Western North Carolina residents recently made it clear they do not support Duke Energy Progress’s request for a 15 percent rate increase for its customers.
As required by law, the North Carolina Utilities Commission conducted a public hearing to gather input on the corporation’s request. More than a dozen people testified during the quasi-judicial hearing held in Franklin, and a majority of the speakers were against any increase at all.
Duke Energy isn’t the only utility company raising its electric rates this year amidst rising energy costs, but some local electric customers will see a better deal than others.
An electric rate study Waynesville Mayor Gavin Brown called “sobering” was presented to the Waynesville Board of Aldermen Oct. 10 and shows shrewd fiscal management on behalf of the town, but an inevitable rate increase on the horizon.
Most who spoke during a public hearing at the Macon County Courthouse on Duke Energy’s proposed rate increases were not pleased with the prospect of another uptick on their electric bills and lambasted Duke Energy representatives for wanting to use the increase to pay for recently built fossil fuel plants and pay higher dividends to investors.
Well raise my electric bill … again.
Duke Energy is looking to hike its rates by nearly 10 percent.
I don’t know Duke Energy CEO James Rogers and don’t have anything against him. But it’s not very hard not to imagine he and the giant utility he runs as the symbolic poster children for much of the discontent brewing in this country right now.
In a recent series of public hearings across North Carolina (including one in Franklin and one in Marion) about Duke Energy’s request for a rate hike, the company’s profits and the pay to its top executives have been mentioned by working-class folks who don’t want to see a 17 percent hike in their power bill. Duke has asked the state Utilities Commission to approve the increase, which would take effect in February 2012 if approved.
According to corporate filings and several news stories, Rogers earned $8.8 million in salary last year and received stock work about $1.35 million. Several other top Duke executives made millions. Also shown by recent corporate filings was a profit rate of 12.5 percent of earnings. Duke had an operating margin of 19.1 percent, which is a pretty good lick in this era. Most of those small businesses who will feel this rate hike would be ecstatic about those profits and that operating margin.
Rogers’ salary and compensation are at a level that puts him in elite company. His compensation is 200 times the salary of someone who makes $50,000 a year. The disparity is jaw dropping.
In addition to Rogers’ huge salary, Duke spent $1.73 million lobbying the federal government in the second quarter of this year. Multiply that out and one would guess that Duke spends somewhere close to $7 million a year trying to influence the votes of the men and woman who are going to make decisions about pollution controls, nuclear energy safeguards, etc.
According to Democracy North Carolina, a nonpartisan watchdog group, 115 of the 170 state legislators elected in 2010 got a donation from either Duke or Progress Energy. The PACs of Progress Energy and Duke Energy gave $540,000 to General Assembly candidates in the 2010 election alone. That was more than any other PAC. The two companies are on their way toward a merger that will likely be approved.
And here’s a kicker that might raise some hackles. According to Democracy NC, “The companies are also lobbying the N.C. legislature for an unusual law that would allow them to raise rates automatically to recover the millions spent on developing and building new nuclear or other power plants, even if the construction project is ultimately abandoned. The proposal would make ratepayers, rather than investors, bear the financial risk of expansion operations.”
This is not meant as an anti Duke diatribe. Duke Energy is a popular corporate citizen that gives some of its profits back to the communities it serves. Its executives and employees take part in hundreds of community service organization throughout North Carolina.
But the timing of this request is what is so galling. Duke is reaping huge profits, pays its executives exorbitant salaries, and spend millions lobbying lawmakers who make the rules it has to follow, while at the same it wants the poor, the elderly, the unemployed and struggling small businesses to pay more for power.
The reports about of income disparity and poverty are raining down on us like a tropical storm: largest income disparity in U.S. history between top 1 percent and everyone else; elderly rate of poverty highest it has ever been; income gap between young adults and their parents at highest level ever; student debt at record levels; and more and more.
N.C. Attorney General Roy Cooper is lobbying the state Utilities Commission to deny the request. The N.C. Public Staff, which represents the public in these rate hike requests, wants the proposed increase cut by almost two-thirds. Obviously, the opinion of the state’s citizens has been overwhelmingly against the rate hike.
