Environment, Legislature

House Finance green-lights Duke Energy ratemaking bill; would allow utility to increase annual profits

Rep. Deb Butler, a New Hanover County Democrat on the Duke Energy ratemaking legislation: “The bill seems unilateral” — for Duke. (Photo: NCGA)

A controversial bill that would allow Duke Energy to increase its annual profits through alternative methods of ratemaking cleared another hurdle today, despite opponents’ objections.

The House Finance Committee introduced an amended version of Senate Bill 559 to ostensibly appease the state’s industrial and retail customers, such as Walmart. But the bill still sounded several alarms among lawmakers who view part of it as a gift to the energy industry.

Rep. David Lewis, a Harnett County Republican who is running the bill in the House, said this section of the bill “has been misunderstood from the get-go. Modern needs and modern challenges require modern tools. … We need to start talking about what our power situation is going to look like in 2025, ’30 and ’50.”

The measure would allow utilities, primarily Duke, to apply for “multi-year” rate plans that the would provide flexibility for the utility. Under these plans, a variation of which are used in 35 other states, the Utilities Commission could — but is not required to — grant periodic rate changes for as long as three years without holding traditional base-rate hearings. Those hearings are lengthy quasi-judicial proceedings during which the utility, the public staff and ratepayers testify under oath about the effects of a proposed rate increase. The bill language would allow Duke to sidestep that process in lieu of a 120-day public comment period. The company would have to file a public annual report. Base-rate cases would still provide for traditional public testimony.

The Utilities Commission also would have more time to rule on Duke’s ratemaking plan. The original bill set a nine-month limit; the new version extends it to a year.

The banding portion of a multi-rate plan would allow the Utilities Commission to establish a return on investment — a profit — for the utility that acts as a midpoint; from there, the commission also would set a low- and high-end range — a band — for profitability. This provision would require Duke Energy to refund to customers any profits above 1.25 percent on its rate of return.

But Rep. Graig Meyer, an Orange County Democrat, noted if that provision were law today, Duke Energy could earn an extra $425 million over three years before issuing such a refund. If Duke earned below 1.25 percent, the Utilities Commission would hold a rate case to allow Duke Energy to recover its losses.

Peter Ledford, general counsel for NC Sustainable Energy Association, told the committee that his organization is concerned with the multi-year plan and the rate-banding. “If a new tax collected $140 million a year, it would draw extreme scrutiny.”

John Burnett, deputy general counsel for Duke Energy said he’s never known the commission to call in the utility “for over-earning.” He dismissed the suggestion that a utility can “manipulate” its rate of return.  The Utilities Commission bases the profitability rates on variations beyond the utility’s control, like weather, taxes and the number of customers. Burnett said customers would benefit from the bill, in part to “avoid expensive utility commission hearings.” (Duke often deploys an armada of paid attorneys to these hearings.)

There are no environmental performance goals associated with the multi-year plans or the rate-banding. Rep. Deb Butler, a Democrat from New Hanover County, said other states incorporated such standards into these alternatives. “There are no increases in renewable energy, energy efficiencies or clean ups of environmental contamination,” Butler said. “The bill seems unilateral.”

Another contentious provision remained from the original Senate version. Duke Energy could file for alternative ratemaking and a traditional base-rate case at the same time. If the Utilities Commission rejects Duke’s proposal for the alternative version, the utility could withdraw it and merely settle for a base rate.

“We feel like the utilities have a guardrail,” said Sharon Martin, executive director of the Carolina Utilities Customer Association, which represents the state’s manufacturers. “If you trust and acknowledge the Commission experts, why do the utilities need this” — the ability to withdraw their alternative plans.

Martin asked lawmakers to split the bill between the benign Section 1, which allows for bonds to pay for storm recovery costs and the second section, which she suggested should be sent to a study committee. “Part 2 cherry-picks a rate mechanism that benefits utilities,” Martin said. “There are no quantifiable customer benefits.”

The House Finance Committee voted 16-12 to send the bill with a favorable report to the Public Utilities Committee.

The Senate version of the bill was sponsored by Sens. Dan Blue, a Wake County Democrat, and Republicans Bill Rabon and Ralph Hise, who represent several coastal and mountain counties, respectively. It passed that chamber on May 2.

