The N.C. Supreme Court on Friday overturned a 7.2 percent rate increase that was approved last year for Duke Energy, saying the rate increase was set without considering the effect on customers or the states shaky economy.
The ruling was issued in response to a legal challenge by state Attorney General Roy Cooper. Cooper argued against the increase, saying it caused a public hardship in the midst of a prolonged economic downturn.
The rate increase was approved by the N.C. Utilities Commission and went into effect this year.
The Commission failed to make findings of fact regarding the impact of changing economic conditions on customers, the court ruled. Fairness to customers is a critical consideration in rate cases.
The AGs challenge, and the courts decision, show how North Carolinas struggling economy is creating anxiety at the highest levels of state government.
The courts decision casts uncertainty on another rate request Duke is planning this year. Its not clear from the courts ruling if the Utilities Commission must reissue its order with a better explanation, or if the Commission will have to hold a new round of public hearings.
The Charlotte power company had contended the rate increase approved in January 2012 was legally sound and necessary to fund its operations.
The typical household that buys power from Duke has been paying an extra $7 a month as a result of the rate increase. Duke has about 1.9 million customers in the state, including 180,000 in Durham, Chapel Hill and the western Triangle.
For the moment, customers must continue to pay the increase.
Dukes ally in the appellate hearing was the Public Staff, the states agency that represents customers in utility rate matters. The Public Staff typically opposes electric utilities on rate increases, but had negotiated a compromise with Duke, which had originally asked for a 15.2 percent overall rate increase in June 2011. The AG had minimal involvement in the rate case before the utilities commission. The AG put on no testimony and no witnesses to challenge the negotiated settlement between Duke and the Public Staff.