Public gets say in Progress Energy rate case

jmurawski@newsobserver.comMarch 12, 2013 

  • If you go

    What: The N.C. Utilities Commission public hearing about Progress Energy’s first proposed base rate hike in 25 years.

    Where: Room 2115, Dobbs Building, 430 N. Salisbury St.

    Time: Wednesday, 7 p.m.

Progress Energy customers who could end up paying more than $100 a year extra for electricity under a pending rate request will finally get their say on the matter Wednesday at the last of five statewide hearings for the public.

Activists have bought newspaper ads and plan to stage a protest rally in front of the state government building in Raleigh where the N.C. Utilities Commission will hear from citizens, many of them organized by Greenpeace, AARP, N.C. Housing Coalition and other groups.

Scores of people got an early start and emailed their opinions of higher power bills during the past several months.

“Families have had sky-rocketed prices in food, gas, child care, insurance, property tax and now this, rate hikes,” Sandra Abromitis of Buncombe County emailed the Utilities Commission this month. “This is unfair, un-American, and greedy, and shame on you.”

Though the public hearing is likely to be a lopsided affair against rising rates, Progress has also encouraged economic developers, business boosters and other supporters to come out and make a showing on the company’s behalf.

Wednesday’s public hearing will be followed a week later by a complex, technical proceeding on the rate request involving lawyers, accountants, engineers and other experts. The full “evidentiary” hearing starts March 18 and could last a week.

Together, the pair of public hearings mark the concluding phase of a rate request filed last fall and argued over with hundreds of pages of online documents.

In addition to emails from residents, Progress’s request to raise rates has drawn criticism and commentary from the Department of Defense, Kroger, Time Warner Cable, N.C. League of Municipalities and local governments, including the City of Raleigh.

“There’s a tremendous amount of interest – more than I’ve ever seen in a rate case,” said James McLawhorn, director of the Electric Division of the Public Staff, the state’s consumer advocacy agency in utility rate cases.

Progress is seeking its first “base” rate increase in 25 years. The base rate is a utility’s profit center, going directly to the bottom line.

Progress, with 1.3 million customers in North Carolina, is seeking to collect $183 million extra a year from its customers, largely to cover the cost of three new natural gas power plants, an upgrade at the Shearon Harris nuclear plant in Wake County, retirements of aging coal plants, and other operating expenses.

Who bears the cost

Last month, the Public Staff announced that it had reached a settlement with Progress, in which the company agreed to reduce its rate hike by about half. Instead of an 11 percent overall increase, which would have raised household rates by 14.2 percent, Progress agreed to an overall increase of 4.7 percent in the first year and 5.7 percent in subsequent years.

The final decision rests with the Utilities Commission, a judicial panel whose members were appointed by Democratic governors Bev Perdue and Mike Easley. The Utilities Commission is not bound by the Public Staff’s settlement with Progress, which is a subsidiary of Charlotte-based Duke Energy.

A rate increase is almost inevitable, but the portion that will be shouldered by households, businesses and industrial customers remains to be determined. Progress and the Public Staff could not reach an accord on that issue, and Progress is asking the Utilities Commission for an important concession: Leave power costs essentially unchanged for large industrial users.

“Who bears the cost is probably the single most important issue,” said Chapel Hill lawyer John Runkle, who represents Durham activist group NCWARN in opposing the rate request. “Whose ox gets gored – that’s the technical term for it.”

Industrial concerns

Industrial customers accounted for 41 percent of Progress Energy Carolinas’ electricity sales in 1990, but by 2011 they had slipped to 25 percent. These chemical plants, paper mills and other manufacturers say they are vital to the economic health of the state and should receive a rate discount to help them financially so they can hire workers in job-starved regions of the state.

“This is not a debate society,” the industrial users said in a filing. “What is decided in this case will have real-life implications that will impact the economy in PEC’s [Progress Energy Carolinas’] service territory.”

If the industrial users get a break, the Pentagon contends that federal government facilities should also get the same favor, considering that military bases employ more than 100,000 people in the state.

The discount Progress is seeking for its industrial customers is a promise the company made to those lucrative customers in exchange for winning their support for Progress’s merger with Duke Energy.

The particulars of the private deals were filed with the Utilities Commission under seal last year as trade secrets. The commission unsealed the deal-cutting details in response to a public records request filed by the media and by activist groups.

Murawski: 919-829-8932

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