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NC WARN: Duke Energy should pay penalty for improper charges — Charlotte Business Journal

By John Downey

NC WARN alleges Duke Energy Carolinas wants to charge customers for $22 million worth of spending that the watchdog group contends ought to be paid by shareholders and should not be included in the utility’s rates.

N.C. WARN witness William Marcus testified Wednesday in Raleigh that the company should be fined for what he called flagrantly incorrect charges, such as at one time attempting to charge customers for political contributions Duke had made.

Marcus, principal economist for JBS Energy Inc., recommended that the N.C. Utilities Commission cut by 0.1% whatever return on equity it found would be proper for Duke Carolinas — part of Charlotte-based Duke Energy Corp. (NYSE:DUK) — to make up the penalty. That would amount to a fine of about $10 million per year. If the commission were to accept the 10.2% rate of return proposed in Duke’s current request, for instance, Marcus would contend it should be cut to 10.1%.

Marcus was the first opposition witness to testify in the commission’s hearing this week on Duke’s proposed 5.1% increase in N.C. electrical rates.

Duke disputes that there are any large incorrect charges in its rate proposal. Mistakes are possible, the company says, but it contends the settlement it worked out the Public Staff of the N.C. Utilities Commission, which reduced Duke’s initial request for a 9.7% rate increase, is fair to both customers and the company.

The largest figure challenged by Marcus is almost $25 million for stock-based executive compensation. Marcus contended those costs were improperly charged to customers because they did not involve cash payments.

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