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State Government

North Carolina becomes a national leader in clean air

North Carolina became a national leader in fighting air pollution with the ratification of legislation requiring Progress Energy and Duke Energy to radically reduce emissions from the 14 coal-fired power plants they operate in the state. The utilities will install state-of-the-art scrubbers at the plants that will slash emissions of nitrogen oxide by 78 percent by 2009. Nitrogen oxide is a main cause of ozone and contributes to acid rain and haze.

To help Duke Energy and Progress Energy pay the staggering costs of upgrading the power plants, the state agreed to freeze residential electric rates at current levels for the next five years. It’s possible those rates would have been lowered as the utilities paid off previous investments covered by the rate base.

“There is not another plan in the country that goes this far toward cleaning harmful smokestack emissions from our air — and it does so without raising rates,” Gov. Mike Easley said at the bill-signing ceremony at the Capital. “These reductions will protect the health of all our people by reducing lung disease and asthma, benefit our environment by reducing smog and acid rain, and benefit our economy by preserving our investments in tourism.”

Both Duke Energy and Progress Energy supported the legislation, as did NCCBI. “North Carolina’s new clean air legislation is a good example of the kind of sensible, balanced approach we need to air quality and environmental issues,” said Progress Energy Chairman William Cavanaugh. “This new legislation provides adequate timelines, clear standards and full cost recovery that will allow us to continue to provide reliable and affordable electricity to our customers while significantly improving air quality.”

The legislation, S. 1078 Improve Air Quality/Electric Utilities, also known as the Clean Smokestacks bill, will require power plants to reduce nitrogen oxide emissions from 245,000 tons in 1998 to 56,000 tons by 2009, a 78 percent reduction. NOx is the main cause of ozone and contributes to acid rain and haze. It will require a reduction in sulfur dioxide emissions from 489,000 tons in 1998 to 250,000 tons by 2009 (49 percent) and to 130,000 tons by 2013 (74 percent). Sulfur dioxide is the main cause of fine particles, haze and acid rain.

In addition, the law requires the N.C. Division of Air Quality to conduct a study of mercury and carbon dioxide emissions in the state. As an added benefit, the equipment needed to reduce sulfur dioxide emissions is expected to cut mercury emissions by about half. Airborne mercury eventually ends up in streams and lakes where it can accumulate in certain kinds of fish, making them unsafe to eat.

Utility companies will be required to cut their emissions year-round at power plants within North Carolina. The legislation differs from federal rules, which only apply during the ozone season (April through October), and allows utilities to buy or trade pollution credits from other states instead of cutting air pollution from plants in North Carolina.

Separately, Gov. Easley signed a contract in which Duke Energy and Progress Energy agree to give valuable clean air credits to the state instead of selling them to power companies elsewhere.

Utility companies earn these credits for a good cleanup record, and they can sell them to companies in other states. The credits have a monetary value estimated in the tens of millions.

The Clean Smokestacks law complements the state’s other recent efforts to reduce emissions from motor vehicles. In 1999, the General Assembly adopted legislation expanding into 49 counties the auto emissions testing program that had been in effect only in the state’s urban areas. However, problems with new computer software forced a delay in the Clean Tailpipe program from its scheduled start in July until September.

Treasurer Gets Tough: Wall Street investment firms must enforce strict new separations between their investment banking and market research divisions if they want to continue doing business with North Carolina’s $60 billion pension fund, state Treasurer Richard Moore said last month. He announced that North Carolina, which has the 10th largest public pension fund in the United States and the 24th largest in the world, will join with New York, with its $110 billion pension fund, in the move to protect their pension funds against bad investment advice. Moore and New York State Comptroller H. Carl McCall said they will stop doing business with Wall Street firms that compensate their analysts based on the amount of investment banking business they bring in.

HMO External Reviews: One of the major parts of North Carolina’s new Patients Bill of Rights law took effect July 1 when the state Department of Insurance (DOI) launched its program creating external review of medical care decisions by insurance companies. The Healthcare Review program provides consumers with the right to appeal an insurance company’s decision to deny coverage because they believe the services are not medically necessary. This new law applies to all health insurers that perform utilization review. The law does not cover self-funded employee health plans covered under ERISA, Medicare or Medicaid and does not cover denials for reasons other than medical necessity.

Any health plan participant whose initial denial decision was made on or after July 1 can request an external review from DOI. However, before being eligible for an external review, all appeals procedures with the insurance company must be exhausted. When the internal appeals process goes against the consumer, the consumer may request an external review from DOI. The request must be filed within 60 days of receiving the insurer’s final denial.

DOI will evaluate each request to determine if it is eligible for an external review. Those cases that do qualify will be assigned to a group of health professionals who are experts in the medical condition covered in the case and will have experience with the services and treatments used to treat that condition. -- Steve Tuttle

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