County officials caught off guard by additional five percent increase
People will soon be feeling an additional money crunch due to an approved five percent rate increase on electricity statewide. On Tuesday, August 9, the North Carolina Utilities Commission (NCUC) formally approved Duke Energy's petition for the rate increase, which will be effective starting September 1. The five percent increase follows on the heels of a much larger 17 percent that Duke Energy applied for in July.
According to Betsy Conway, spokesperson for Duke Energy, the billing system is set up to have two separate components that appear on the customer's monthly bill. Conway explained that one component is fuel rating, and that its increase in recent years justifies Duke's five percent increase. This component pays the company to maintain their facilities and, according to Conway, is the “price incurred to generate power across the system.” Based on an annual report that the company is required to make and the current fuel costs at that time, those rates are adjusted accordingly. Conway noted that these rates fluctuate depending on the market.
In 2009, fuel rates increased by 4.8 percent while 2010 saw an average decrease in the fuel rating by 7.1 percent. The price of fuel was up that year, but Duke Energy was actually using less fuel at the time to maintain their facilities. For 2011, the company reports in Docket No. E-7, Sub. 982, that there is ample evidence to justify a billing rate increase due to higher expenses for nuclear fuel and coal to run their system.
The 5 percent increase was not discussed at the commissioners’ meeting on August 9, or at any previous meeting. Commissioner Beale stated that he did not even know about the additional 5 percent until after the fact. That seems to have been the case with most of the commissioners and other town leaders.
Customer Class Average rate increase percentage— Residential - 17 percent
— Commercial -14 percent
— Industrial -14 percent
— Lighting - 8 percent
“It was news to me,” said Horton. After obtaining and reading over a copy of the Utilities Commission Docket and speaking with representatives of Duke Energy, Horton said, “I understand it is for the changing fuel rates, but it will still have a negative impact on the people that get the bills.”
Duke Energy had already filed a separate request for a 17 percent increase on July 1. The 17 percent increase comes from the second component of Duke’s billing system, known as “base rates.”
Whereas fuel rates are filed and adjusted annually, base rates are adjusted on an “as-needed basis.”
“The base rates are only adjusted when the utility requests it,” Conway said. “These rates are to recover investments made in the system.” In other words, Duke Energy has restored and built new plants over the past two years, and now the energy company needs to recover that revenue.
“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 Energy district manager Fred Alexander.
What does all of this mean when the Duke Energy bill comes in the mail to the customer? If a home uses 1,000kwh of electricity per month, they would see an increase of $4.55 per month on average with the fuel rate increase of 5 percent. If the base rate increase of 17 percent goes into effect, then the average customer that uses 1,000kwh of electricity per month would see an increase of $19 on their bill. This would be in addition to the $4.55 fuel rate increase. There are approximately 1.8 million Duke customers in North Carolina. If the NCUC approves the 17 percent increase, an additional $646 million in annual revenue will be generated for Duke Energy from North Carolina customers. The company claims that even if the new rate increase is approved, its rates will still remain below the national average.
At the August Macon County Board of Commissioners meeting, a resolution opposing the 17 percent rate increase was unanimously accepted and passed. County Manager Jack Horton, then forwarded the resolution to the 100 counties in North Carolina as well as to the NCUC.
“My biggest issue is the size of the increase. Two percent or three percent, okay, but 17 percent?,” said Commission Chairman Brian McClellan, “I do not feel like being quiet about it.”
Commissioner Beale was in total agreement with his colleague. Beale stated that many people in Macon County are on a fixed income and the unemployment rates are still above 10 percent. “The people can not afford the five percent and they are asking for 17 percent on top of that?,” he questioned. He resolutely declared “we are going to try to get the Utilities Commission to approve as little of the 17 percent as possible.”
Commissioner Kevin Corbin said that residents suffer from a lack of options for electrical providers. “I have no choice at my house but to buy from Duke Power,” Corbin said.
The NCUC is still deliberating about the 17 percent request. Duke Energy expects the NCUC decision regarding that increase by this fall, after a series of public hearings. One such hearing will be held at the Macon County Courthouse, in courtroom A, at 7 pm on October 26. If any, or all, of the 17 percent base rate increase is approved, the changes would go into effect by February 2012. The public is invited to come and voice their opinions about the rate increase.
If customers wish to find out more about the increase or find easy, helpful money-saving tips, they can visit www.duke-energy.com/Youtility
Quick and Easy Tips to Save Energy and Save Money
1) Minimize door traffic and seal leaks around doors and windows.
2) Shutting your blinds during the day can cut down on the heat by 45%, thereby cutting down on your use of a cooling system.
3) Energy Star says that adjusting your thermostat by just a few degrees will save you a lot in the long run.
4) Replace the bulbs you use the most with cool CFLs and save up to $30 per bulb in energy costs over the lifetime of the bulb.
5) Using a microwave instead of a regular oven uses 70% less energy.