Wednesday, March 5, 2008

Progress-ive Policy

Progress Energy recently made a presentation to Wall Street that just a few years ago would have seemed incredible. The presentation was motivated by a recent survey Progress made of its customers in Florida, North Carolina and South Carolina.

While the findings may not be palatable to stodgy, reactionary utilities, Progress should be commended for living up to its name and realizing that the old adage is true: "the customer is never wrong."

Among the findings:

  • "79% of our customers think climate change requires immediate and drastic action"
  • Expanding the utilization of renewable energy and energy efficiency is twice as important as ensuring a reliable supply of electricity and more important than avoiding rate increases.
  • Public opinion virtually eliminates coal plants as an option
Progress rightly sees this as a sea change in the way they will do business in the future. Instead of emphasizing cheap and reliable electricity at any cost to our health and the environment, its customers want energy services that allow them to save money while heading off the worst effects of climate change.

Progress customers also see their utility as playing a disproportionate role in making sure that happens.

Comparing Progress to Santee Cooper reveals a striking result. Progress surveyed its customers to find out how the company should respond to climate change using alternatives to coal. Santee Cooper surveyed its customers to find out how to sell more coal.

From the Charlottee News & Observer:
Published: Mar 01, 2008 12:30 AM
Modified: Mar 01, 2008 05:41 AM

Progress sees shift to renewables
Customer demand and carbon gas limits will force changes, the utility warns investors

John Murawski, Staff Writer

Half of Progress Energy's customers in North Carolina say the company isn't doing enough to develop renewable energy, and a whopping 79 percent say that global warming requires immediate and drastic action.

Those are some polling results that the Raleigh electric utility released Friday as a warning to investors that power companies could face major costs to comply with carbon dioxide limits that are expected to be imposed by Congress. Progress Energy said that the cost of compliance could add $3 billion a year to the cost of doing business in this state and 5 billion annually in Florida -- or as much as $20 a month for a typical residential customer.

About half the electricity generated by Progress Energy in the Carolinas comes from
coal-burning power plants, making officials jittery about the potential cost of meeting federal carbon-emissions limits. Coal plants are the leading sources of carbon dioxide, the greenhouse gas blamed for overheating the planet.

Progress Energy's customer surveys, presented at a conference for Wall Street analysts that the company hosted in Florida, show how far public opinion has swung in this state on combating climate change. Progress Energy, which has 3.1 million customers in the Carolinas and Florida, said public opinion virtually eliminated coal plants as an option.

The company regularly surveys its customers to assess its public image and to gauge customer sentiment about public policy. Progress added questions about renewable energy about two years ago.

"It's important to know where customers stand, because policymakers are going to be responding to public opinion," John McArthur, the company's general counsel and senior vice president, told the analysts.

The most recent survey polled 1,700 customers in the fall, including about 700 in North Carolina. In one of the more surprising responses, customers said they are more interested in developing renewable energy -- such as solar, wind or animal waste -- than they are in receiving reliable electricity.

Public opinion turns

Now Progress officials say they have a new challenge: The public may be overly
optimistic about the potential for renewable energy. Though environmental advocates have said alternative energy is cheaper than building power plants, Progress executives said renewables are costly and not as dependable as power plants.

"The public has unrealistic expectations about renewables," McArthur said. "They think it's twice as important as reliability."

But McArthur noted that the surveys show customers are willing to pay extra for green energy, after years of saying that, above all, they demanded cheap and reliable power. Knowing that customers will tolerate cost increases, Progress Energy supported a state law requiring that 12.5 percent of electricity in the state come from renewable energy sources and efficiency programs by 2021.

But the survey did find some in favor of more traditional power options.

In North Carolina, 56 percent of customers favor new nuclear plants. Progress Energy last week applied for a federal license to add two nuclear reactors at the Shearon Harris site in Wake County, and it will apply for two additional reactors in Florida this year. Utility officials tout nuclear energy as an answer to global warming, because, unlike coal-burning power plants, nuclear plants emit no greenhouse gases.

Though alternative energy is coming down in cost, estimates for nuclear plants have tripled in the past several years.

The Westinghouse AP1000 reactor that Progress Energy is considering for Florida and the Shearon Harris site has been estimated at as much as $9 billion. Progress Energy has not revealed its cost estimates, but the company will file preliminary estimates for the Florida plant with utility regulators in that state in coming weeks.

No comments: