As regulators hear Duke rate case, advocacy groups cite corporate greed

jmurawski@newsobserver.comJuly 8, 2013 

Advocacy groups made their last-minute public appeal Monday to block Duke Energy’s third rate increase request in the past four years, as rate hearings got underway in Raleigh before the N.C. Utilities Commission.

NC WARN, AARP, Greenpeace and others staged a rally outside the state office building that houses the Utilities Commission, waving placards and signs and donning costumes. The activists staged a mock trial depicting the Utilities Commission as an ineffective straw man, and convicting Charlotte-based Duke of corporate greed.

The groups contend that Duke is socking ratepayers with bogus charges, including country club fees, Charlotte Bobcats sponsorships, as well as Washington, D.C. events staged at charities and the Kennedy Center. Some portion of such corporate expenses are generally allowed in rates as a legitimate business cost.

On Friday, however, Duke made a filing to the Utilities Commission admitting an accounting error in the way it calculated political contributions. The company said the $326,242 it wanted North Carolina ratepayers to cover should actually be reduced to zero.

Duke Energy’s North Carolina president on Monday acknowledged the company made errors in charges that it tried to pass on to customers, including $326,000 in political contributions.

Paul Newton was the first witness Monday in a hearing in Duke’s rate case before the North Carolina Utilities Commission. He defended Duke against advocates who say the utility tried to overcharge customers.

In his testimony Monday, Newton said the company made accounting errors in its filings. Duke on Friday acknowledged the $326,000 in political contributions that it said customers should not be billed for.

“We are a company of humans, and humans make errors,” he said. Newton said Duke would investigate why the mistakes happened.

Recipients of the contributions were the Republican Governors Association, the North Carolina and South Carolina Republican parties, and the group Strategies for the Global Environment.

Duke has called those charges “inflammatory” and noted that most of the disputed charges dissolved when it agreed with the commission’s Public Staff to cut the new revenue it seeks by nearly half, to $235 million. If the commission approves the settlement, typical residential customers would pay about $7 a month in higher bills.

A Duke household today pays about $103 a month for 1,000 kilowatt hours of power.

Hundreds of Duke customers have objected to raising rates at public hearings and in emails sent to the Utilities Commission.

The hearings are expected to last through Wednesday. The Utilities Commission is widely expected to grant some kind of rate increase, but not necessarily as much as Duke wants.

Duke says the increase is needed to pay for power plant construction, system upgrades and other operating expenses.

Newton said the settlement would help the 1.9 million Duke Carolinas customers who are facing their third rate hike since 2009.

“We’re not looking for a home run here,” he said of the revenue Duke is seeking. “We’re just looking for a base hit.”

Newton said Duke Carolinas has not earned its allowed rate of return on its power plants and other property – 7.88 percent under the settlement – since the mid-2000s.

“It would be highly unlikely, almost impossible, that there would be any errors that would cause us to over-earn our rate of return,” he said.

Duke, with 1.9 million customers statewide, is the state’s biggest utility company. Its Raleigh-based subsidiary, Duke Energy Progress, has 1.3 million customers and recently won a rate increase before the Utilities Commission.

NC WARN, a Durham group, is contending that Duke should be penalized for attempted overcharges.

“Duke is trying to bilk the residents of this state,” said NC WARN director Jim Warren. “These bogus expenses that Duke is trying to get away with have been tried in the last couple of rate cases.”

The Associated Press and Bruce Henderson of the Charlotte Observer contributed.

Murawski: 919-829-8932

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service