Duke Dilemma: Can utility companies be clean and safe and keep costs down?

by J. J. Summerell
Chair, Libertarian Party of North Carolina

While I'm no apologist for Duke Energy, I understand the dilemma the company faces in responding to the Dan River coal-ash spill.

Because we must buy electricity, and Duke Energy is virtually the state’s only provider, it is a natural monopoly. Why would it have faced any financial barriers to ensuring the environmental safety of its power plants and transmission facilities? Microeconomics theory indicates that Duke could have easily raised prices to cover the costs of environmental-protection measures.

That didn't happen because Duke operates in a contradictory regulatory environment. 

The Department of Environment and Natural Resources advocates for regulations and measures that protect the environment and ensure public health and safety – which cost money.

Meanwhile, the N.C. Utilities Rates Commission – the watchdog agency that represents consumer interests and sets electricity pricing – often prohibits companies from raising rates to pay for these added expenses.

This means the two agencies often work at cross purposes. 

Because protecting the environment, public health and safety is a core function of government, regulations should encourage – not discourage – businesses from complying. Furthermore, companies should be allowed to raise their prices to pay for the cost of compliance. 

As a Libertarian, I believe it's a fundamental tenet of civil society that property owners have the right to use their property as they deem best, so long as that use doesn’t infringe upon the rights of others. Environmental laws, in particular, must balance the rights of all property owners. 

We Libertarians also believe that exposing people to pollution is a violation of their rights and should be treated as such. Polluters – both public and private – should be required to fully compensate people for any personal injuries or property damages they cause.

Duke Energy must realistically assess the cost to clean up all of their known environmental risks, with the utilities commission adjusting rates accordingly. I suspect the per-consumer cost would be very small.

There are hundreds of toxic waste sites across North Carolina. If we don't correct these environmental accidents – and take steps to prevent future ones – at the electricity consumers’ expense, the cost will fall on all taxpayers. Neither option is great, but the first is fairer. 

The utilities commission has been quite successful at keeping consumers’ electricity rates low, but at what environmental cost? When the smoke billows out of the chimney and the ash pours into the river, we all pay indirectly.

Printed in the News & Observer on June 28.

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