Oct 20 - McClatchy-Tribune Regional News - James Romoser Winston-Salem Journal, N.C.

Two months after the passage of a landmark state law to promote alternative energy, environmental and consumer advocates are still at odds with the state's large power companies over how much consumers will end up paying for greener energy.

The law, which has been hailed as North Carolina's most significant change in energy policy in decades, will force power companies to begin using renewable energy sources for a portion of their electricity supply.

How the law will be applied is up to the N.C. Utilities Commission, which regulates the state's two major power companies, Duke Energy and Progress Energy. The commission must devise a set of rules that will determine how many restrictions or potential penalties are placed on power companies as the companies try to meet the law's mandates and recoup costs from their customers.

One unsettled question is the part of the law that deals with energy efficiency. The power companies are required to enact programs that encourage their customers to reduce their overall energy usage and conserve energy during times of peak energy demand.

For instance, power companies may give customers coupons for energy-efficient light bulbs, dishwashers, water heaters or other appliances. Or companies may provide "assessments" of homes or businesses to recommend ways for customers to save energy.

The law also allows the power companies to raise customers' electric rates in order to pay for the cost of these programs. The amount of money that the companies can recoup depends on how much energy is saved as a direct result of the companies' efforts.

But measuring what is essentially the "non-use" of energy is difficult, and so is determining the source of that energy savings.

For instance, if Duke runs a TV commercial with a message supporting energy efficiency, Duke would be allowed to build the cost of that commercial into all customers' electric bills.

The commercial may cause some customers to save energy, but many other customers who never see the commercial may decide to start saving energy for other reasons, unrelated to the company's measures.

"The question is: Is Duke going to end up taking credit for that increased efficiency?" said Shana Becker, the staff attorney for the N.C. Public Interest Research Group, a nonpartisan group that advocates for consumers' rights, public health and good government.

The amount of energy savings that gets measured also depends on the amount of future energy demand estimated by power companies. If the companies overestimate the demand, and then customers end up using much less energy than projected, the state would appear to be more energy-efficient than it actually is.

The rules established by the utilities commission will determine how efficiency is measured, verified and paid for.

Duke Energy estimates that its proposed energy-efficiency program, known as "Save-a-Watt," will cause a 4 percent increase to customers' bills within four years.

If customers "take full advantage" of the energy-saving measures in the program, their bills will decrease 6 percent during that time because they will be using less electricity, said Andy Thompson, a company spokesman.

Another unsettled question is what will happen to the power companies if they do not meet the law's renewable-energy requirements.

The law requires that 12.5 percent of the state's electricity come from renewable sources or energy-efficiency measures by the year 2021. But the law does not specify penalties if a power company fails to meet that standard.

Supporters of alternative energy want the utilities commission to set penalties, saying that without them, the law will lack teeth. But the power companies say that it would be unfair to punish the companies if third-party suppliers are unable to generate enough renewable energy to meet the law's standard.

The technology for renewable energy, which includes solar power, wind power and power generated from landfill gas or animal waste, is still evolving, and Duke and Progress are unlikely to build their own solar farms or wind turbines. Instead, they will buy renewable energy from other energy suppliers.

"We want to make sure that all parties recognize that there are circumstances beyond the utilities' control," said Paige Sheehan, a spokeswoman for Duke Energy.

If Duke does its best to comply with the law, but its suppliers do not deliver enough renewable energy, Duke should not be punished, Sheehan said.

-- James Romoser can be reached at 919-833-9056 or jromoser@wsjournal.com.