Commission increases Duke Energy Progress rates and profits, but adopts low-income affordability programs

CHAPEL HILL, N.C.–A coalition of consumer and clean energy advocates expressed disappointment in the recent North Carolina Utilities Commission order on Duke Energy Progress’ proposal that increases rates and charges to its customers; raises Duke Energy shareholders’ compensation; and implements a three-year rate increase under North Carolina’s new performance-based regulation. However, the advocates welcomed the adoption of low-income affordability programs resulting from its partial settlement with the utility.

The coalition of consumer and clean energy advocates—the North Carolina Justice Center, North Carolina Housing Coalition, Natural Resources Defense Council, Southern Alliance for Clean Energy, and Vote Solar, represented by the Southern Environmental Law Center—intervened in the case to advocate for improvements to the proposed low-income program; challenge Duke Energy’s insufficient performance-based regulation proposals; oppose Duke’s exorbitant return on equity proposal; and advance an alternative to Duke’s expensive grid spending.

The commission ultimately approved a partial settlement between the public interest parties represented by the Southern Environmental Law Center, the Public Staff, the Sierra Club, and Duke to launch a new customer assistance program. In addition, the approved settlement includes a $16 million shareholder contribution to low-income households over the next three years: $10 million for critical health and safety repairs that would allow for energy efficiency and weatherization upgrades to homes and $6 million for Duke Energy’s Share the Light fund, which helps low-income customers who are behind on their bills. However, the Commission rejected many of the arguments raised by interveners regarding the return on equity, performance-based regulation, and distribution system planning components of DEP’s application.

“The approved affordability settlement will help lower energy burdens for low-income households and support them in accessing new federal funding opportunities through the Inflation Reduction Act,” said David Neal, senior attorney at the Southern Environmental Law Center. “However, the commission’s order misses many other opportunities to rein in Duke’s allowed profit margin and restrain Duke’s unprecedented levels of spending on the distribution grid, which will ultimately be paid for by customers, making it harder to afford the investments needed to comply with the state’s clean energy mandates.”

By bucking Duke Energy’s requested excessive 10.4% return on equity and allowing a 9.8% return instead, the commission has saved customers millions of dollars without jeopardizing the utility’s ability to attract capital investment. But the commission could have done even more to protect ratepayers. Expert witnesses who appeared on behalf the Public Staff, Department of Defense and all other federal agencies, large industrial customers, and the consumer and clean energy groups represented by the Southern Environmental Law Center demonstrated that returns between 6% and 9.25% would be sufficient under the governing legal standard.

“Customers will not appreciate the Commission’s decision to approve DEP’s performance-based regulation with few guardrails, despite the fact that we presented the Commission with a plethora of suggested guardrails,” said Maggie Shober of the Southern Alliance for Clean Energy. “As approved, DEP’s performance-based ratemaking mechanisms will guarantee its earnings while providing customers with few commensurate benefits.”

“While we are certainly disappointed with other aspects of the commission’s decision, we applaud the approval of the customer assistance program, Duke’s additional $6 million contribution to the Share the Light Fund and $10 million contribution towards health and safety repairs” said Claire Williamson of the North Carolina Justice Center. “Investments like these are important steps in trying to help North Carolina’s low-income communities meet their energy needs.”

“The commission gave the greenlight to Duke to continue spending significant amounts of ratepayer dollars on expensive grid investments without a ground-up, community driven plan driving the strategy,” said Jake Duncan of Vote Solar. “This means Duke will continue to prioritize the investments that benefit Duke, instead of the investments that enable a distributed energy future that benefits both North Carolina’s most vulnerable populations and our future populations.”