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- published 3/27 (Larry) - unpublished ?

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Opinion Deja vu with Duke Energy

George HasaraIt's Duke deja vu all over again. Duke Energy is petitioning for yet another rate hike. The bid is a 9.7 percent overall increase with special love for residential customers who would be tagged for a 11.8 percent jump in electric costs. Duke also has a bonus feature request of an additional charge of $2.86 per month per household. This is to pay for “energy efficiency programs.” And, you thought those light bulbs they hand out were for free. It's not fair. I'm not talking about the rate increase but the fact that I have to come up with new material for an article when I could have had one reprinted that was written less than 18 months ago. Duke simply rehashes the same verbiage as it does for every rate increase request. As others have pointed out, capital expenditures and maintenance are a part of doing business and should already be factored in with pricing. When I bought a new espresso machine for the business, prices didn't go up. New tables didn't warrant a special seating surcharge either. If costs go up (for whatever reason) you make less money.

It's basic math. Sure, you can raise your prices, but only to a point. At some point, diminishing returns kick in with people buying less because of higher prices and business going to competitors. However, if it's a monopoly with a product that is hard to do without or find alternative sources for, such as electricity, there are different dynamics in play.

In 2012, the consumer price index inched up less than 2 percent for the year. A convenient number when such things as social security increases or pay raises are tied to that figure. Apparently, inflation is different for utility companies than for the rest of us. Duke's rising costs can be offset by rate increases approved by The North Carolina Utilities Commission. Our rising costs can be offset by turning off the thermostat.

Once again, the public will get a chance to have input in advance of the Commission's ruling on the rate increase. It's an interesting concept, asking people if they want to pay more for something that they think is already too expensive. I suppose it's more dignified to call it a “public hearing” rather than a “dog and pony show.”

Duke Energy is concerned about it's stock value and profitability for its shareholders and rightfully so. I imagine the concern extends to its employees as well. The sticky part of it all is the hybrid nature of this business. To plagiarize my own writing from 2011: “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.”

My recommendation for the NC Utilities Commission is to treat Duke as the public service agency this time around and have the energy company do the necessary belt-tightening measures instead of placing the financial burden on the public it serves. I would like to take at least a two-year hiatus from writing about power rates going up.





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published: 10/18/2013
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