Multi-billion dollar grid “modernization” deal could hike rates 26 percent in three years on its own; industrial lawyer calls it “invasion of ratepayers’ wallets” while AARP calls “boondoggle”
Duke Energy’s proposed side deal at the 11th hour of an already controversial rate case continues drawing opposition from consumer watchdogs, industrial customers, tech giants and environmental groups.* It appears the vaguely worded deal could bring an initial rate hike of 26 percent over the first three years – while becoming a perpetual tax on customers. The NC Utilities Commission is set to rule on the grid proposal along with the broader 11.5 percent rate request within days.
AARP-NC is calling on its members to urge the commission and Attorney General Josh Stein to “reject the settlement which gives open-ended blank checks from ratepayers to Duke Energy.” The group points out that “the company is seeking PRE-APPROVAL to impose a new costly surcharge on your bill, calling it ‘grid modernization’.”
Industrial customers’ attorney Bob Page calls the settlement an “invasion of ratepayers’ wallets,” and writes that Duke has never provided an understandable definition of “grid modernization.” He also says the evidence shows the grid work “is part of an overall corporate strategy … designed to use ordinary, routine grid investments to drive Duke’s shareholder earnings.”
The organizations that reached the proposed settlement with the utility emphasize that the $2.5 billion deal – down from Duke Energy Carolina’s original $7.8 billion plan – would add some actual grid improvements and scale it down from ten to three years. But as attorney Page points out, the annual cost to customers would be about the same.
Worse, Duke has told the news media that it plans to keep pushing for its original plan and to replicate it in the Duke Energy Progress territory – consistent with promises to stockholders that it will add $16 billion in “grid modernization” over the next decade, with more to come year after year.
The last page of the proposed settlement has a table that projects a three-year residential rate increase totaling 13 percent resulting from only the grid work. We assume those are Duke’s estimates. But NCSEA’s witness in the rate case said the actual rate impacts of the original grid plan were twice as high as Duke claimed. So the rate hike from the scaled-back proposal could be twice as high as the 13 percent shown in the table. Vagueness and lack of data always seem to work in the utility’s favor.
We don’t doubt that those who settled with Duke – the NC Sustainable Energy Association, Environmental Defense Fund and Sierra Club – are acting in good faith. But the clean energy benefits the settlers cite range from modest to minimal, and far short of what’s demanded by the accelerating climate crisis. One example is that Duke Energy agreed to add 300 megawatts of battery storage across its system over an eight-year period. This is dwarfed by storage plans in other states, and by the 8,000 megawatts of fracked gas-fired plants Duke plans to build in the Carolinas.
Solar-with-storage projects are steaming forward in several states and other countries because they are proving to be cheaper and more reliable than new gas plants. Utilities are increasingly placing solar generation and storage on or near buildings instead of requiring large new transmission investments. Such a path, as laid out for our state in North Carolina Clean Path 2025, is what Duke Energy should be pursuing – not massive and nebulous additions to traditional infrastructure.
Any grid money approved by the commission will likely lead to a multi-party court battle. The grid controversy needs to be resolved during an open and separate process, not based on a last-minute settlement proposal in a complicated rate case.
*Those openly opposing the grid settlement to date include:
Carolina Industrial Group for Fair Utility Rates III
Public Staff of the Utilities Commission
Carolina Utility Customers Association Inc.
Southern Environmental Law Center
NC Justice Center
NC Housing Coalition
Natural Resources Defense Council
Southern Alliance for Clean Energy
Attorney General Josh Stein has not filed a notice of opposition to the settlement yet, but did oppose the “grid modernization” during the rate case.