Public Staff’s proposed settlement is a horse-trading dance that undermines public involvement
For the third time in a row, the NC Utilities Commission’s Public Staff has settled the major part of a rate case with Duke Energy or Progress Energy before all the public and evidentiary hearings are held.
Last week, a number of groups urged the Executive Director of the Public Staff, Robert Gruber, not to settle with Progress before completion of all hearings. We argued that such settlements undermine the proper role of the public and organizations representing residential and small business customers in determining electric rates and energy policy.
The utilities and the Public Staff seem to be orchestrating a dance designed to limit the public to a spectator role. The horse-trading goes like this:
– The utility inflates its rate request far above what it hopes to receive.
– The Public Staff bids low, then settles early.
– Both sides look good, but residential, small business and local government ratepayers get side-stepped and gouged again with higher rates for power plants that aren’t needed.
Progress Energy first sought an 11 percent overall rate increase. It settled for a 4.7 percent increase the first year and another one percent in subsequent years.
But residential customers could still suffer a 10 percent rate hike – or more – because the settlement doesn’t address how that overall increase would be allocated among the various classes of ratepayers.
The procedures Duke Energy uses to allocate costs among the classes discriminate starkly in favor of large industrial and commercial customers. During the Duke-Progress merger process, Duke promised those large customers that Progress, which used to have a somewhat fairer allocation process, would switch to Duke’s method.
Duke also promised the industrials a special deal, called an Industrial Economic Rider, which would enable some of them to avoid any rate increase. Residential, small business and local government ratepayers would be forced to pick up the tab.
The settlement agreement also does not address the doubling of the basic residential service charge, which would hit low-income customers and seniors the hardest. Meanwhile, the settlement would allow Progress Energy a 10.2 percent return on equity, a hefty profit guaranteed to investors in the parent corporation, Duke Energy.
Repeated rate increases for expensive, old and polluting technologies are particularly reckless
when energy efficiency, renewables and combined heat and power can cost less, and when they reduce – instead of increase – global warming pollution.
The ball is now in the court of the North Carolina Utilities Commission, which will make the final decision on whether the rates are fair and reasonable.
For a fair outcome, the public must speak louder than ever.