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Duke Energy witnesses defend propriety of most customer charges — Charlotte Business Journal

By John Downey

Duke Energy witnesses testifying in the company’s rate hearing before the N.C. Utilities Commission on Thursday defended the company against accusations by the witness for watchdog group NC WARN that it was seeking to charge customers for more than $20 million worth of costs that should be paid by shareholders.

But the witnesses also made concessions, agreeing to remove about $112,000 from the utility’s cost-recovery request. With charges the company had earlier agreed to forego, Duke Energy Carolinas has agreed to take out nearly $1 million from the $234 million in revenue that would be raised by its proposed 5.1% rate hike.

Duke initially asked for a 9.7% rate hike that would have raised $446 million in new revenue. But it negotiated a compromise with the Public Staff of the N.C. Utilities Commission, charged with protecting customer interests, to reduced the increase.

Carol Shrum, Duke’s director of rates and regulatory strategy, and Danny Wiles were the utility’s key witnesses Thursday in the hearing before the N.C. Utilities Commission.

They disputed testimony from California economist William Marcus, who said Duke Carolinas included charges totaling more than $30 million that Carolinas customers should not have to pay.

North Carolina’s roughly 70% share of Duke Carolinas’ costs would translate into more than $21 million worth of charges to N.C. customers.

Most of the overcharges alleged by Marcus involved about $25 million paid to executives of parent Duke Energy Corp. That would be more than $21 million in costs the company proposed charged to N.C. customers.

Shrum testified that a share of charges for executive compensation has been in Duke’s rates for years and was neither new nor improper. Wiles testified the company had already agreed to take out about $870,000 in charges that Marcus had identified as improper in the weeks leading up to the hearing. That included $326,000 in charges Duke agreed to withdraw as the hearings opened Monday.

The two witnesses, who testified together as a panel, defended almost all of $549,000 in additional charges Marcus challenged for the first time in testimony presented Wednesday.

Those included $1,200 paid for a lunch with Chinese bankers, which had been mentioned repeatedly through the hearings. Wiles said Chinese banks held an 11% share of a $6 billion credit facility for Duke Carolinas’ corporate parent. The Carolina utility can borrow up to $1.2 billion under that facility. That made a lunch with the bankers an allowable business expense, he said.

They also defended a Duke Carolinas charge to customers for almost $157,000 worth of payments to Charlotte-based Zapata Engineering for its report on conditions at the crippled Crystal River nuclear plant in Florida.

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