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Duke Energy can't raise its rates in NC, the state ruled. That rarely happens.

Duke Energy said Monday customer bills could fall less than 1 percent on average over the next four years, as it complies with an order from a state regulator to reduce rates.
Duke Energy said Monday customer bills could fall less than 1 percent on average over the next four years, as it complies with an order from a state regulator to reduce rates.

A state regulator on Friday rejected Duke Energy’s request to raise customers rates in North Carolina, ordering it instead to cut those rates.

The N.C. Utilities Commission's order amounts to a rare denial for the Charlotte-based utility, which had sought its first rate hike since 2013 for central and western North Carolina.

It was not immediately clear how customer bills will be affected by the announcement. Duke must now submit a plan to the commission for how rates will be impacted.

In requiring Duke to reduce rates, the commission pointed to benefits Duke is getting from a lower tax rate for corporations approved by Congress last year that President Donald Trump had made a centerpiece of his economic policy.

Duke had sought to collect an addition $700 million annually from customers, including to recoup costs related to its expensive coal ash cleanup around the state.

In a statement, Duke said it disagreed with some of the state's findings.

"The company will evaluate next steps, keeping in mind that it is critical to balance the needs of our customers with smart investments that keep costs as low as possible and keep North Carolina competitive for the long term," Duke said.

Duke can appeal Friday's decision to the state Supreme Court. The company did not say whether it will do so.

Friday's action affects customers in a territory stretching to the Tennessee border to Winston-Salem and the Durham area.

Duke had initially requested an average increase for all customers of 13.6 percent. Under that plan, residents' rates would have grown by 16.7 percent, the largest increase of any customer group.

Duke lowered the request this year to an 8.5 percent average increase across all customer types. The reduction accounted for savings under the federal tax cuts and a partial settlement reached with the commission’s public staff, which represents consumers.

Duke has said the higher bills were needed to recoup costs it had incurred to generate cleaner electricity and modernize the state's electric grid. In making the announcement last year, Duke said that even with the proposed change its rates would still be lower than in 1991, when adjusted for inflation.

Citizens came to the Mecklenburg County Courthouse on Tuesday, January 30, 2018, to voice their displeasure with Duke Energy's proposal for a rate hike to make customers pay for its expensive coal ash clean-up.

But the company also generated criticism for asking that customers foot coal ash costs, including to close ash sites – which state lawmakers ordered Duke to shutter after a 2014 ash spill into the Dan River.

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Duke has said its shareholders are on the hook for fines and cleanup costs associated with the spill itself.

Opposing a rate hike

Tech giants Apple, Facebook and Google, which all have operations in the state, also opposed the Duke rate increase. Among other things, the firms blasted Duke's push for customers to cover costs for an abandoned nuclear project near Gaffney, S.C., and for a project to upgrade the state's electric system.

Low-income customers also told Duke and the commission that the higher rates would be difficult to afford. And the North Carolina AARP had said older adults across the state were concerned about the impact of a large rate hike.

Environmentalists and others protest outside the Duke Energy headquarters in Charlotte, NC, on Tuesday, January 30, 2018. The protest was over Duke Energy’s proposal to pass on the costs of its expensive coal ash clean-up to customers.

Critics had also expressed frustration that Duke pushed to raise rates the same year it revealed CEO Lynn Good was given a 55 percent increase in compensation last year, taking her to $21.4 million. That's the highest she's ever made as chief executive.

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Friday's announcement comes after the commission this year approved an increase for Duke customers in eastern North Carolina and the Asheville area.

In that case, Duke initially requested an average jump across all customer types of 14.9 percent.

The commission approved an increase of 4.7 percent over the next four years. In 2022 that rises to 6 percent.

Other moves

On Friday, the commission also:

Said Duke can recover $546 million it spent on coal ash costs. But the commission hit the company with a penalty that reduces that figure by $70 million.

In penalizing Duke, the commission accused Duke of "pervasive, system-wide shortcomings" in its oversight of coal ash management. The penalty will be paid for by the company, not its customers, the commission said.

Denied a request by Duke to have customers pay for a multibillion-dollar project known as Power Forward Carolinas, which the company has said will modernize the state's electric system.

Ordered Duke to refund to customers $60 million annually over four years in money it collects from them in advance to pay eventual state income taxes.

Granted Duke permission to raise a basic monthly charge in residential customer bills to $14. The company had requested to increase it from $11.80 to $17.79. The increase will be offset by decreases in per kilowatt-hour charges for residential customers, the commission said.

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