Duke Energy’s power play could cost NC consumers

A mountain of coal sits next to Duke Energy’s Marshall Steam Station on Lake Norman outside of Charlotte. When coal is burned it creates coal ash, which is then stored in ponds near the company’s power plants.
A mountain of coal sits next to Duke Energy’s Marshall Steam Station on Lake Norman outside of Charlotte. When coal is burned it creates coal ash, which is then stored in ponds near the company’s power plants. dhinshaw@charlotteobserver.com

Duke Energy is pushing a Trojan horse – which, while disguised as legislation to give state regulators more flexibility, would permit Duke to earn excessive profits at customers’ expense without the comprehensive scrutiny it currently receives from regulators.

Far from helping regulators – or anyone else other than Duke – Senate Bill 559 is an attempt to pocket additional money for Duke Energy, the chief driver of the bill. SB 559 opens the door for Duke to be allowed to raise its rates annually to collect from ratepayers an estimated $10 billion in coal ash clean-up costs and $13 billion in grid modernization costs over the next decade.

But like the mythical Trojan horse, SB 559 appears harmless from the outside.

The bill, which passed the Senate and currently pending in the House, contains two parts. The first part would allow Duke Energy or North Carolina’s other power provider, Dominion Energy, to sell bonds to pay storm costs.

The second part of SB-559 is far more insidious for consumers and regulators. It would allow Duke and Dominion to ask the N.C. Utilities Commission for successive rate increases covering up to five years, upending the current system in which each utility must ask each time it wants to change rates and face an extensive review.

In addition to reducing ratemaking scrutiny and locking residential and business consumers into higher rates for multiple years, the legislation has the potential to strip power from the Utilities Commission.

Under current law, Duke and Dominion are bound by the commission’s final ruling on rate increase requests unless appealed to a higher court. But under SB 559, if Duke or Dominion doesn’t like the commission’s decision on its five-year rate increase application, it can simply withdraw its request and revert back to rules that were in place prior to enactment of SB 559.

It defies all judicial sense that an entity being regulated can dismiss the commission’s orders if they do not align with its business incentives. Keep in mind that North Carolina’s utility regulators didn’t ask legislators for these new rate mechanisms – Duke did.

The only stakeholders benefiting from SB 559 are Duke Energy and Dominion Energy, which is why no consumer advocates, no clean energy advocates, and no business customers support the legislation. This bill comes at a time when Duke is ramping up to collect from customers an estimated $23 billion in coal ash cleanup and energy grid improvements costs, and SB 559 is an avenue for Duke to pass these bills onto consumers.

Beyond the cost arguments, bill opponents warn that the new rules could block competition from other energy providers, particularly those offering renewable energy solutions.

In its advocacy for SB 559, Duke claims that North Carolina’s energy regulation is in need of reform. But if the system is so problematic, it would be far more prudent to perform a comprehensive examination to consider all aspects of utility regulation in our state. All this legislation would do is add two new rate mechanisms, cherry-picked by Duke to benefit energy providers.

Members of the General Assembly should see SB 559 for what it really is – a power play that strips authority from state regulators and passes higher costs onto consumers, while serving to hinder other beneficial energy opportunities for our state.

Sharon Miller is executive director of the Carolina Utility Customers Association, which represents a wide range of businesses across North Carolina in efforts to secure reliable energy services at the lowest possible rates through participation in North Carolina’s regulatory and legislative arenas.