By Ken Cuccinelli
As the former Attorney General in Virginia, I’ve been following with interest the progress of a bill that, as the StarNews correctly noted in an April 29 editorial, would be “extremely convenient for the power company.”
Key provisions to extend the period of time between utility company rate cases are embedded within N.C. Senate Bill 559, being debated at the N.C. General Assembly. Similar provisions hurt Virginia customers, and will hurt North Carolina customers, too.
The only beneficiary of extended rate reviews, as designed in the current bill, is the utility. In Virginia, our two monopoly utilities have the legislative- and commission-approved ability to lock-in over-earning hundreds of millions of dollars every year, while customers are left to pay the price through higher bills.
Multi-year rates can work, but Duke’s proposed model is flawed. If it could be amended to ensure that the utility operates with transparency, a full accounting of their spending, and a 100 percent “true-up” of over-earning for all years between rate reviews, then it’s possible the concept could work. The Virginia model and North Carolina’s SB 559 fail on all three counts.
Even Virginia’s own public utility commission has taken the highly unusual step of reporting on the utilities’ windfall profits in its orders. During the last several years they have gone to the trouble of calculating the utilities’ locked-in over-earnings, which by the end of this year is on track to total over $1 billion since 2015, when this scheme was begun.
How is this bill, with so many downsides for customers, managing to survive at the legislature? Duke has cleverly positioned the bill as being primarily about a provision from which customers can actually benefit: storm securitization. Securitization allows the utility to essentially refinance their debt from storm damages so that customers won’t have to pay as much for those finance costs. But Duke is using securitization as a human shield for multi-year rates. They’re using a good legislative idea to sneak through huge windfall profits with the provisions that lock in its over-earning with multi-year rates.
If Duke’s commitment to securitization (and their customers) is genuine, they’ll split the bill and allow that benefit to pass. Otherwise the motivation is crystal clear that Duke is just using storm securitization for cover.
Ratepayers want the benefits of innovation, fuel choice and control of their own energy destiny. But the monopoly utility model does not accommodate market competition and free choice. The multi-year rates of SB 559 are an unfair extension of government mandated monopoly control of electricity.