Duke Energy, facing a storm of protests over the 15 percent N.C. rate hike it is seeking, has offered an olive branch to regulators that trims the increase to 12 percent.
The utility also offers to donate $15 million to help low-income customers.
Duke has heard loud protests over the hike at hearings in Charlotte and other N.C. cities, with more than 1,100 comments filed with the N.C. Utilities Commission in the past two months. The commission's Public Staff, which advocates for customers, has recommended the hike be slashed by two-thirds.
Duke's N.C. president, Brett Carter, outlined a "customer response plan" in a filing Thursday to the utilities commission.
The plan cuts $118 million from the $646 million Duke initially sought. The company would offset $5 million of that reduction, along with $10 million from shareholders, in a plan to help low-income customers in the Carolinas.
That $15 million is separate from the $15 million for weather-tightening aid and training that Duke has offered as part of its intended merger with Progress Energy, said company spokeswoman Betsy Conway.
"We really continue to hear concern about implementing a rate increase in this challenging economy," Conway said.
In written testimony filed with the commission, Carter defended the need for the rate hike, which would largely pay for nearly $5 billion in construction projects since 2009. He called the timing during a rough economy "unfortunate, but necessary given the prudent investments already made on behalf of its customers."
Robert Gruber, executive director of the Public Staff, called Duke's latest offer unacceptable.
"We are continuing to talk, but it's unlikely that a settlement at this point could be reached," he said.
Al Ripley of the N.C. Justice Center in Durham called the one-time $15 million donation for low-income customers insulting. "It's just far too little money to address the need that's out there," Ripley said, adding that customers need help not only in paying higher power bills but in making their homes more energy-efficient.
Duke is facing off with regulators on several fronts as the year winds down.
It's seeking a similar 15 percent rate increase for its 600,000 customers in South Carolina, where a consumer advocacy agency has recommended it get only a 5.8 percent hike. Federal regulators have concerns over Duke's merger with Raleigh-based Progress Energy, and a goal of closing that deal by year's end may be slipping away. Cost overruns and claims of ethics violations and poor management have plagued a $3 billion power plant under construction in Indiana.
In adjusting its N.C. rate request downward, Duke adopts some recommendations of the Public Staff. But the two have failed to reach a settlement agreement that could help smooth the way for commission approval of the rate case.
Duke and the consumer staff still stand far apart on a key factor: the return on equity, or profit margin for shareholders.
Duke offers to reduce the maximum rate of return from 11.5 percent to 11.25 percent, trimming $25 million from its rate request. But the Public Staff has recommended a rate of 9.25 percent, whacking $213 million. A group of large industrial customers advocates 9.5 percent.
Carter's testimony said rates in that range would be lower than comparable utilities.
He said "the very real possibility exists that, if adopted, such low returns would drive investors to put their money elsewhere, with the ultimate result of raising the company's cost of capital and driving up the cost to our customers through potentially higher interest rates and lower bond ratings."
The utilities commission will begin hearing from experts for Duke, consumer advocates and customer groups on Nov. 28 in Raleigh. Rate changes would affect Duke's 1.8 million N.C. customers and take effect in February.
"We continue to keep those lines of communication open" with other parties to the rate case, Conway said.
Staff writer John Murawski contributed to this report.
