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Watchdog group files complaint against Duke Energy over reserves

North Carolina utility watchdog group NC WARN filed a complaint Tuesday with federal regulators alleging that Duke Energy wrongfully charges its customers for new power plants while operating with exorbitant reserves.

The 19-page complaint highlights Duke's Florida operations as one of the utility's prime examples of large reserves.

The Tampa Bay Times reported in July that Duke Energy Florida listed its anticipated reserves for this month at 38 percent of its full potential generation — 18 percent above state requirements and 23 percent above standards in almost all other areas of the country.

Meanwhile, Duke and Florida's other investor owned utilities requested — and state regulators granted — the gutting of energy efficiency goals. The utilities also won approval to end solar rebate programs.

At the same time, state regulators gave Duke approval to build a $1.5 billion natural gas plant in Crystal River.

"Duke Energy manipulates the electricity market by constructing costly and unneeded generation facilities, directly leading to generating capacity far above what is reasonable or necessary to meet demand," NC WARN, an environmental organization, wrote in its complaint.

Jim Warren, NC WARN's executive director, said part of the problem stems from the utilities' "undue influence" over state regulators through campaign contributions to elected officials and other pressures. He said that influence has left "a bruise on the democratic process in a lot of ways."

"We're talking about a whole range of years-long influence," Warren said. "It happens under Democratic and Republican administrations. Huge amounts of campaign money and lobbying prowess. There's a whole range of activities that are central to the business model of entities like Duke Energy."

In response to NC WARN's complaint, Dave Scanzoni, a Duke spokesman, said in a statement that the utility has built new plants in recent years after closing 35 coal-fired units since 2011. Scanzoni said Duke has built plants to ensure that its customers have power even during the most severe winter and summer weather patterns.

"Unlike NC WARN, Duke Energy takes seriously its responsibility to provide reliable, dependable electricity to its customers — 24/7, 365 days a year," Scanzoni said.

"The North Carolina Utilities Commission has repeatedly rejected NC WARN's similar arguments in the past," he added. "In addition, the North Carolina Public Staff — which represents customers and the public — has repeatedly supported, as reasonable, Duke Energy's investment in power plants and electricity reserves to meet customer needs at all times."

Duke, based in Charlotte, N.C., merged with Progress Energy, which was based in Raleigh, N.C., in July 2012, forming the largest utility in the country with 7.1 million customers in six states.

NC WARN argues that instead of finding ways to reduce the energy needs of its customer base, Duke and other utilities keep getting bigger, building more plants and growing reserves.

"The excess capacity throughout the Southeast region can and should be used among the various utilities to supplement each other's generation requirements, rather than to duplicate the waste of unneeded or under-utilized generation," NC WARN stated.

Florida is particularly flush in excess capacity, even with the minimum requirement of 20 percent reserve. Most areas of the country require just a 15 percent reserve. At that level, Florida could power an additional million homes.

Duke, Tampa Electric and Florida Power & Light all reported to the state reserve margins for this year in excess of 20 percent.

NC WARN requested that regulators at the Federal Energy Regulatory Commission investigate Duke's operations and explore the potential benefits of the utility entering into a "regional transmission organization." NC WARN also has requested FERC hold hearings.

RTO systems require utilities to make their transmission lines available to power producers without discrimination, allowing customers greater choice about who provides their electricity.

Such a system would in effect create competition for Duke and other investor-owned utilities.

NC WARN also wants federal regulators to emphasize the use of rooftop solar as an alternative to building more big box power plants along with the regional cooperation.

Contact Ivan Penn at ipenn@tampabay.com or (727) 892-2332. Follow @Consumers_Edge.

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