Education, Environment

Kids’ brains can be damaged when schools are near factories, major pollution sources

Each blue dot represents a Toxics Release Inventory site. These facilities emit contaminants that can cause cancer and damage human health and the environment. There are 22,000 such sites in the US. (Source: ToxMap)

A study of Florida public schools, found that children who are exposed to air pollution are more likely to score lower on tests and to be suspended from school. In addition, a school’s overall accountability ranking is more likely to drop.

The findings were recently released in a peer-reviewed paper by researchers Claudia Persico of American University and Joanna Venator of the University of Wisconsin.

At least 200 million people in America — two-thirds of the population — live within three miles of a Toxics Release Inventory site. Of those, 59 million live within one mile. And 22 percent of all public schools are within one mile of a TRI facility, according to 2016 data.

There are roughly 22,000 TRI sites in the US, and many are located in low-income neighborhoods and communities of color. These facilities emit thousands of types of contaminants, many of them unregulated.

Persico spoke about the research findings Monday night at NC State University. She said during certain times in children’s development — between birth and age 1, as well as in middle childhood, in grades 3 through 7 — the brain is especially vulnerable to the effects of contamination. At these ages, a child’s brain is forming new neural connections, known as neuroplasticity, that can determine learning ability, well as emotional behavior.

“These are bad times to be exposed to pollution,” Persico said.

However, the culture of high-stakes testing doesn’t account for environmental factors that can affect learning and overall school performance. Lead, mercury and other emissions from power plants and vehicle tailpipes might damage the brain, the paper said. Brain cells can die. Exposure to lead is especially problematic because nerve cells can be “demyelinated,” meaning the protective sheath is peeled away. (Multiple sclerosis is one of several diseases that result from demyelination.)

A separate study from 2017 found that students who take tests on days when there are high concentrations of air pollutants fare more poorly than when the air is cleaner.

Persico said that based on the Florida study, after a new TRI site opens, schools within one mile are more likely to have their school grades drop than comparison schools between one and two miles away within the same zip code. The effect, Persico said, is comparable to a 11 percentage-point increase in the proportion of disadvantaged students in a school. TRI site openings are associated with a higher likelihood of the school falling at least one grade-level, such as from a B to a C.

These findings could compel school districts that are near TRI sites to install and maintain air conditioning and filtration systems to purify  indoor air. The research could also guide local zoning and school siting decisions by keeping polluting industries as far away as possible from schools. “How does local environmental policy affect local education policy?” Persico said.

In many cases, it doesn’t. As Policy Watch reported last week, the Moore County School District is building a new elementary school for grades Pre-K through 5 within a mile of multiple pollution sources. Most of the children currently assigned to the school are economically disadvantaged and Black or Latinx.

 


 

Environment

DEQ denies water quality permit for MVP Southgate natural gas pipeline

A final route has not been announced, but the green line shows the general area where the MVP Southgate natural gas pipeline would traverse. It would enter North Carolina near Eden, then travel roughly 46 miles through Alamance and Rockingham counties, ending near Haw River. (Map: MVP Southgate)

The Mountain Valley Pipeline Southgate project encountered another setback this week, when the NC Department of Environmental Quality rejected a key water quality permit, a federal requirement for the plan to continue.

Although DEQ had repeatedly asked for information for more than six months, MVP Southgate hadn’t provided a full accounting of stream crossings and other impacts on waterways to the department. Without the additional information, DEQ couldn’t evaluate the application before a federal deadline, according to a letter from Linda Culpepper, director of the Division of Water Resources.

MVP Southgate has known of the federal timetable since March, when the Federal Energy Regulatory Commission publicly announced it would issue a proposed route and a draft environmental impact assessment next month.

MVP may re-apply to the division, but not until after federal regulators release their information. An MVP spokesperson said its project team intends to resubmit the application after FERC’s announcement. “The MVP Southgate project team has worked diligently to provide NC DEQ with comprehensive and updated information about the proposed route in accordance with federal regulations.”

Opponents of the project were relieved about the delay. “This is a win for landowners, tourists and farmers, as well as for water quality and the environment as a whole,” said Steven Pulliam with community group Good Stewards of Rockingham. “Numerous streams and wetlands would be crossed along Southgate’s path which also passes dangerously close to homes and private wells. MVP has been unable to demonstrate proper execution of these crossings on its uncompleted and ever-inflating 300-mile mainline project.”

