Duke Energy’s mandatory fee plan is unwise and unfair

Duke Energy has asked the NC Utilities Commission to approve a hike in mandatory fees.
Duke Energy has asked the NC Utilities Commission to approve a hike in mandatory fees.

For most North Carolinians, the electric bill is a fact of life, an unavoidable part of the household budget. When times are tight, as they are for far too many of our constituents, families must find a way to pay. Otherwise, they risk having essential electric services shut off. For some, it’s an impossible choice between food, medicine and power.

We do what we can to conserve power and cut costs by turning off appliances, adjusting the thermostat and installing LED bulbs.

Duke Energy’s proposed rate hike has not received enough public scrutiny. But often overlooked is Duke’s requested increase in mandatory fees. These mandatory fees – called a basic customer charge – reduce our already-limited control over our electric bills.

Duke Energy Progress asked the Utilities Commission to allow it to increase its mandatory fee by a staggering 75 percent. This proposed increase is on top of the big increase in the mandatory fee approved in 2013, when the fixed charge went from $6.75 to the current level of $11.13. If Duke got what it wanted this time around, the monthly flat fee would have tripled from 2013 levels, going up to $19.50 per month.

Duke Energy and the Public Staff – the lead advocate for utility customers – have reached a partial settlement that would raise the mandatory fee to $14 a month, a 25.8 percent increase. Unfortunately, Duke sees this increase as a step to even higher fixed charges. At the hearing on the rate increase before the Utilities Commission, a witness for Duke acknowledged that the utility will seek to recover $27 a month in mandatory fees from its residential customers. The company sees further upward pressure on those fees in the near future.

This trend is deeply troubling. Even before turning on a single light switch, each residential customer would owe Duke Energy $27 per month if Duke gets what it wants. This would punish those who have taken steps to be thrifty with their energy use, raising bills without any additional benefits to customers.

But the problems go beyond frugal energy users. Duke’s proposal could hurt all of us, because saving energy helps avoid the need to build expensive power plants to meet additional demand.

Not only are Duke Energy’s plans unfair, they’re also unjustified. It’s like going out to dinner and ordering only a side salad while others at the table order filet mignon and fine French wine – and then being forced to split the check equally. Similarly, Duke Energy’s fee calculation is based on passing on an equal share of certain costs to each customer, even though higher-usage customers create more of those costs than lower-usage customers.

To make matters worse, Duke’s fee increase will hit hardest where it hurts the most: lower-income households and seniors on fixed incomes, both of whom tend to use less electricity. African-American households also tend to use less energy. More than 1.1 million households in our state – about a third of the total – cannot find truly affordable housing. For these families, more than 30 percent of their annual income goes to housing costs, including the power bill. Increasing fixed charges will make this affordable housing crisis worse. Under Duke’s plans, people of color, the elderly and those with lower incomes would subsidize wealthier households, which tend to be bigger electricity users.

Duke’s proposal is straight out of the utility playbook and part of a national trend. Fortunately, utility commissions around the country have recognized the problems with higher mandatory fees and have rejected many attempts to increase them. Florida utility Gulf Power withdrew a similar increase after upset customers sent regulators more than 1,000 letters and showed up in droves at public hearings. Minnesota, Washington, Missouri and Maryland commissions have rejected mandatory fee increases, many of them smaller than the one Duke is proposing. In those cases, utilities commissions concluded that mandatory fee increases were unreasonable and sent the wrong message about saving energy.

The Natural Resources Defense Council, Southern Alliance for Clean Energy and the N.C. Sustainable Energy Association have gone on record to oppose the fee hike, echoing the stance of the organizations we lead: the N.C. NAACP, the N.C. Justice Center, AARP North Carolina and the N.C. Housing Coalition.

Duke’s proposal to increase mandatory fees would set back families working hard to pay their bills, and set back our progress toward making and using energy more wisely. Duke should pull the plug on its unwise, unfair plans.

The Rev. Dr. T. Anthony Spearman is president of the N.C. Conference of NAACP Branches. Doug Dickerson is the director of the AARP-North Carolina.

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