Some “readings” of woolly worms indicate that we are in for a long cold winter. If the proposed Duke Energy rate increases go into effect, it will be a more expensive one as well.
Duke Energy Carolinas was awarded an increase in 2009 that amounted to residential rates going up 8 percent. This time they are doubling down and asking for a 17 percent hike that, if approved by the North Carolina Utilities Commission (NCUC), would be implemented in February 2012.
Public utility companies such as Duke Energy are schizophrenic. As an investor-owned company, it is definitely a for-profit entity. However, it also operates as a public utility with a government granted monopoly. So, it then (in theory) switches hats becoming a public service agency. If you go to their website you can sign up for free energy efficient light bulbs that no doubt will come in handy when your electric bill goes up. Power companies try to persuade customers to use LESS of their product and when that happens, it’s used as a justification to charge MORE.
Duke Energy states that lower customer usage is one of the reasons for the rate increase. However, unless a fundamental economic principle can be reversed and higher prices actually start increasing demand, it appears that some people need to go back to business school, perhaps starting with Duke Energy’s CEO Jim Rogers.
Rogers presumably approved of the plan to plead/pressure the North Carolina Utilities Commission to give a green light to the significant rate increases. Last year, Rogers’ pay increased by 25 percent. Though he doesn’t draw a salary, his annual compensation package, as reported by the Charlotte Observer, is approximately $7 million, mostly in stock. This year, he and his company are asking residents of the Carolinas to part with a greater share of their wealth in order, as Duke Energy puts it, to “support healthy, vibrant communities.” And, no doubt, healthy, vibrant stock portfolios.
While I find it amusing and sometimes absurd that CEOs can rake in millions and even tens of millions in annual compensation, it’s not really my concern, as long as I am not forced to be a customer of the firm they represent. I’m all for maximizing profits. But, I’m also all about choice. If you want to be connected to the “grid” in this area — Duke Energy is the only option. Had Rogers taken a significant compensation reduction in accordance with the reported challenges his company faces, that would have brought an air of sincerity to the current rate increase request.
According to Duke, the main reason given for the rate increase is a string of capital expenditures involving new power plants and modernizing existing plants over the last couple of years. So much for extra money from the 2009 rate increase. The rationale for that increase was also to upgrade the system. Once again, in a weak economy, it seems a bit odd to have an ambitious expansion program.
Most likely the NCUC will grant Duke Energy Carolinas a compromise increase. Hopefully, it will be more in line with Duke the public utility rather than Duke the Fortune 500 company. If rate increases are as slow as the woolly worm – I can live with that.
George Hasara is a regular columnist for the Macon County News, as well as the owner and proprietor of the Rathskeller Coffee Haus & Pub, located at 58 Stewart Street in Franklin.