State Attorney General Roy Cooper said Friday he will ask the N.C. Supreme Court to block a 7.5 percent rate increase that North Carolina regulators approved a day earlier for Duke Energy Progress.
Cooper is challenging the N.C. Utilities Commission’s approval of a Progress rate increase, issued late Thursday in a 120-page order. The AG said the commissioners failed to consider the economic effect of the rate increase on Progress customers.
“This order puts utility profits ahead of people,” Cooper said in a statement. “It talks about how much consumers are hurting but sticks them with higher rates anyway.”
The new Progress rate goes into effect Saturday and will raise a typical residential bill by about $8 a month, or nearly $100 a year.
Progress issued an immediate response, anticipating the debate that will unfold in the looming court fight. The company said the rate increase is needed to pay for an investment of about $2.3 billion for plant modernization and other improvements.
“Duke Energy Progress has made sizable investments to ensure that customers receive electricity that’s affordable and reliable, and increasingly clean in terms of how it’s generated,” the utility’s statement said. “The company is retiring older, less-efficient coal plants that lack state-of-the-art emission controls, and replacing them with cleaner, natural gas-fueled plants.”
Cooper is modeling his planned Progress appeal on a similar challenge he filed last year to block a 7.2 percent increase by Duke Energy. The N.C. Supreme Court agreed with Cooper and ordered the N.C. Utilities Commission to recalculate Duke’s rate increase.
The Duke rate remains in effect while the commissioners revisit the matter.
The high court’s April ruling in the Duke dispute set a new standard for considering utility rate cases, and Cooper said the Utilities Commission failed to adhere to that standard in its Progress rate ruling Thursday.
“A true analysis of the effect on struggling consumers as required by the North Carolina Supreme Court should result in lower rates,” Cooper’s statement said.
But Robert Gruber, director of the Public Staff, the state’s consumer advocacy agency in utility rate matters, said the AG will have a much harder time prevailing in the Supreme Court against the Progress rate increase because the Utilities Commission took care to adopt the court’s standards for consumer protection from the recent ruling in the Duke case.
In its Progress ruling, the commissioners wrote that there is no quantifiable method to measure the economic impact of utility rates on thousands of customers in dissimilar financial situations.
At the same time, the commissioners wrote that they were cognizant of the financial strain many residents are experiencing in the wake of the worst economic downturn since the Great Depression.
The Utilities Commission’s decision adopts a compromise settlement reached between Progress and the Public Staff. Before the settlement, Progress had been seeking an increase of 14.2 percent.
Duke Energy Progress, formerly called Progress Energy, is the Raleigh subsidiary of Charlotte-based Duke Energy. Progress has 1.3 million customers in North Carolina, while Duke has 1.9 million.
Progress sought a rate increase, its first major rate case in 25 years, to cover the costs of three new natural gas power plants; an upgrade at the Harris nuclear plant in Wake County; retirements of aging coal-burning power plants; transmission line upgrades and other operating expenses.
On Thursday, the Utilities Commission approved a 5.5 percent average rate increase that translates to a 6.5 percent increase in the first year for residential customers and a 7.5 percent increase in subsequent years. The increase boosts Progress’s annual revenue in North Carolina by $178.7 million.
Progress issued a statement late Thursday saying that even with the approved rate increase, its rates remain below the national average.
“We understand there is never a good time to increase rates,” the statement said. “However, we believe this approved settlement will allow us to keep the rate increase to customers as low as we reasonably can, and still recover the investments we’ve made to modernize our system and to ensure safe, reliable and increasingly clean electricity for the future.”