Watchdog group warns against pattern of backroom “rate games” as Duke Energy Progress seeks 16.7 percent more from households
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 Friday 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.*
Among the initial concerns NC WARN has identified in the application for a rate increase:
- Regarding coal ash: 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.
- Coal ash: 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?
- 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.
- The exorbitant rate increase would be highest for residential customers, with the toughest impact on low- and fixed-income families due to the 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.
- The rate increase would come atop a requested 2.3 percent fuel charge increase Duke is seeking in a separate proceeding. Together, the 19 percent residential increase would raise rates by an average $20 per month, a particular hardship for families least able to afford it.
- 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.
The 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. In fact, by early August the utility also plans to file for a large rate hike for customers in the adjacent Duke Energy Carolinas territory.
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.
*See the steps of the “rate game” as played by the regulators and regulated in NC.