SOUTHEASTERN, N.C.—Your monthly electric bill will soon increase, even before you ever turn a single light or appliance on.
The North Carolina Utilities Commission has approved Duke Energy Progress’s proposed fixed-rate increase that gets applied to all its residential energy customers. Regardless of how much electricity a customer uses, this increase will be applied as a monthly “basic customer charge.”
RELATED: Bill Saffo says Duke Energy rate increase will cause increase of taxes, or cuts in services
Duke Energy initially requested to increase its basic customer charge by 75 percent, but, during negotiations on Friday, it settled on a 26 percent increase.
Low-income burden
The energy company sought relief for storm and coal combustion residual costs in its initial request to increase rates. That includes the cost of excavating and permanently storing potentially toxic coal ash, including it the company’s Sutton plant outside Wilmington.
Duke initially asked for $361 million to offset to cost of complying with state and local lawsuits – including one to alleviate contaminated groundwater in the Flemington area of New Hanover County – which required infrastructure overhauls by the company.
Duke Energy argued the increase was reasonable because it was subject to new legal requirements. These requirements govern Duke Energy’s handling of coal ash and ultimately resulted in the closure of 19 plants; the Sutton plant, like several others, switched to natural gas.
“They initially wanted it to go up to $19.50,” said David Neal, senior attorney for the Southern Environmental Law Center. “That’s before residents had even turned on a single light bulb.”
“There’s a ripple effect from increasing electric rates like that across the board,” —David Neal
The Utilities Commission ultimately limited Duke to $232 million, telling the company it would have to return for a future hearing for additional increases related to covering the financial burden of coal ash removal and storage.
Residents of southeastern North Carolina will pay $14 per month to stay connected to the grid. Duke told regulators that it costs the company $21 to keep a customer connected to its grid. However, a study by Resource Insight Inc. found that the actual cost of remaining connected was found to be $8.54 per customer.
“It’s disappointing because we had compelling evidence that the utility shouldn’t charge customers in that fixed fee any more than it costs to connect customers to the grid,” Neal said.
Several advocacy groups entered into negotiations with Duke Energy over the proposed increase; the North Carolina Justice Center, North Carolina Housing Coalition, Natural Resources Defense Council and Southern Alliance for Clean Energy were all represented by the Southern Environmental Law Center.
The Southern Environmental Law Center argued the utility’s fixed rate increase would place an unfair burden on low-income residents.
“What Duke is trying to do is put too much into the fixed monthly charge and not enough into the volumetric rate and we think that has serious consequences for people who are struggling,” Neal said.
Representatives from the Southern Environmental Law Center call Duke Energy’s tactics “regressive.” Neal says placing more of the bill charges in an unavoidable, fixed rate cost gives residents less of an incentive to cut back on their daily use.
“In Duke’s attempt to put more and more of these so-called fixed charges on your bill, it’s going to undercut our state’s progress in both conserving energy and make it harder and harder on those who already try to conserve their energy use,” Neal said.
Ripple effect
In October, mayor of Wilmington Bill Saffo submitted formal testimony that Duke Energy’s rate increase would have “the potential for ‘rate shock’ among all customers.”
Saffo’s testimony was considered in the N.C. Utility Commission’s negotiations Friday. He argued the increases would create a “perfect storm” that would inevitably impact future municipal budgets.
“There’s a ripple effect from increasing electric rates like that across the board,” Neal said.
Update: This article has been updated to correctly identify David Neal.
Johanna Ferebee can be reached at johanna@localvoicemedia.com or @j__ferebee on Twitter
