Consumer Advocates, Employers Resist Duke Energy Rate Bill
RALEIGH, N.C. (AP) — Duke Energy Corp. is pushing North Carolina legislators to allow the country's largest electric company to line up profitable infrastructure projects years into the future and bypass lengthy regulatory battles.
The state Senate could take up legislation later this week after it was cleared by a committee Tuesday.
The measure comes after state utilities regulators last year wouldn't approve a $13 billion, 10-year Duke Energy proposal on electricity grip updates with profit margins tacked on. The company could continue with work and come back later to request permission to raise rates and recover what it spent, the North Carolina Utilities Commission said. Duke Energy also projects charging consumers up to $10 billion for coal-ash cleanup lasting a decade or more.
The legislation has been blasted by lobbyists for large manufacturers and other industrial customers, Google, Walmart, the AARP and clean-energy groups who see it as increasing Duke Energy's ability to raise power rates by reducing the ability of consumers to resist.
"Being skeptical by nature, I smell this as a green light to raise rates," Republican Sen. Jerry Tillman of Randolph County said Tuesday. "There's something that don't smell right when 100 or more of our big-business people who have weighed in on this and opposed this."
The change would allow Duke Energy or Virginia-based Dominion Energy, which operates in northeastern North Carolina, to set a key component of electricity rates for up to five years without the power company having to justify its reasons in trial-like hearings as are now required.
The North Carolina Utilities Commission — which oversees the operations and financial health of the companies that are legal, regional monopolies — could allow multi-year periods between rate-setting cases if it determines the result would be just, reasonable and in the public interest.
Duke Energy's legislative supporters argue that rate cases require tons of expert testimony and are expensive to mount, costs that are ultimately passed on to consumers. The years-long gap between rate increase requests, followed by customary increases, could be smoothed out and made more predictable by multi-year rate plans, supporters said.
The legislation "is a measured step forward to help us all better plan for our energy future here in North Carolina," said Alex Glenn, a top Duke Energy attorney on regulatory matters.
The proposal represents a dramatic restructuring of the state's process for deciding electricity rates, said Bradford Sneeden, Attorney General Josh Stein's legislative adviser. The legislation also surfaced about a month ago without consultation from affected groups, opponents said.
Duke Energy has been talking to interested groups about its desire to allow for multi-year rate plans and other regulatory alternatives, company spokeswoman Grace Rountree said.
Opponents are pushing back with full-page newspaper ads, an online campaign and their own legislative lobbying effort.
Electric utilities have long based their business on building expensive infrastructure like power plants, adding a regulator-approved profit margin, and persuading regulators to raise electricity rates to pay for it all.
"The more money they spend, the more money they make," said Chris Carmody, executive director of the trade group North Carolina Clean Energy Business Alliance.
But utilities are facing a changing landscape as the need for big generation projects has fallen after decades of energy conservation and fewer factories. So Duke Energy and other electricity companies are touting to Wall Street the increasing importance of grid spending to replace aging equipment, block malicious hackers, minimize outages, and accommodate the upsurge of wind and solar power.
Dozens of regulated utilities across the United States are devoting hundreds of billions of dollars to upgrade the software, switches and wires to enable a much more flexible distribution of electricity. Increased investment in the distribution grid will be the primary source of growth for most utilities over the next five to 10 years, said investment research firm SSR.