The MVP project is owned by EQM Midstream Partners, a publicly traded company based in Pennsylvania. The main portion of the pipeline begins at a fracked gas operation in West Virginia and runs through central Virginia. The southern extension would start in Chatham, Va., enter North Carolina in Eden. The pipeline, 24 inches in diameter, would then travel 46 miles through Rockingham and Alamance counties, ending near I-85/I-40 in Haw River.

Early drafts of the route show the the pipeline could crisscross North Carolina waterways, including the Dan River and tributaries to the Haw River, more than 80 times. Over a third of the route is forested.

MVP Southgate filed for a water quality permit on Nov. 30, 2018. In early January, DEQ asked for more information, and the next month, MVP replied that it was still evaluating prospective routes and would provide updated list of impacts “at a later date.” MVP also told DEQ that it would file a final plan for all proposed “permanent fills of aquatic resources” in North Carolina once it had finished the surveys and finalized the project design.

In late March, DEQ again returned the application as incomplete.

“This may seem like just an administrative decision, but it shows just how hard the pipeline company wants to rush this project by trying to get a state permit that has to be grounded in information that’s not even out yet,” said Ridge Graham, North Carolina Field Coordinator with Appalachian Voices.

MVP had estimated it would start construction early next year; given the inevitable delays and probable legal challenges, that timetable looks unlikely.

“We’re encouraged to see that NC DEQ is not going to rubber stamp this project, even as the company is rushing to get permits approved without adequate documentation,” said Emily Sutton, the Haw Riverkeeper, with the Haw River Assembly. “This project puts our streams and drinking water at risk, and is not needed to meet our energy needs in North Carolina.”

As Policy Watch previously reported, last November DEQ Assistant Secretary Sheila Holman submitted a formal comment to FERC questioning the need for the pipeline. In that eight-page correspondence, Holman wrote that MVP’s predictions of a gas shortage were not factually supported: “We remain unconvinced the Southgate project is necessary.”

Environment

Chatham County testing shows elevated levels of Chromium 6 in 100+ wells

More than half the drinking water wells tested in Chatham County contained levels of contaminants associated with coal ash that were above the state’s health advisory goal, according to researchers from UNC and Virginia Tech.

Earlier this spring, researchers tested water from 242 private wells; 51 percent had elevated levels of Chromium 6 and 84 percent had high levels of vanadium. The state health goal for Chromium 6, also known as hexavalent chromium, is 0.07 parts per billion. Among the wells tested, the average concentration for Chromium 6 was 0.14 ppb — twice the health goal –and the maximum detected reached 3.25 ppb.

The Centers for Disease Control and Prevention has linked Chromium 6 to cancer, respiratory illness, and liver and kidney disorders.

For vanadium, the state has set an interim standard of 0.3 parts per billion. The average among the tested wells was 1.4 ppb — five times the health goal — and the maxiumum was 20.8 ppb.

Exposure to vanadium can result in anemia, neurological effects and high blood pressure.

Researchers released the sampling results Friday evening at a community meeting in Moncure.

Chromium 6 and vanadium are found in coal ash, but they are also naturally occurring. Moncure has a nearly 100-year history with and coal ash and Duke Energy. The utility operated the Cape Fear coal-fired power plant in Moncure from 1923 to 2011; the plant has been demolished.

However, Duke recently received an air permit from the Department of Environmental Quality for a beneficiation plant at the Cape Fear site to convert fly ash for use in cement. Although the facility will have pollution controls, it still will emit thousands of pounds of arsenic, beryllium, cadmium, sulfuric acid and other hazardous and toxic chemicals into the air each year.

The utility also stores coal ash from its Sutton plant in Wilmington in a lined impoundment at the Brickhaven Mine, also in Moncure.

Researchers are now mapping the wells and their proximity to potential pollution sources.

About 10 percent of the wells contained high levels of lead, including one with 1,326 parts per billion. Although there is no safe level for lead, the EPA has set a maximum contaminant level of 15 ppb. High lead levels can be caused by old household plumbing.

Similarly, elevated copper concentrations, which affected about 36 wells, can be the result of pipes. When water is naturally acidic, it can eat away at the copper, which in turn leaches into the drinking water.

UNC and Virginia Tech have also tested wells in Iredell and Robeson counties.

Researchers tested 786 wells in Iredell County, where Duke operates the Marshall Steam plant on the shores of Lake Norman. Seventy-nine percent of which had levels of Chromium 6 above the health advisory goal. Of 62 Robeson County wells, 23 percent had elevated levels of the compound. Duke Energy operated the Weatherspoon plan in Lumberton until 2011.

