By Elizabeth Thompson
In the wake of Hurricane Florence, a controversial bill from the state Senate could change the way energy utilities, and especially Duke Energy, charge customers.
Senate Bill 559, approved by the Senate, is awaiting approval in the state House, where it is sitting in committee. The bill, which Duke Energy heavily lobbied for, consists of two parts — the first related to storm recovery funding and the second, more controversial part related to expanding rate-setting options.
The bill was introduced after the North Carolina Utilities Commission denied Duke Energy’s request for $13 billion in increases for a 10-year improvement plan to fund grid modernization and coal ash cleanups. Duke Energy North Carolina President Stephen De May told WRAL News the bill was not a result of that decision.
The bill has been harshly criticized by a number of clean energy advocates, environmentalists and ratepayers, who say it would unfairly raise rates. Since this bill is so controversial and so complicated, we decided to investigate just what exactly it entails and what it could mean for customers.
PART ONE: STORM RECOVERY FUNDING
The first part of the bill has met considerably less opposition. Its main goal is to give Duke Energy and other utilities a way to cover costs related to storm recovery.
It would do this by allowing Duke Energy to issue “storm recovery bonds,” which would help pay for storm-related expenses, said Lori Bennear, a professor of energy economics and policy at Duke University.
Because the bonds would be secured by a line-item charge on customer’s bills, that security mechanism could allow Duke Energy to borrow at lower rates, Bennear said.
The bonds would be issued for people and investors to buy, said Daniel Tait, the research and communications manager at the Energy and Policy Institute. This would be cheaper than taking a loan because bonds have lower interest rates.
Grace Trilling Rountree, a spokeswoman for Duke Energy, said this part of the bill could save customers “15%-20% on storm recovery costs.”
“This is likely a good thing for customers in an era where we are expected to face increasing storm frequency and severity,” Bennear said.
Bennear said this part of the bill would likely lower rates for customers, but the second and more controversial part of the bill is where rates may increase.