Progress Energy agrees to halve rate hike

jmurawski@newsobserver.comFebruary 25, 2013 

Progress Energy customers bracing for a rate increase of nearly $180 a year will get a significant break under a compromise the Raleigh electric utility announced with consumer advocates Monday.

Progress and the state’s Public Staff agency agreed to slash the power company’s initial 11 percent rate increase request by about half: to 4.7 percent in the first year and 5.7 percent in subsequent years.

The final decision is up to the N.C. Utilities Commission, but Public Staff settlements carry considerable weight with the commission.

Public Staff Director Robert Gruber said his agency would have challenged Progress’s rate request on numerous grounds if the two sides couldn’t reach a settlement. Electric utilities prefer settlements whenever possible because such agreements give Wall Street assurance of what to expect in terms of future revenue.

“We had potentially 40 different adjustments we could make,” Gruber said.

Progress has 1.3 million customers in North Carolina. The last time Progress went through a major rate case was in the 1980s, when the company, then known as Carolina Power & Light, had asked for a 13.9 percent rate hike and the utilities commission granted a 9.1 percent increase in 1988.

As a result, a Progress household paid $85.24 for 1,000 kilowatt hours of electricity in 1988, whereas the same amount of power today costs a Progress household $104.06. However, that increase is due mostly to rising fuel costs, not to a change in the “base rate.”

Since then the company has gone through several iterations, becoming Progress Energy with an expansion into Florida, and then becoming a subsidiary of Duke Energy last year.

The rate case before the utilities commission is far from over, as more than a dozen other participants are involved and can make their own arguments to the utilities commission. The other participants include environmental groups, social justice organizations and large-scale industrial power users.

“We believe this agreement with the Public Staff is an important and positive step in this proceeding,” Progress spokesman Jeff Brooks said in a statement.

The matter is set for a public hearing before the utilities commission in Raleigh on March 13.

An evidentiary hearing is set to begin March 18 that will take at least several days.

The deal between the Public Staff and Progress is a partial settlement but key details remain unresolved and will need to be decided by the commission.

In its original request last fall, Progress asked for an 11 percent overall rate increase that would have raised residential rates 14.2 percent.

The settlement announced Monday determines the average increase, but does not allocate the specific costs to Progress’s residential, commercial and industrial customers.

Progress is trying to keep its industrial rates relatively flat, but the Public Staff plans to challenge that request because it would shift the burden to other customer classes.

“We don’t support it,” Gruber said. “We think the burden on residential customers is high enough already.”

Murawski: 919-829-8932

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