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Duke Energy Rate Hikes

Public Hearings on Duke Energy Carolinas Rate Hike Request:

Franklin: January 16 at 7:00 p.m.
Greensboro: January 24 at 7:00 p.m.
Charlotte: January 30 at 6:30 p.m.
More on the hearings and a January 23 protest in Durham here.

To make public comments online, email statements@ncuc.net.
For Duke Carolinas, include “Docket E-2 Sub 1146” (talking points coming soon).

Duke Energy Carolinas Talking Points

Duke Energy Carolinas has requested a rate hike of $611 million in additional annual revenue, an overall rate increase of 12.8%. As part of this, DEC is seeking a 16.7% increase for residential customers, with the basic customer charge (the minimum you pay regardless of how little electricity you use) increasing from $11.80 to $17.79. As a result, the average residential bill would increase $18.72 / month if the rate hike is approved. This would be a tremendous hardship for families least able to afford it.

Of the $611 million annual increase, $101 million is for the newly constructed Lee natural gas plant in South Carolina and two solar facilities; $53 million is for the abandoned Lee Nuclear Station; and another $182 million for other capital projects. DEC is also seeking $135 million for coal ash mitigation and cleanup already spent and another $201 million for ongoing coal ash costs. Another $60 million is for smart meters.

These annual costs are partially offset by $64 million in deferred taxes and another $57 million in other changes in revenue.

This large rate hike request is a symptom of Duke Energy’s business model of constructing fracked gas-burning power plants and raising rates while stifling the growth of renewable energy. If Duke is allowed to continue on this track, there will be many more rate increases.

Among the concerns NC WARN has identified in the application for a rate increase:

In addition to seeking $135 million more each year for COAL ASH CLEAN-UP activities so far, Duke seeks to charge customers $201 million per year for future clean-ups – with no end date specified. NC WARN believes state laws do not allow Duke Energy to charge customers for costs resulting from unlawful activities, lawsuit settlements, or criminal convictions.

As noted above, the exorbitant rate increase would be highest for RESIDENTIAL CUSTOMERS, with the toughest impact on low- and fixed-income families due to a 50% increase in the residential basic service charge along with the rate increase, and an average monthly bill increase of $18.72. This means that a low-income family may have to sacrifice food, water, or any other fundamental needs to pay for electricity. Currently, many such families cannot afford to pay for the electricity bill alone and need to seek public assistance.

DEC wants customers to pay $53 million more each year for its failed, ten-year effort to license and build two new reactors at the LEE NUCLEAR STATION in South Carolina. Even after the Utilities Commission put a cap of $120 million on the amount DEC could spend for licensing and pre-development in 2011, DEC went ahead and spent $520 million, and now wants customers to pay for the entire project, including interest. If any other company invests in a project and overspends, that company bears the burden and cannot pass the excessive costs of its failure to the ratepayers.

A Further Concern: Backroom Deals

NC WARN is urging state regulators to break their pattern of settling rate cases and mergers with Duke Energy behind closed doors.  The long-running practice undercuts the public wellbeing and gives the utility exactly what it really wants – covered by a thin pretense of regulatory oversight.  We are also calling on Attorney General Josh Stein not to be drawn into backroom negotiations, and instead to stand up for the public against allowing Duke’s attempt to recover billions in coal ash clean-up costs that were caused by its executives’ illegal actions.

In a letter sent to the attorney general and Chris Ayers, head of the NC Utilities Commission’s Public Staff, we noted that in the past several rate cases, “premature settlement has made involvement by the public and intervenors almost meaningless.”  Last year, for the fifth straight time in a major Duke Energy case, the Public Staff undermined fair process by cutting a backroom deal with the utility; that time, they didn’t even await input from the public or parties to the case.

Duke Energy Progress Talking Points

(hearings already concluded)

Summary

Duke Energy Progress has requested a rate increase of:

  • 14.9% average across all customers
  • 16.7% increase for residential customers
  • 15.4% increase for small general service customers
  • 12.9% for medium general service customers
  • 13.4% for large general service customers

The average residential bill would increase $17.80 if the rate hike is approved.

Duke Energy Progress has asked for a 2.3% increase in customers’ fuel rates in addition to this rate hike. Together, the increases come to 19 percent for residential rates and would increase bills by an average $20 per month, a tremendous hardship for families least able to afford it.

Details

This large rate hike request is a symptom of Duke Energy’s business model of constructing fracked gas-burning power plants and raising rates while working with the Koch brothers to stifle the growth of renewable energy. If Duke is allowed to continue on this track, there will be many more rate increases.

And if Duke Energy’s massive expansion of fracked gas succeeds without considerably stronger scrutiny and challenge, the hyper-potent methane spewing unburned from gas wells, pipelines and power plants will be a key factor in driving humanity into runaway climate chaos.

Among the concerns NC WARN has identified in the application for a rate increase:

  • Coal ash:  In addition to seeking $330 million over five years for coal ash clean-up activities so far, Duke seeks to charge customers $129 million per year for future clean-ups – with no end date specified – a pre-charging we believe is unlawful.
    • As detailed in NC WARN’s March 7th motion in a related case, state laws do not allow Duke Energy to charge customers for costs resulting from unlawful activities, lawsuit settlements or criminal convictions.
    • Recently, several insurance companies refused to pay liability claims, pointing out that Duke Energy knew its coal ash practices were risky.  How much have Duke Energy executives and shareholders already profited from risky practices of handling coal ash?  And why should customers bail out the company when those risky practices backfire?
  • The exorbitant rate increase would be highest for residential customers, with the toughest impact on low- and fixed-income families due to a 75% increase in the residential basic service charge, a flat fee that would jump to $19.50 per month even if no power were used.
  • In past rate cases, the Commission’s Public Staff did not conduct in-depth review of all utility expenses, only a sampling.  In Duke Energy’s previous rate case, NC WARN’s witness exposed nearly $100 million of improper annual expenses, leading Duke’s state president to open the four-day hearing by apologizing for “accounting errors.”  Improper charges are likely present in the current request, making careful scrutiny from all parties critical.
  • Duke Energy wants customers to pay $45 million for its failed, seven-year effort to license and build two new reactors at the Shearon Harris nuclear plant.

More information

NC WARN news release on rate case (7/11/17)

NC WARN letter to Attorney General, Public Staff demanding no backroom settlement of rate case (7/6/17)

News release announcing NC WARN opposition to large rate increase to pay for coal ash cleanup (3/8/17)

News release from 2016 on pattern of backroom deals between Duke Energy and regulators (7/7/16)

Media reports

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