Duke wants more than just the rate increase and the ability to let ratepayers take the risk for its expansion. It also wants the Utilities Commission to up its allowable profit margin to 11.5 percent, up from the 10.7 it is now allowed. The Public Staff recommended a return of 9.25 percent. Most U.S. utilities have been allowed returns of 10 to 10.5 percent in the past five years, according to the industry trade group Edison Electric Institute.
Taken as a package, this sounds like a big corporation trying to stick it to its customers during an economic recession. Duke’s political clout, however, means it will in all likelihood get at least part of the increase. That’s my bet. Any takers?
Economic times are simply too hard, and Duke Energy is being too greedy for the state utilities commission to allow the company to hike its rates, many of the speakers taking advantage of a public hearing in Franklin said last week.
Some 30 speakers used the microphone at the Oct. 26 hearing, which attracted about 100 people from North Carolina’s westernmost counties. A similar hearing drew an overflow crowd Oct. 11 in Marion, the only other forum focused on the hike that was held in Western North Carolina.
Duke Energy wants to raise residential rates 17.4 percent and, on average, raise commercial rates by 15 percent. The increase, which would take effect in February, would add about $19 a month to the typical residential customer’s bill of about $97.
Three-fourths of the increase would help pay for $4.8 billion for building new power plants and for pollution-control equipment to help the environment.
Duke District Manager Fred Alexander told the commission the increase in rates is necessary to help Duke continue providing the “vital service” of electricity.
“I’m here tonight appealing to you on the behalf of the clients that we have at Second Mile Ministry,” said Hazel Finley. “These are mainly elderly people who are on a fixed income,” and underemployed or unemployed people “who have exhausted” their benefits. “I see no reason for Duke to get (an increase) on the backs of these people who are, so desperately, trying to make it one day at a time here in Macon County,” she said.
Many speakers told the commission members of their anger at Duke’s seeking more customer dollars when, in 2010, the company reportedly earned $1.3 billion and paid its chief executive $6.9 million.
With those sorts of profits, “then why does Duke believe that they need to take any more of my money?” Carl Iobst of Jackson County queried the commission.
A rate hike, said Bob Harold of Stanley Furniture in Robbinsville, could possibly take the furniture manufacture under and put up to 420 people out of work. Stanley Furniture is Graham County’s largest employer.
Stanley Furniture pays Duke $1. 2 million under the company’s current rates for electricity.
“It will put us in a very noncompetitive situation where it will increase our electricity bill per year $180,000,” Harold said. “I feel like the rate increase is too exorbitant.”
Other businessmen attempted a softer approach, with Nantahala Outdoor Center’s John Burton in the particularly unenviable position of trying to urge caution about raising rates while not criticizing the very entity that controls the water flow whitewater rafters, and the company, depend upon.
“I’m counting on you guys to vet the proposal,” Burton told the commission. “To make sure … that it’s reasonable. While the rate hike is painful, some of it is necessary to keep doing what they do.”
F.P. Bodenheimer, a Franklin businessman, spoke more directly in Duke’s favor, noting the importance of a good energy supply to power manufacturing machines. In the older days, when Nantahala Power and Light delivered the energy to his lumber-based business, reliability was questionable and the power sometimes failed, Bodenheimer said.
That costs businesses time and money that simply aren’t expendable, he said.
“But, we do have one opportunity that the homeowner does not have,” Bodenheimer said. “We can pass on some of the cost to customers who buy our product … possibly. But for the homeowner, there’s no place for them to pass it.”
Ken Brown of Jackson County spoke both as a Duke customer and as a representative of the environmental group Western North Carolina Alliance. Brown noted the lack of competition facing Duke here in the Southeast and linked that to the company’s reluctance, in his view, to offer competitive rates. The energy company’s grasp might just get tighter in the days to come if a merger proposal with Progress Energy is approved.
“In North Carolina, Duke Energy and Progress Energy are conspiring to monopolize electric generation by asking the N.C. Utilities Commission to approve a merger that will squash competition in North Carolina,” Brown told commissioners, a sentiment echoed by Swain County resident Joe Deddo.
Brown also spoke to cost overruns at the controversial Rutherford County-based Cliffside plant being passed on to North Carolina customers, for electricity to leave the state and serve customers in South Carolina.
