Politics & Government

Good for planning ahead or padding profits? Critics fight a plan for Duke Energy rates

Updated April 30, see below.

Debate over a controversial proposal on electricity rates ratcheted up this week with two environmental groups’ full-page newspaper ad asking the state Senate’s top-ranking Democrat, Dan Blue, to end his support for a Duke Energy bill and stop taking the company’s “dirty money.”

The North Carolina Conservation Network was calling residents Monday, asking them to register their opposition to Senate Bill 559, which it described as a “blank check for Duke Energy.”

And a group of manufacturers and advocacy groups asked the bill’s sponsors to withdraw or substantially change its controversial sections.

Blue said the ad in the Sunday News & Observer, paid for by NC WARN and Appalachian Voices, is off base.

“This is absolutely groundless, “ Blue said in an interview. “This is the desperation of NC WARN.”

Blue is one of the main sponsors of the bill that would allow the state Utilities Commission to grant electricity rate increases in five-year blocks. Now, the Utilities Commission approves rate increases a year at a time.

Opponents are cranking up the pressure at a critical time. Two Senate committees have already endorsed the bill, and a third, the Senate Rules Committee, is set to consider it Tuesday – likely the final stop before going to a vote of the full Senate.

The bill’s supporters say considering rate increases over a period of years rather than a year at a time improves planning for the company and helps consumers.

“North Carolina needs modern and flexible tools for setting rates – tools that allow utilities to better align the timing of investments and thereby meet the needs of customers more quickly and cost-effectively,” Grace Rountree, a Duke Energy spokeswoman, said in an email.

“If approved, this legislation would provide new tools to the NCUC [NC Utilities Commission] that — if used only under their discretion— could translate to cost stability and predictability for North Carolina customers, as well as quicker access to the benefits of cleaner energy and new technologies.”

The bill has drawn an army of detractors that include manufacturers, the state’s largest employers, and environmental and consumer groups who say the bill would undercut rate-payer protections.

Power rates a top concern for retirees, industry

Jim Warren, executive director of NC WARN, said the multi-year rate plan is a way for Duke Energy to push onto consumers its costs for mismanaging coal ash and to pay for a grid modernization that the Utilities Commission has rejected.

“What they’re really proposing is a major overhaul of our electricity system,” Warren said.

Five-year approvals could lead to unnecessary rate hikes, said Steve Hahn, a spokesman for AARP North Carolina.

“We hear from our members about utility rate hikes more than anything else,” Hahn said. “They see it every month. It’s an expense they feel they’re not prepared for.”

The N.C. Manufacturers Alliance wants to stop the rate-making change. Its president, Preston Howard, said the rate-approval system should stay as it is.

Electricity is one of the top costs for most manufacturers, Howard said. He called the Duke Energy proposal “a risky proposition.”

Opponents of the rate plan, including the Manufacturers Alliance, Smithfield Foods, GlaxoSmithKline, and dozens of other companies and advocacy groups sent a letter to Senate leader Phil Berger and the bill’s sponsors Monday, asking for the controversial section to be withdrawn or changed. (Update: A lobbyist for GlaxoSmithKline said the company has no position on the bill. Preston Howard said GSK ended up on the letter as a result of miscommunication between the company and the Manufacturers Alliance.)

As written, the bill would “permit electric utilities to continually earn more than their authorized profit margin and jeopardize future economic development and investment in the State through ever-increasing electric rates,” the letter said.

Blue said in an email that he understands the importance of affordable energy to the economy and manufacturers.

Duke Energy campaign contributions

NC WARN’s ad featured Blue because he was one of the legislature’s top 11 recipients of campaign donations from the company’s political action committee and its executives.

A report by Energy Justice NC Coalition, a group of the bill’s opponents, says Duke’s PAC and top company executives gave Blue, a veteran legislator and former House speaker, more campaign money in 2018 than they had in any other year. Berger was the top recipient, according to the report, with $76,250. Blue, the only Democrat in the top 11, received $10,900.

Republicans control the Senate and House.

Sen. Ralph Hise, a Spruce Pine Republican and one of the bill’s lead sponsors, is not on the group’s list of top recipients. Warren said in a text message that does not undercut the group’s argument that the company is using donations to get the bill passed.

Rountree, the Duke spokeswoman, said in an email that political action committee contributions to Blue “were consistent with those made with legislative leadership.”

Lynn Bonner has worked at The News & Observer since 1994, and has written about the state legislature and politics since 1999. Contact her at lbonner@newsobserver.com or (919) 829-4821.