Predatory Delay – Duke Energy’s Monopolistic Energy Strategy

Sworn Testimony by Dave Hollister

President, CEO, and Co-founder of Sundance Power Systems

Submitted on September 27, 2017, N.C Utilities Commission Hearing on Duke Rate Increase Request


My name is Dave Hollister and I am a co-founder of Sundance Power Systems and the Alliance for Energy Democracy and I currently sit on the Energy Innovation Task Force that is grappling with the issue of creating a clean energy future for the Western Region of North Carolina. I have been working on energy issues in North Carolina for over 23 years starting with our home which was the first officially net metered solar home in the state of North Carolina.

I come here tonight to offer some perspective on these significant issues that we are considering that underlie this rate hike. I am the first one to offer significant praise to Duke for developing and managing the energy grid in North Carolina that has been reliable and affordable. I also commend the perspective and decisions that have come forth from this body to support this work.

This issue before us, however, brings to light some of the inadequacies of the reliable and affordable methodology that has been the primary regulatory lens in North Carolina. This rate case brings a whole new perspective to this methodology and in turn, brings into question the ways in which we view how costs are distributed.

The other day I learned of a new term that I think is important to bring into the lexicon of this discussion. The term “Predatory Delay” is defined as the “the blocking or slowing of needed change, in order to make money off unsustainable, unjust systems in the meantime.”

This rate case represents predatory delay in three ways. First, we are being asked to pay for environmental externalities that were created over decades of energy production from coal use. And of course, the argument is that this was a result of energy that we, as a society, asked Duke and Duke Energy Progress to deliver for us and we sanctioned this behavior as a society. Therefore, Duke is requesting us to pay these costs. But the reality of this situation is that it was clear from the beginning that dumping toxic compounds into a pond was not the best plan for dealing with this environmental externality. No….it was cheap and easy or in regulatory speak…it was “least cost” in the short term, but it was a flagrant form of predatory delay. More on this in a bit.

Secondly, this rate case includes money to continue to build out dirty energy infrastructure. There is certainly enough consensus among the scientific community that we need to be developing a truly sustainable clean energy infrastructure that can accommodate the rapid adoption renewable energy generation and DER resources. A failure to immediately adopt this vision and make sure that all monies spent on “modernization” will be applicable to creating this future means these costs will eventually be stranded costs. This predatory delay of building a substantially “typical” dirty energy infrastructure now rather than creating the grid of the future is a bad deal for the citizens of North Carolina.

The problem here is that there is no vision of what grid modernization means. What should the grid of future look like? We all know we need to do this. I have spoken to all levels of people in the Duke organization and they all agree that the genie is out of the bottle and the traditional business model is on its way out and in fact is becoming a liability. A failure to create this vision and leverage every dollar toward a clean energy economy is a failure of leadership. Something we as citizens in North Carolina rely upon this body to have.

It is your responsibility to have leadership and represent the interests of the people. But I can certainly say that if asked, most people believe you do not have their interests at heart and that you capitulate to the big monied interests including Duke. Now I have worked with some of you and the public staff and I know that is not a true representation of this body. But I can say that at a time such as now…If you follow Duke down the road of Predatory delay, you will be complicit and you will be in violation of your mandate.

Let’s be real and truthful about this “modernization plan;” the majority of the costs that are being asked for have nothing to do with modernization. The truth is that without a strong vision of what we want this grid to look like and what the pieces of a truly clean and sustainable clean energy grid look like, we are allowing the tail to wag the dog. It is written in the constitution that Duke must serve the public good. Well this request represents a form of predatory delay to defend a business model that will be obsolete in a few years. So why should we pay for this short-sighted plan?

And third, as we have shown with the coal ash problem, we have not been very good at honestly accepting all the costs associated with our dirty energy generation and infrastructure. The organizing principle of the industry has been to privatize the profits and socialize the losses. So, let’s not make the same mistake when it comes to the carbon loading of our atmosphere. We have the consensus of the scientific community that we are in serious trouble. A predatory delay in this regard could be catastrophic, the costs of which could be beyond measure. Just tell me what the costs to North Carolina would be for losing the Eastern Seaboard? This is of course a small piece of what could actually happen. This is not the issue to be exhibiting a lack of vision, but in fact we have no vision…

Clearly if we had vision and common sense we would have taken responsibility for the coal ash when it was being created. We would have acknowledged the environmental costs immediately into the equation and the handling of such waste. We have made the same mistakes with nuclear energy as well. In my mind, we have verifiable facts on the ground that we have been consistently getting this wrong since we look through a jaded regulatory lens that does not include these environmental externalities. From all accounts, this predatory delay shows that honestly looking at these costs is against the mandate of this body, as expressed in the constitution, and makes this body culpable and complicit in the inevitable costs that will be incurred in the future.

So now let me put this into terms that you all should be completely familiar…That is “cost shifting” or “cross subsidization.” See…The coal ash issue is perhaps one of the largest and most egregious cost shifting requests in the history of this body. It is massive. Duke is asking today’s ratepayers to pay for decades of dirty energy costs associated with energy they perhaps did not use? Indeed, all of the predatory delay tactics here are forms of cost shifting.

The reason why this is so important at this time is that this idea of cost shifting is being used to squelch the blossoming clean energy revolution by attacking net metering. I will not surmise as to whether this is simply the result of some myopic viewpoint or it is a calculated tactic to defend a dying business model, but it is indeed a massive contradiction and constitutes discrimination to a class of people in this state who are using their own capital and resources to solve one of the biggest challenges facing humanity NOT make it worse.

If we were to HONESTLY and ACCRURATELY include all of the true costs of our various energy sources…. Include all the health, environmental, social costs, and consider that there are also RISKS for various energy paths, we could finally change that regulatory lens we look through. We all know in our hearts that with this new lens, this new vision, a clean energy future will win the day!

So, who is culpable for this lack of vision and environmental stewardship? That is the question here. Who made the decision to dump toxic coal ash into ponds of water as a solution? Who did that? Did this body approve such a primitive way of handling toxic waste? Did Duke? Who bears responsibility for the short-term profits of a private corporation cutting environmental corners? That is the question before you. I do know one thing. Not one of us made this decision. This cost shifting of the coal ash onto ratepayers is a shunning of personal responsibility of this body and Duke.

We must learn from this situation NOW so we do not repeat it. We must not let predatory delay allow the short-term interests and lack of vision to once again put us in financial and environmental jeopardy in the future. I recommend that before we allow Duke to monetize any of these costs, that we have a deep, truthful discussion about the regulatory lens we look through, how and why we have allowed cross subsidies and cost shifting to occur, we develop a cohesive vision of what the clean energy grid of the future looks like and most importantly, what role Duke should be playing in developing this future so that we can once again all work together to get the job done!!

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