Jul 21 - The News & Observer, N.C.



Wal-Mart and other big businesses in the state want out of paying a charge on their bills that the majority of Progress Energy's customers must cover. Last month, the N.C. Utilities Commission approved a $250 million electricity grid upgrade for Progress Energy. The commission also ruled that big business customers would have to help pay for the upgrade.

But Wal-Mart and trade groups representing several dozen industrial power users want that decision reversed. They argue that a provision in the state's 2007 energy conservation law exempts large commercial and industrial electricity users from having to pay for utility conservation programs. When the law was being debated, the business lobby cut a deal that created an exemption for companies that have their own energy conservation programs.

If the commission refuses to grant the waiver, the issue could end up in court. So far, the companies have two influential allies: Progress Energy and state's top utilities cop, Edward Finley Jr., the chairman of the N.C. Utilities Commission, who dissented with the commission's June decision.

"The opt-out right was included in the legislation in exchange for the support of these customers," Finley wrote. "The General Assembly created the opt-out right and the Commission is not free to remove it."

The dispute goes to the heart of who will pay for the state's push to make homes and businesses more energy-efficient. Progress Energy estimates that through next year its conservation programs will cost more than $22.5million. Customers will subsidize the programs, and the money will pay for rebates to encourage homeowners and businesses to get energy-efficient equipment, energy audits and technical assistance.

The outcome of the fight with the utilities commission could affect thousands of businesses in the state that buy electricity from Progress. In the past two years more than 500 companies have asked to be exempt from paying for Progress' conservation programs. Locally the list includes Angus Barn, Belk, AT&T, BB&T, Costco, Food Lion, Glaxo SmithKline, Raleigh-Durham airport, Red Hat and the downtown Sheraton hotel.

The costs of subsidizing energy conservation programs range from $484 a year for the smallest "large" commercial customers (those using at least 1 million kilowatt hours a year) to thousands of dollars a year for larger companies.

The $250 million it will cost to improve Progress Energy's grid will be the single biggest conservation expense so far, so energy-conservation payments by big businesses and industries will increase significantly if the utilities commission ruling holds. Wal-Mart and other major power customers say the improvements, which Progress Energy will count toward its obligation for saving energy, are an energy conservation program from which they are exempt under the 2007 law.

Meanwhile, household customers are paying 74 cents a month to support Progress Energy's residential conversation programs. Unlike business customers, household customers can't opt out if they do their own conservation measures. Progress Energy has asked the utilities commission to reduce the monthly charge to 55 cents starting in December to reflect the actual cost of the programs.

Wal-Mart, the nation's biggest retailer, calls itself an industry leader in the corporate green movement. The company says it has developed a store prototype for Wal-Mart and Sam's Club stores with an advanced energy management system, computerized lighting controls, daylight harvesting systems, LED lighting, white membrane roofs to reflect heat, and high efficiency equipment that captures waste heat for reuse.

The special exemption was a touchy issue from the outset. Some businesses said they practiced energy conservation long before it was in vogue and shouldn't have to subsidize businesses belatedly adopting "green" practices. Environmental groups and consumer advocates said the exemption was simply a political favor for a powerful lobby.

It doesn't take much to qualify for the exemption. A big business or industry can opt out of paying as long as it doesn't accept financial incentives from its electric utility. It notifies the power company that it has its own conservation program at its own cost -- or that it plans to start one. No details, results, proof or timetables are required.

"There's no verification or documentation," said James McLawhorn, director of the Electric Division of the Public Staff, a state consumer advocacy agency. "If somebody says, 'We've got a compact fluorescent light bulb program at the company,' and all they've done is ... screw in one CFL, they could technically get away with it."

john.murawski@newsobserver.com or 919-829-8932

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