Raleigh – On Sept. 30, Duke Energy announced plans to raise rates for residential power by 6.7 percent in North Carolina.
This proposed hike would raise rates for commercial and industrial customers as well, but at 1.7 percent less than for residential customers. Average customers using 1,000 kilowatts per month would see bills go up by $8.06.
Duke Energy North Carolina President Stephen DeMay insists that the utility does not take rate hikes lightly. In an effort to alleviate strain on low-income customers, Duke proposes to eliminate fees for those paying through direct deposit and credit cards and to establish a workshop to study protections for low-income consumers.
Duke filed a case for this most recent rate hike with the North Carolina Utilities Commission, where the plan will undergo a months-long review process, including a period for public comment. Duke requested that the commission make their decision before Aug. 1, 2020.
Last year, Duke raised rates for residential customers in western and central North Carolina by a mere fraction of their initial request for a 16.7 percent hike, which was rejected by the Commission.
Duke’s proposal would increase revenue by $291 million, which the utility claims is necessary to cover costs related to cleaner energy, improving reliability and infrastructure, and offsetting the $36 million costs of Hurricanes Florence and Michael as well as winter storm Diego.
Covering environmental costs is a large part of Duke’s proposal. The company plans to reduce carbon emissions by 50 percent by 2030, convert coal-fired plants into natural gas facilities and rely more heavily on nuclear power.
In 2015, Duke Energy pled guilty to violations of the Clean Water Act and the federal government sentenced the company to pay a total of $102 million, including paying a $68 million criminal fine and spending $34 million on environmental projects. Under that plea agreement, Duke was expected to spend $3.4 million to remedy its coal ash impoundments.
At the time, Assistant Attorney General John C. Cruden said, “The massive coal ash spill into North Carolina’s Dan River last year was a crime and it was the result of repeated failures by Duke Energy’s subsidiaries to exercise controls over coal ash facilities.”
According to Duke, the company is “continuing to make progress closing coal ash basins in ways that put safety first, protect the environment, minimize impact to communities and manage costs.”
While Duke’s proposal works its way through the Commission’s review process, Senate Bill 559 – which offers alternative ways to fund storm recovery, including “recovery bonds” as well as five-year rather than annual reviews for any rate increases – already passed the Senate. The bill was written last year, after the Commission denied Duke Energy’s request for $13 billion for a 10-year improvement plan to modernize the grid and clean up coal ash sites, though De May told WRAP News that the bill was not a result of that decision.
Duke Energy did lobby heavily on behalf of this bill and critics allege that the company had a hand in the actual writing of the proposed legislation. Companion Bill 624 must pass through several committees before coming to a vote in the House.
The storm-recovery portion of the bill has met little opposition but the second part – which deals with changes in rate-setting – has proven less popular. Under current law, every proposed rate hike must go through the Commission for review. The bill includes an option for utilities to increase rates over a period of up to three years rather than on a yearly basis.
Another aspect of the bill concerns limits on profits. The Commission has set a maximum profit for utilities, but the bill includes a 1.25 percent leeway both above and below that specific amount.
Other states have adopted similar multi-year plans, with varying results. While New York saw increased productivity, Virginia saw its main energy provider, Dominion, gain excess profits of $300 million last year.
Elizabeth Thompson of the North Carolina Fact-Checking Project echoes critics’ concerns about lack of oversight and too much power lying in utilities’ hands. Political connections are also suspect, with one of Duke Energy’s main critics, Energy Justice North Carolina, tracking the company’s political contributions, which equalled more than $1.6 million over a decade, with spending increasing during this bill proposal.
Of Graham County’s voices in Raleigh, Sen. Jim Jones (R), who voted in favor of Bill 559, received $10,800 in Duke Energy contributions in the past decade, while Rep. Kevin Corbin (R) has received $1,000 from the utility.
Duke claims that it is “doing nothing more than exercising our right to participate in the legislative process – just like the groups that oppose SB 559 are doing.”
If the House passes its version of the bill, HB 624 will then go to Gov. Roy Hooper’s desk. Hooper has already expressed concerns about the bill.