The North Carolina Public Utilities Commission has not yet ruled on a rate increase request for Duke Energy customers in Western North Carolina despite conflicting reports.
The North Carolina Utilities Commission has issued an order granting a partial rate increase for Duke Energy Progress.
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.