A week after allowing Duke Energy a rate increase that includes charges for coal ash cleanup for about half its North Carolina consumers, state regulators on Monday began considering raising prices on an additional 2 million customers.
The state Utilities Commission opened a hearing on the company’s request to charge an extra $539 million a year to customers of its Duke Energy Carolinas subsidiary in central and western North Carolina.
That translates into a 14 percent increase for the typical residential customer’s $104 monthly bill, a spokesman for the Charlotte company said.
The hearing started with lawyers questioning a Duke Energy executive about one of many thorny questions being considered – how soon to share the company’s windfall from the new federal corporate income tax cut with customers.
The requested rate increase and its 10 percent potential allowed profit margin was needed so the country’s No. 2 electricity company by total customers can continue borrowing cheaply as it faces the multi-billion-dollar price tag of cleaning up and closing storage pits for toxic coal ash, a Duke Energy consultant said.
“It’s extraordinarily important for Duke Energy Carolinas to maintain its credit profile,” Duke consultant Robert Hevert said.
No decision was reached Tuesday.
“We know for many of our customers this is a significant portion of their monthly budget,” said Duke Energy spokesperson Meredith Archie. “We’re trying to balance our investment in cleaner, more reliable energy in rates that are as low as possible for our customers.”
Some consumer advocates aren’t buying that.
“Their argument is well, this ultimately benefits the customer because we feed it into our system for other costs,” said Sherrie Zann Rosenthal, Durham Assistant City Attorney. “But that’s not the way the statute’s written, and by that logic they could always overcharge and they could rationalize that it benefits the rate payers.”
Duke Energy said the rate request could be reduced by a percentage point or two because of the federal government’s action benefiting corporations.
“We are proposing to provide benefits to our customers from the tax reform,” Archie said. “Our customers will see benefits in the near term with an immediate reduction in our revenue request.”
Not fast enough, Zann Rosenthal said.
“The statute says they get their revenue requirement plus a reasonable rate of return, costs plus,” Zann Rosenthal said. “And we just think they should be sticking to the statute. More and more there are some customary practices that are basically building up a slush fund for Duke Energy.”
More witnesses will testify before these hearings conclude.
The Associated Press contributed to this report.