This, Brown said, would “unnecessarily burden business, industrial, municipal and residential ratepayers with a third rate increase in two years to pay for an outmoded facility.”
Other speakers also had strong environmental concerns and said they wanted to see Duke turn toward more earth-friendly sources of energy.
“I want cleaner energy,” Scott Burns of Franklin told the commission before opposing the rate hike as “outrageous” on Duke’s part to even request.
If you read the information Duke Energy is spreading throughout the news media in its vast public relations campaign, you’d be led to believe the request for a 15 percent rate increase (17 percent for residential ratepayers) is a result of meeting new environmental regulations, especially in building the new “state-of-the-art” coal unit at Cliffside.
This is a distortion of reality that should be understood by all public officials, news outlets and members of the rate-paying public. I commend the Macon County Commissioners and the Franklin Board of Alderman for being the first public officials to take a stand against this round of rate hikes. Hopefully others will follow in short order.
This is the second of three rate hikes Duke Energy will be requesting for its expansion at Cliffside. For those who have not followed this issue closely, the energy from this plant is not intended to meet the energy needs of North Carolinians, where demand has been steadily declining due to efficiency and conservation measures in the past decade.
Rather, the Cliffside project is part of Duke Energy’s plan for expansion into new competing territories in other states. For example, in 2009 Duke expanded by signing a contract with five electric cooperatives in South Carolina to provide up to 1,500 megawatts of new capacity. That’s more than twice the capacity of the new unit at Cliffside, indicating an already existing large surplus of generating capacity for Duke Energy.
In addition, the new Cliffside hardly represents “state-of-the-art” coal technology, not even by the industry’s own standards. So-called “clean coal” technology was previously defined by the industry as Integrated Gasification Combined Cycle (IGCC) technology in which clean-burning methane gas is the ultimate fuel extracted from the coal prior to burning. IGCC units would in addition, supposedly, allow for the capture and sequestration of CO2 or greenhouse gases.
Duke Energy chose not to build an IGCC plant at Cliffside (perhaps because the practicality did not live up to the industry hype), but instead is constructing an old-fashioned, dirty, pulverized coal-burning power plant that will release into our air sulfur-dioxide, nitrogen oxide, mercury, hydrogen chloride, cadmium, barium, dioxins and dozens of other hazardous and toxic chemicals. While it’s true that the new plant will reduce the output of most of these pollutants from what older plants produced without emission controls, the poisons of Cliffside’s operation will continue to add to the buildup of toxins already permeating our environment, including and especially mercury. The new unit at Cliffside will do nothing to reduce CO2 emissions, and in fact will double its previous output of greenhouse gases to approximately 6 million tons per year, or as much as would be produced by a million automobiles.
The continued use of coal derived from mountaintop removal mining is devastating a huge geographical region in Appalachia, its people, its history and its water supply. And the toxic coal ash pile from Cliffside’s operation will build as a catastrophe in waiting.
There is nothing responsible about the Cliffside project and ratepayers in North Carolina should not finance this project through outrageously high rate increases. The state should instead be pursuing policies that will result in further reductions in energy consumption and the transformation to clean, safe, less expensive renewable technologies as quickly as possible.
A proposal by Duke Energy to hike electricity rates by 17 percent isn’t sitting well with many of the company’s customers in this region, who question why the power giant should be seeking any increase — much less such a large one — during these times of economic hardship.
Because Duke is a public utility, the final say on whether the proposed residential rate increase goes through rests with the N.C. Utilities Commission. If granted, Duke Energy would see a jump in revenue of about $646 million. Customers would see a corresponding increase of about $19 a month or more, based on a 1,000 kilowatt-per-month usage rate.
The company filed a rate case with the Utilities Commission late last week. If approved, the new rates would start around next February.
The rate request also seeks a 14 percent increase for industrial and commercial customers. The average of rate increases for all types of customers is 15 percent, Duke said.
“They can just go electrocute themselves as far as I’m concerned,” a miffed Angela McGregor, of Bryson City, said. “I would like a cost breakdown on exactly what they plan to spend it on.”
In a news release, Duke said it needs the money “mainly to recover expenses that have already been made to comply with state and federal laws and replacement of aging infrastructure necessary to meet customer needs.”
