Clean energy advocates oppose three-year rate hike for customers and note several missed opportunities, but applaud approval of low-income affordability program
CHAPEL HILL, N.C.— Following an order late Friday from the North Carolina Utilities Commission, regulated monopoly Duke Energy Carolinas will raise rates for customers for three years, boost profits for shareholders, and spend hundreds of millions, largely on distribution grid infrastructure projects over the next three years, clean energy advocates said. The order establishes Duke Energy Carolinas’ first multi-year rate hike and comes after a nearly identical decision in August, when the commission approved rate hikes for Duke Energy Progress.
A coalition of consumer and clean energy advocates, which was represented by the Southern Environmental Law Center and includes the North Carolina Justice Center, North Carolina Housing Coalition, Natural Resources Defense Council, Southern Alliance for Clean Energy, and Vote Solar, voiced their dissatisfaction with the order, though they applauded one aspect: the approval of Duke’s new low-income affordability program, the Customer Assistance Program. The launch of the customer assistance program stems from a partial settlement earlier this year between the groups represented by the Southern Environmental Law Center, the Public Staff, the Sierra Club, and Duke Energy.
The coalition intervened in the case to advocate for improvements to the low-income program; oppose Duke’s unreasonable return on equity proposal; challenge Duke’s inadequate performance-based regulation proposals; and advance an alternative to Duke’s expensive distribution grid spending.
In approving the affordability settlement, the commission mandated improvements to both Duke’s proposed and existing low-income programs. Duke’s new customer assistance program will provide the utility’s most under-resourced customers with a monthly credit to reduce energy costs. In addition, shareholders will contribute $6 million for Duke’s Share the Light fund, which helps customers behind on their bills, and $10 million for critical health and safety repairs in low-income houses, which would then allow those homeowners to access cost-saving efficiency and weatherization upgrades.
However, the commission rejected many of the interveners’ central arguments, authorizing a high return on equity, establishing weak performance-based regulations, and giving Duke the green light to spend hundreds of millions on the grid.
“We’re thrilled with the approval of the affordability settlement,” said David Neal, senior attorney with the Southern Environmental Law Center. “Unfortunately, the commission missed several other opportunities to ensure fair rates for North Carolinians. The Duke Energy Carolinas order, which follows similar rate hikes for Duke Energy Progress, means that customers all over the state will feel the impact of Duke putting profits first – above a reasonable return on equity, meaningful performance-based regulation, and a community driven strategy for our grid.”
Throughout the rate case, expert witnesses from the Public Staff, large industrial customers, and the consumer and clean energy groups represented by the Southern Environmental Law Center, all demonstrated that returns between 6.15% and 9.55% could attract investment and compensate shareholders fairly, while safeguarding customers from exorbitant rates. Despite these testimonies, commissioners approved a 10.1% return on equity.
“The commission had a responsibility to authorize a fair return on equity – one that could have saved North Carolinians hundreds of millions of dollars each year,” said Luis Martinez, Director of Southeast Energy at the Natural Resources Defense Council. “Customers will quite literally pay the price for this misstep.”
“While the structure of performance-based regulation has the potential to be a boon to customers, the commission’s order fails to meaningfully link incentives to goals that customers want, like affordable decarbonization,” said Maggie Shober of the Southern Alliance for Clean Energy. “Duke’s plan is ‘performance-based’ in name only.”
Jake Duncan of Vote Solar said, “Duke and the commission missed an important opportunity to focus investments on local energy generation and management, like rooftop solar and battery storage, that we know are affordable and reliable and lead to a more resilient, modern grid. We’re disheartened that customers’ money will be spent on expensive, unnecessary grid updates at a time when a forward-looking, community driven strategy for our grid is critical.”
Claire Williamson of the North Carolina Justice Center noted that in light of other aspects of the order, “We’re glad that the commission has considered the needs of lower-income North Carolinians by approving the affordability settlement. Energy efficiency means lower costs for families, but many households can’t afford the repairs necessary to make those improvements. Shareholders’ contributions to health and safety repairs for under-resourced households mean that access just expanded.”
Samuel Gunter of North Carolina Housing Coalition agreed, adding, “Energy affordability is crucial for lower-income families, some of whom face energy costs as high as 30 percent of their monthly income. Against the backdrop of the commission’s decision to increase customers’ rates, we’re especially proud to have fought for programs that will help families keep the lights on.”
The Southern Environmental Law Center is one of the nation’s most powerful defenders of the environment, rooted in the South. With a long track record, SELC takes on the toughest environmental challenges in court, in government, and in our communities to protect our region’s air, water, climate, wildlife, lands, and people. Nonprofit and nonpartisan, the organization has a staff of 200, including more than 100 attorneys, and is headquartered in Charlottesville, Va., with offices in Asheville, Atlanta, Birmingham, Chapel Hill, Charleston, Nashville, Richmond, and Washington, D.C. southernenvironment.org
Since 1985, the Southern Alliance for Clean Energy has worked to promote responsible and equitable energy choices to ensure clean, safe, and healthy communities throughout the Southeast. Learn more at www.cleanenergy.org.