Last Friday, Duke Energy Corporation filed a request with the North Carolina Utilities Commission to impose a 17 percent increase on power rate fees for residents and a 14 percent increase for commercial and industrial establishments.
The proposed rate hikes have met with disapproval from public officials in WNC, as they could add up to $19 to the average monthly residential power bill. If approved, the rate hike would likely go into effect by February of next year and would come on top of rate increases already planned due to rising fuel costs.
This week, the rate increase was a topic of discussion during meetings of both the Macon County Board of Commissioners and the Franklin Board of Aldermen. Both boards expressed unanimous opposition to the rate hike, with the Franklin board passing a resolution stating their disapproval.
On Tuesday, Franklin mayor Joe Collins signed the document opposing the electricity rate hike after the town board unanimously passed the resolution at the behest of Alderman Bob Scott.
“It is absolutely inconceivable to me that Duke Energy, which has so many top executives bringing home millions of dollars a year, that they would throw a 17 percent rate increase onto people when this country is in economic distress on the local level and right on up to the national level,” said Scott.
Franklin’s Vice Mayor Verlin Curtis, was equally critical of Duke, saying that an increase of 17 percent was unnecessary. “Duke could make more money if they didn’t tear our dams out,” he said, adding that projects like the Lake Emory Dam in Franklin have been neglected by Duke.
Similar comments were heard at a recessed meeting of the county board on Tuesday. Introducing the topic, Commissioner Kevin Corbin asked that the commissioners consider a resolution expressing the board's opposition to the proposed increases. Corbin remarked that the timing of the rate increase proposal was especially poor considering the economic downturn and the continuing high rates of unemployment in the county.
“A public utility needs to recognize like we recognize that this is not the time for increases,” Corbin said. “People don't have the money.”
Commissioner Ronnie Beale agreed, noting that demand for financial assistance for utility bills remains high at the county's Department of Social Services. “People are still struggling,” said Beale. “For a large sector of Duke customers, it's just not a good time to be raising rates.”
Beale added that few if any companies in the county have seen a 17 percent increase in business in recent years.
Commissioner Ron Haven told the board that he has already sent an email to Duke telling the company there is no way he would support a rate hike at this time. “I felt like there was no reason to even ask for it.” Haven added that while Duke serves its customers in the region well, he wouldn't support even a one percent increase at this time.
“My biggest issue is the size of the increase,” said commission chairman Brian McClellan. “Two percent or three percent, okay, but 17 percent?”
Vice-chairman Bob Kuppers called the proposal “absurd.”
The board asked county manager Jack Horton to draft a resolution stating the board's opposition to the rate hike and which is to be introduced at the regular August meeting of the board.
Franklin leads in rate increase issue in region
Franklin and Macon County seem to have taken the lead on the issue in the region. The Sylva and Jackson County boards have yet to meet since last Friday’s announcement.
Maurice Moody, mayor of the Town of Sylva, said he intends to forward a copy of Franklin’s resolution to Sylva’s town board members. Moody added, however, that he was not sure what impact such a resolution would have on either Duke or the decision of the Utilities Commission.
According to Highlands town manager Jim Fatland, the municipality, which operates its own power utility under a purchase agreement with Duke, will not be affected by the retail rate increases. The town sets its own retail rates.
Over the past three years, however, Duke has made significant increases of 17 percent to its wholesale rates for Highlands. Effective July 1, Highlands customers will begin to see a ten dollar minimum rate increase (for a total minimum rate of $19.50) in addition to a 4.3 percent usage increase.
Fatland says that even with the increases, Highlands customers still enjoy a comparatively low rate compared to Duke’s direct retail customers.
Duke seeks to recover expenses of modernization program
According to Duke, the base rate increase would help the company keep up with billions of dollars in investments for upgrades to its electricity generating and transmission system in the last two year. All in all, the rate hike would generate an additional $646 million in revenue for Duke from within the state. There are approximately 1.8 million Duke customers in the North Carolina.
“Since 2009, we’ve spent $4.8 billion to modernize the system and comply with environmental regulations,” said Brett Carter, President of Duke Energy North Carolina. “Also, we continue to aggressively manage the day-to-day costs of running the business,” he said. “For example, last year our power plants set records for operational excellence and we did it while holding operating and maintenance expenses essentially flat.”
“This increase is mainly to recover expenses that have already been made to comply with state and federal laws and replacement of aging infrastructure necessary to meet customer needs,” said Duke district manager Fred Alexander, stressing that the request will not go into effect automatically. “It will be examined in a variety of hearings held by the NC Utilities Commission expected this fall.”
Regardless of Duke’s claims that it is efficiently managing customer costs, Alderman Scott maintains that households throughout Franklin and Macon County would be hit hard by a 17 percent rate increase. “It would just be disastrous for struggling homeowners, people without jobs, people with health issues and small businesses,” he said. “It would hurt everyone except for the wealthy… This is just another way big business is ripping off the American public.”
Scott asked Duke for more clarity on the reasoning for their sought fee increase.
In 2009, the Utilities Commission granted Duke an average 7 percent rate increase for two years after it had requested 12.6 percent. The company claims that if the new rate increase is approved, its rates will still remain below the national average.
North Carolina is not the only state expecting a rate increase. Last year, the South Carolina Utilities Commissioners granted Duke a 5.2 percent rate increase which will take effect early next year for more than half of a million South Carolinians using Duke’s service.