In an email sent generically to “dear southwestern NC community leader,” Duke District Manager Fred Alexander, based in Macon County, noted “no one likes rate increases. But they’re necessary to ensure the availability of affordable, reliable and clean electricity today, and for decades to come.”
That explanation hasn’t deterred leaders in Franklin from passing a resolution opposing the rate increase, with Alderman Bob Scott leading the charge.
“Unfortunately, this is but another example of large business taking liberty with corporate welfare as opposed to those who really need financial help,” he wrote fellow town leaders in an email sent last week. “This rate increase will severely hurt the elderly, the poor and those trying to live on fixed incomes whose incomes have been slammed by corporations that caused the financial mess the nation is in.”
The Macon County Board of Commissioners will likely follow suit, Commissioner Ronnie Beale said. The matter was discussed at a county meeting last week, and appeared to have the unanimous support of the five-member board.
Franklin, which once headquartered for the region the Duke-absorbed Nantahala Power and Light Co., has surfaced in the recent past as an area of heartburn for the power giant.
The last time Duke sought a rate increase, in late 2009, the company faced vocal and sustained opposition at a public hearing held by the utility commission in Franklin.
At the time, Duke claimed the then sought-after 12.6 percent hike was needed to pay for upgrades to power plants and infrastructure across its system, including construction of a controversial new coal plant near Marion. Duke also said the rate hike would help maintain its credit rating.
The Utilities Commission allowed Duke only a 7 percent increase. That increase saw the average customer using 1,000-kilowatt hours per month pay $7.30 more each month.
“They are not giving us anything better for the increases,” said Randy Gogolin of Sylva, who makes his living as a nurseryman through his business, the Garden of Weeden.
Gogolin said that he and his wife would like to go completely power-company free by getting off the grid and becoming fully self-sustainable. This was something they dreamed of doing some 20 years ago after moving here, Gogolin said, “but life hit” and there were kids to be raised.
A rate increase, he said, only provides additional impetus for such a move.
Becca Nestler, who with her husband, Stephen Beltram, own and operate Balsam Gardens in Jackson County, said paying more for electricity would pose a true financial hardship on the farm. The couple, which raises and sells broiler chickens and vegetables, is currently using a walk-in cooler, three refrigerators, an upright cooler and a chest cooler, Nestler said.
“That would be awful,” she said of the proposed rate increase. “It would mean more expense for our farm. It’s hard enough as it is.”
Dave Nestler, her brother, is a woodworker in Sylva who relies some on electric-powered tools. He said while his business could more easily absorb a rate increase than his sister’s farm, he isn’t happy about doling out more dollars unless it truly helped produce cleaner energy.
“But, it’s not,” Nestler said. “It’s just going to be more profit for Duke.”
Chris Dole, a trained chef who currently works in marketing in Sylva, like David Nestler, said he wouldn’t mind paying more if the tradeoff was cleaner energy.
“I just think (a flat increase) is wrong, though,” Dole said.
And Duke is indeed being duplicitous, according to longtime foe Avram Friedman, executive director of the activist clean-air group, the Canary Coalition. Friedman said the rate increase would help pay for its expansion of the controversial Cliffside Coal Plant. Friedman said Duke plans to sell electricity generated at Cliffside across the grid in other states, yet is trying to pay for the new coal plant on the backs of North Carolinians.
Duke Energy’s rate hike request met strong opposition at a public hearing before members of the N.C. Utilities Commission in Franklin last week.
Duke claims the 12.6 percent hike is needed to pay for upgrades to power plants and infrastructure across its system, including construction of a controversial new coal plant near Marion. If approved, the request would bring the utility more than $496 million per year in additional revenues. Duke says the rate hike will help maintain its credit rating.
Speakers representing environmental groups, local businesses, and local governments — along with plenty of private citizens — were nearly unanimous in denouncing the proposal. The giant utility was criticized for continuing construction of unnecessary coal plants, for its failure to invest more in renewable energy, for the timing of its request during a recession and for its decision to sell power made in North Carolina out-of-state.
