Politics & Government

Legislators change a controversial bill on Duke Energy rates

Legislators altered a bill that would change the way Duke Energy’s electricity rates are set in an attempt to dilute the intense criticism over one of the most talked-about proposals of the legislative session.

Senate Bill 559 would allow the state Utilities Commission to set electricity rates for up to three years for Duke Energy, rather than set rates more frequently. The commission now sets rates for the power company about once a year. Duke Energy asks for specific increases, and the Utilities Commission decides whether they are justified. It’s rare for utilities to get all they want.

Proponents say the change will allow Duke Energy to improve its planning, while critics say the proposal will allow the company to soak customers and pad its profits.

A change approved in the House Rules Committee on Monday would have Duke Energy invest all returns up to 1.25% over those authorized by the Utilities Commission in projects the bill’s supporters said would help low-income communities. The bill requires Duke to reimburse customers if its returns are more than 1.25% higher than authorized.

Returns up to 1.25% more than guaranteed “would go to affordable housing and job creation,” said Rep. David Lewis, a Harnett County Republican and the House Rules chairman.

The bill has been one of the most heavily lobbied this session. Duke has been working to get the bill approved, while groups representing energy customers have bombarded legislators with emails asking them to reject it.

Appalachian Voices and NC Warn took out full-page newspaper ads targeting Sen. Dan Blue, the chamber’s Democratic leader and one of the bill’s main sponsors.

Rep. Ted Davis, a Wilmington Republican, said Monday he had received “emails and texts and emails and texts” about the bill. He wanted a response to the allegations that the bill would be a windfall for Duke Energy while its customers suffer.

“It’s important that we clarify this,” Davis said.

Critics said the changes approved Monday would still allow Duke Energy to profit from fast-rising electricity rates.

The amendment says Duke could spend the excess money it makes on:

  • Electric infrastructure investments that facilitate job creation in economically distressed areas or low-income communities;

  • Electric infrastructure investments that further creation of affordable housing for low-income customers;
  • Electric infrastructure investments in communities that will result in quantifiable and measurable benefits for low-income customers in those communities,
  • Energy efficiency and demand-side management programs for low-income customers.

Kevin O’Donnell, a utility consultant, noted that the excess returns wouldn’t be designated for a charity focused on low-income people. Instead, Duke Energy could use the money to make investments that go into its rate base -- the value of its property -- which would then be factored into utility rates and lead to increases.

“If it goes into the rate base, it will increase rates for everyone across the state,” O’Donnell said.

Peter Ledford, general counsel for the NC Sustainable Energy Association, said there were many ways to modernize rate-setting and Duke “cherry-picked the tool most beneficial to shareholders.”

Tim Pettit, a Duke Energy spokesman, said in an interview that any investments would have to get Utilities Commission approval. Some of the allowable spending -- projects to improve energy-efficiency, for example -- would not become part of the rate base, he said.

The amendment “addresses a lot of questions people had,” Pettit said.

If the full House approves the bill, it would go back to the Senate. The Senate would have to agree to the changes before it goes to Gov. Roy Cooper.