UNC researcher Andrew George will present the Chatham County findings at a second community meeting, Tuesday from 6 to 7 p.m. at Central Carolina Community College, Multipurpose Room, Building 42, 764 West St., Pittsboro.

Environment

Settlement agreements require Enviva to install more stringent air pollution controls on wood pellet plants in Richmond, Sampson counties

Photo of wood pellets

Trees are ground into wood pellets, which are then shipped to the United Kingdom, where they are burned for fuel. (Photo: Creative Commons)

Enviva, the world’s largest manufacturer of wood pellet fuel, will install more stringent air pollution controls at two of its plants, as part of settlement agreements with the state and environmental groups.

In the first settlement agreement, Clean Air Carolina had challenged the air permit for the Hamlet plant in Richmond County that was approved by NC Department of Environmental Quality earlier this year. In court documents, Clean Air Carolina alleged that the Division of Air Quality had violated state and federal law in classifying the plant, which is under construction, as a minor source of air pollution. The environmental group, based in Charlotte, also argued that DAQ arbitrarily relied on emission estimates in Enviva’s air permit application.

As a result, Enviva would have been allowed to emit greater amounts of volatile organic compounds, as well as hazardous air pollutants, formaldehyde and methanol into the air.

Although DEQ and Enviva denied Clean Air Carolina allegations, the three parties reached a settlement agreement. The agreement requires Enviva to add air pollution controls to reduce emissions and adhere to legal limits on them. Enviva also agreed to additional record keeping and reporting conditions.

Clean Air Carolina was represented by the Southern Environmental Law Center and the Environmental Integrity Project.

Last November concerned citizens, as well as Enviva supporters, filled an auditorium at Richmond Community College to comment on the proposed facility in Hamlet. “I ask you, DEQ,” said Daniel Parkhurst, policy manager for Clean Air Carolina, at the time, “to put the health of the families and children first.”

Within the last decade, there has been a spike in hazardous and toxic air emissions Richmond County: From roughly 100,000 pounds (50 tons) in 2010 to nearly 400,000 pounds (200 tons) in 2016, according to DEQ figures.

State regulators said the increase is occurring in part, because of ammonia emissions from natural gas plants owned by Duke Energy and by the NC Electric Membership Corporation. Other sources, such as factories, are also contributing to air pollution.

“Residents of Richmond County already face some of the worst health outcomes in our state,” said June Blotnick, executive director of Clean Air Carolina. “The new air pollution controls required by this settlement will decrease hazardous air pollutants and VOC emissions, reducing two additional threats to the communities’ health.”

More than a quarter of Richmond County residents live at or below the federal poverty threshold, compared to the state average of 17.8 percent. According to DEQ’s Environmental Justice Mapping Tool, in Richmond County rates of heart disease, stroke, infant deaths, child mortality, and cancer are all higher than the state average.

Enviva manufacturers wood pellets from trees, including hardwoods from bottomland forests. The company ships the pellets to the United Kingdom, where they are burned for fuel, instead of coal. However, burning wood pellets is not carbon neutral. There are multiple sources of carbon dioxide emissions from the wood pellet industry: When the trees are cut CO2 is released into the air; the transport of the trees and pellets by truck, rail and ship; the emissions from the factories themselves; and the release of CO2 when the pellets are burned for fuel.

The environmental damage also extends to the forests themselves. Although companies replant the trees, it is usually a monoculture of pine stands that does not support the biodiversity and habitats found in natural forests.

The second agreement involved Enviva’s wood pellet plant in Sampson County, near the towns of Faison and Clinton. In 2014 the Division of Air quality issued a permit to Enviva that did not require the company to control emissions from certain processes: pellet coolers and presses, and dry hammermills, which grind the pellets.

DAQ didn’t require emissions controls at the time because in its permit application, Enviva claimed they weren’t needed under the Clean Air Act.

However, in March of this year, DAQ determined that Enviva’s permit application was deficient. Specifically, DAQ determined the company’s analysis should have included emissions controls on the pellet coolers and presses. Although Enviva disputed DAQ’s assertion, in late May the state and the company reached a settlement agreement.

Within two years, the company is required to install and operate emissions controls on the pellet coolers and presses and dry hammer mills. In exchange, the state agreed not to pursue an enforcement action based its the March letter.