“It is unconscionable to force a rate hike in for an unnecessary power plant,” said David Bates, the executive director of the Jackson-Macon Conservation Alliance, referring to Duke’s new coal plant. “There’s no such thing as clean coal, just less dirty.”
Bates spoke during the hearing and at a rally held prior to it in front of the Macon County Courthouse. About 20 protestors listened in at the rally, which was organized by the Sylva-based clean air advocacy group the Canary Coalition.
Duke Nantahala District Manager Fred Alexander told the utilities commission, however, that continued construction of the new coal plant, known as Cliffside, is a “great environmental story.”
“Once we turn the new unit on, we can begin retiring 1,000 megawatts of old coal plants,” he said. The old plants are dirtier than the new coal plant, achieving a net gain to air quality.
The hearing was a formal affair, with speakers swearing on the Bible before offering their testimony. In addition to the hearing officer running the meeting, there were two opposing tables at the front of the room: one for a Duke Energy representative and one for the Public Staff of the N.C. Utilities Commission. The Public Staff acts as a guardian of the public’s interest against the regulated monopoly enjoyed by utilities.
The independent oversight body is against the rate hike, according to Dianna Downey, spokesperson of the Public Staff.
“We have a team of accountants and engineers to study the rate hike request. At this point we believe the rate hike request by Duke is not justified,” said Downing, adding that the findings are still preliminary.
The strongest support for Duke came from John Burton of Bryson City, who is the treasurer for the Nantahala Outdoor Center, which relies on Duke for whitewater releases to accommodate rafting. He urged regulators to keep an open mind when considering Duke’s request.
“Electricity and utility costs have gone up less than everything else. Also, the quality of transmission has dramatically improved,” Burton said. “Duke has succeeded in keeping rates down and in improving reliability.”
Others from the business community, however, criticized the timing of Duke’s rate hike request.
Dan Roland of Franklin is the operations manager for Jackson Paper in Sylva, one of Duke largest commercial customers in the region. He said the company recently decided to expand in Jackson County, and while it expected a rate hike, it was surprised at the size and the timing.
“We are opposed to the rate hike request. While we understand the request, we question the short notice and the size of the increase ... it is a tremendous shock,” said Roland.
Part of the debate at the hearing was exactly what Duke’s proposed rate hike will pay for. Many of those speaking against the proposal said the new coal plant, known as Cliffside, is not necessary since the state’s energy usage is declining. Duke, however, says only 20 percent of the rate hike is to fund Cliffside, and it argues it has already spent about $1 billion. State law allows utilities to collect money for new power plants while they are under construction. So even if the construction was abandoned, Duke could still try to recover the money already spent.
In addition to Cliffside, Alexander said the request was to pay for “billions of dollars of investments we’ve already made to build a cleaner and more reliable system.”
But critics said Duke has done little to invest in cleaner energy production or more efficient use of the energy it already produces. Julie Mayfield, the executive director of the Western North Carolina Alliance, urged the utilities commission to deny Duke’s rate hike.
“While there continues to be debate about the percentage of this requested increase that covers infrastructure improvements, previously installed environmental controls and Cliffside, what is clear is this: part of the rate increase is for Cliffside; Duke recently received a 4.5 percent rate increase to cover the increasing costs of coal; and none of the requested increase will cover renewable energy projects or energy efficiency programs,” said Mayfield, reading from a prepared statement.
Avram Friedman, the executive director of the Canary Coalition, said Duke was being duplicitous on several fronts. He said Duke Energy claims the Cliffside plant is to meet growing energy demand in North Carolina, but actual usage in the state is down 2 percent, he said. He also criticized Duke’s recent decision to sell electricity to an energy cooperative in South Carolina and another attempt denied by the utilities commission to sell electricity to Orangeburg, S.C.
“There’s no reason to place this extra burden on electric ratepayers,” said Friedman. “More than 100 new coal plants have been cancelled around the country in the past three years and Cliffside isn’t needed either. It makes much more sense to implement energy policies that will save ratepayers money, by offering economic incentives to invest in energy efficiency in homes, businesses and industry.”
At least two local governments in WNC — Swain County and the Cherokee Tribal Council — have passed resolutions opposing the rate hike request.
The last in the series of public hearings on Duke’s request is scheduled for Oct. 19 in Raleigh.