Google+
Close

Duke Energy’s Bad Bet



Text  



Holman Jenkins has a fine item in today’s WSJ bringing readers’ attention to the substantive issues that provided the context for a prurient e-mail scandal in Indiana — involving cozy relations between Duke Energy and a state-regulator-cum-briefly-tenured-Duke-Energy-executive, a career cut short by these e-mail revelations.

The following excerpt offers the opportunity to remind everyone not only of the juvenile “inevitability” canard employed (by people like Duke’s Jim Rogers) to weaken what little principled opposition remains within the regulated community. It also should remind us of the folly of rent-seeking businessmen thinking they can finally be the ones to ride the political tiger of climate politics and not end up inside it with the rest of us:

Hovering over all is Duke’s Edwardsport coal-gasification plant, whose high-tech white elephanthood is a direct product of Mr. Rogers’s attempt to position his company to prosper in the age of climate politics.

The plant, which is nearly $1 billion over budget, was always destined to mean higher prices for consumers compared to the low-tech coal plants it would replace. But it was sold to the locals as supplying not just electricity but a “clean coal” future for Indiana’s “dirty” coal-mining industry. More to the point, the plant’s economics were supposed to be rescued when Congress passed cap and trade, dramatically hiking costs for traditional coal power plants.

Mr. Rogers here was betting on Mr. Rogers, the closest thing to a celebrity CEO in the utility business, profiled in the New York Times magazine two years ago as a “green coal baron.” No executive has lobbied as noisily or consistently for a national price on carbon output. His wish seemed certain to come true after both major parties nominated climate worrywarts in the 2008 presidential contest.

But something about a 9.8% national unemployment rate has now made politicians less keen on imposing higher utility bills. Nor did Mr. Rogers count on what we’ll boldly call the public’s growing sophistication about climate science. Where the public was once prepared to believe in a pending climate meltdown because “scientists” said so, now it entertains the possibility that “scientists” are human, capable of mistaking theory for fact, of confusing belief with knowledge.

Back in July 2007, I wrote:

Now, this post also prompts me to remember a telephone call I received from a White House aide the night in December 2006 that incoming chair of the Senate Environment Committee Barbara Boxer supposedly broke it to Duke Energy’s Jim Rogers that no, he shouldn’t now expect a cap-n-tax bill to reward his loyal support with billions in rents. It seemed that the issue was too important to have against Bush, and for ’08 [NB: unless, implausibly, climate warrior John McCain somehow won the Republican nod], . . . .

She, apparently like the New York Times now, saw it as more important to have the issue than the law. The greens got wind of this, however — Rogers, so my caller said, was beside himself and ringing everyone in town he could in outrage, so it was hard not to get wind of it — and demanded what proved to be the Boxer-led disastrous vote last summer in which the bill had to be pulled from the floor in a matter of hours.

’08, of course, saw two candidates about equally Moonbattish on the issue, so no subsequent, real debate  or opportunity for the people to weigh in was had, sadly.

My response at the time was to ask as many in the lobbying community as I could muster to meet, urging them to press the advantage, demanding votes, even on Kyoto. They blanched (Washington representatives are a special lot, living in mortal fear not of something bad being passed that harms their company’s interests, but of getting that phone call from the home office asking “so…what do you think of the deal?”, and having no earthly idea what the deal is. So, the notions of fighting and winning aren’t as innate as they might be for some of us with the luxury of ideological purity).

Looks like Rogers and Duke have made a habit of picking the wrong horse to bet on, all arising from their decision to build a business plan around, and then lobby for, energy scarcity. Sticking with principle is usually a better bet.



Text  


Subscribe to National Review