AG Cooper says it’s still too high
After holding public hearings across the state, Duke Energy Carolinas and the North Carolina Public Staff have recently reached an agreement which calls for a rate hike of 7.2 percent instead of the original request of 15 percent. Public Staff, an organization affiliated with the N.C. Utilities Commission, opposed Duke Energy’s initial 15 percent rate hike. After hearing from Tar Heels across the state, North Carolina’s Public Staff and Duke Energy agreed to the aforementioned rate reduction.
If approved by the North Carolina Utilities Commission, the increase would become effective beginning in February of 2012.
“This proposed agreement strikes a balance between today’s challenging economic times and the need to recover the investments made in the electric system to ensure reliable, affordable and clean energy for the Carolinas today and for tomorrow,” said Brett Carter, President of Duke Energy in North Carolina.
Aside from the lower rate increase, the energy company is in the process of merging with Progress energy, which will make them the largest energy provider in the nation. Duke Energy has also agreed to contribute $11 million of shareholder money to the “Share the Warmth” program that provides low income residents in North Carolina with energy-related costs support.
The settlement increases customer base rates by approximately $310 million. The rate increase is based upon a 10.5 percent return on equity (ROE) and a 53 percent equity component of the capital structure. In order to mitigate the customer rate impact due to the challenging economic environment, Duke Energy Carolinas is agreeing to defer approximately $51 million in 2012 related to construction work in progress (CWIP) cash recovery. Another adjustment will reduce the bottom line impact to customers by an additional $8 million.
State Attorney General Roy Cooper also plans to continue fighting the rate increase. “A 7.2 percent rate increase is too much for working families and businesses during these tough economic times,” Cooper said in a statement.
Duke Energy's last rate increase in 2009 raised power costs by 7 percent, but the increase was spread over two years.
In late October, a judicial hearing was held in Macon County to offer citizens the opportunity to speak to Duke representatives about the 17 percent rate increase. A multitude of citizens spoke out against the increase throughout the hearing.
County Commissioner Ronnie Beale attended the judicial hearing, representing the entire Board in opposing the company’s rate proposal. Beale presented officials of the N.C. Utilities Commission with some dismal statistics, saying Macon County received $487,000 in 2010 from the low-income assistance fund to uplift citizens in dire financial straits. The funds assisted 1,700 families in Macon County. According to Beale, the county anticipates receiving at least $46,000 in aid for low income citizens this winter, which will only provide assistance to 200 families.
Beale discussed the statistics to accurately express how tough the economy has been on many Maconians, and how a higher energy bill will do nothing to improve the situation and will only bring a greater hardship to an area which has a high number of families on fixed incomes.
“We have a very large, low-income elderly population,” said Beale. “You hear the unemployment rate is ten percent. Those of us in the construction business can tell you the actual rate is much higher. So I ask the Commission to look seriously at this before you raise the rates in all of the rural counties in this district. I speak for Macon County, but I can attest that all of the rural counties are under the same burden,” he said.
According to Beale, the newly proposed 7.2 percent is still too high because the struggling economy doesn't seem to be improving any time soon. “I would have to agree with the Attorney General,” said Beale. “Any rate right now is just too high in this economic climate. It will inevitably place an extreme burden on those with a fixed income, especially since we have already received a 5 percent increase from the company this fiscal year.”
Beale noted that he is unaware of any other company or business that can just decide to raise their rates by 7 percent at any given time. “The increase is just not justified at this time,” said Beale. “ If it becomes effective it will place a real hardship in the families of Macon County and it is going to be a long winter. I urge the Utilities Commission to consider the rural communities when deciding on the increase.”
The agreement must be reviewed and approved by the North Carolina Utilities Commission. A hearing before the NCUC on the proposed rate increase began on Monday and will continue throughout the week. Advocacy groups representing consumers, low-income households, and large electricity users are urging the Utilities Commission to reject the proposed rate increase. AG Cooper also plans to object to the proposed 7 percent during the hearings.