SOUTHEASTERN N.C. —Last fall, the second largest electric utility in the United States announced it would pursue a rate increase, slated to affect millions of its Carolinian customers.
It’s the first rate case Duke Energy has initiated since 2019 and the only one in its history that proposes a three-year gradual increase. The public will have a chance to speak out at a hearing on Tuesday (all details listed at the end of the article).
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Before Duke can move forward with the increases, it has to gain approval by the North Carolina Utilities Commission, which oversees rates and services of investor-owned statewide facilities.
If approved, by 2025, Duke’s residential customers will pay in total 18.7% more if using 1,000 kilowatt hours per month per household.
The company is asking for the inflation to start each October beginning this year, with customers paying 9.9% more, another 4.5% in 2024 and an additional 4.3% in 2025. If passed, by year three a $126 bill would become $150.
The breakdown would look like this:
- Oct. 1, 2023, a monthly increase of $14.72 – from $126.43 to $141.15
- Oct. 1, 2024, a monthly increase of $5.62 – from $141.15 to $146.77
- Oct. 1, 2025, a monthly increase of $5.21 – from $146.77 to $151.98
In addition to residential increases, commercial and industrial customers will be impacted by year three as such: Small general service will go up by 15.4%, medium general service will pay 12% more, large general service will see a 10% uptick, with lighting and seasonal customers seeing the largest boots cumulatively by 30.4% and 25.5% respectively.
The utility company is allowed to approach the multi-year increase, without having to refile annually with NCUC since 2021’s House Bill 951 passed. Known as the Energy Solutions for North Carolina, the bill garnered the governor’s support in an effort for Duke to shift away from coal-fired power and create renewable energy to reduce its carbon footprint by 70% by 2030. The end-goal is to reach carbon neutrality by 2050.
Duke released 76 million tons of CO2 since 2005 and would need to slash emissions to 23 million tons per year to reach the objective. Under Duke’s Clean Energy Plan, it vows to cut its dependency on coal to less than 5% by 2030, becoming obsolete by 2035 (it has retired 56 coal units in the last 13 years).
It still will use nuclear plants and natural gas plants, the latter of which produce methane and have 80 times the warming power of carbon dioxide in the first two decades it permeates the atmosphere.
Its new multi-year rate structure has drawn ire from environmentalists who say the company should lean more on solar and wind, stating Duke has customers paying in advance of the company’s improvements that aren’t totally green.
As well, HB 951 allows the company to propose “performance-based regulation” — compensating utilities on how they perform over how much electricity they sell.
Duke submitted its request to NCUC last October, stating it has invested $3.5 billion in capital improvements since its 2019 rate hike.
Steeper customer rates would help Duke invest in future upgrades and grid infrastructure, including:
- Distribution and transmission projects intended to modernize its electric grid
- Improvements to reliability through a balanced portfolio of storage, solar, and other generation projects to continue the clean energy transition
- Closure of coal ash basins
- Implementation of new billing and customer information systems
- Maintenance of Duke Energy Progress’ nuclear fleet
- The company’s Covid-19 response
Duke forecasts $4.2 billion needed to fund its goals as well as create “economic development and new jobs.”
By April this year, the company noted in its filing it will have invested roughly $625 million in existing nuclear plants, with another $511 million projected for maintenance. The company owns 11 nuclear sites in the Carolinas, including in Brunswick County; it aims to extend the life of those plants by 20 years.
In 2021, Duke estimated the Brunswick Nuclear Plant helped avoid the release of almost 10.37 million tons of carbon dioxide, had the energy been produced from coal, oil or natural gas. In its application, it specifies the need to replace the Brunswick site’s feedwater heaters, which preheat water before it’s condensed and deaerated to steam.
Duke assesses its current rates do not bring in a sufficient return to meet the needs of “day-to-day operating expenses.” Nor does it “provide its investors with reasonable returns on their up-front capital for Duke Energy Progress investments.”
The increase in charges could generate $623 million or almost 18% more than what Duke currently receives. That number does not take into account riders, which can help decrease costs of customer bills through clean energy incentives, from state and federal programs that assist low-income families or help with storm recovery costs.
“Duke Energy is evaluating ways to leverage the Inflation Reduction Act and Infrastructure Investment and Jobs Act to help offset these investments and save money for customers,” it stated in a release.
More charges in fuel recovery costs
On top of rate increases, Duke Energy Carolinas —separate from the tri-county region’s Duke Energy Progress — filed its recovery costs for fuel surges in 2022. It’s asking NCUC to approve an additional 16% rate increase by September 2023, followed by another 0.4% increase on January 1, 2024. It will affect 2.5 million residential, commercial and industrial customers in the central and western part of the state.
These fuel costs aren’t revenue-generating but allow Duke to recoup losses on volatile gas pricing.
“The company does not mark up the cost of fuel and is required by law to pass through the actual cost on a dollar-for-dollar basis to customers,” it stated in a release.
In 2022, the U.S. Bureau of Labor reported the import of natural gas increased by 165%, the highest since 2003.
Duke Energy Progress supplies power to 1.5 million people in eastern and central North Carolina. The largest populations of these customers live in Wilmington, Southern Pines, Aberdeen, Pinehurst, and Rockingham areas. The Progress subsidiary will not file its fuel recovery costs for 2022 until June. So locals could experience another rate increase as Duke Energy Carolinas customers face.
Last summer, when Duke Energy Progress filed its fuel costs for 2021, it accounted for a $210 million under-recovery. As such, customers in the tri-county experienced bill increases by roughly $10 per month starting January this year.
“Fuel costs to generate electricity have more than tripled over the last year, which is a challenge faced by energy providers across the country,” Kendal Bowman, Duke Energy’s North Carolina president, said in a release.
While Duke’s Carbon Plan addresses improvements to its nuclear fleet and investment in solar, it includes building more methane-fired power plants — meaning fuel recovery costs may continue plaguing customers. The additional facilities could account for 35% of fuel-related increases in the upcoming decade, according to WFAE.
Duke maintains its utility rates in North Carolina remain below the national average. According to EnergySage, North Carolinians spend on average $158 per month on electricity. That parses out to $1,896 a year, 20% less than the $2,369 national average.
“We’re doing everything we can to keep customer bills as low as possible,” Bowman said in a release.
What about cooperatives?
While the customers in Duke’s jurisdiction may be affected this year if the NCUC passes the three-year rate hike plan, how it impacts customers belonging to a cooperative could differ. Take the nonprofit Brunswick Extensive Membership Cooperative, for example.
All municipal and electric membership co-ops purchase electricity from Duke Energy. BEMC CEO Josh Winslow said it controls 40% of its power from cooperative-owned generation, as part of the North Carolina Electric Membership Corporation, headquartered in Raleigh. About 60% of its power comes from others, mainly Duke.
“The financial outlook for these resources and associated fuel requirements is stable for the next few years,” Winslow said.
The co-op’s contract negotiations on wholesale costs won’t be affected in the short-term as BEMC’s power purchase agreements have different maturities and terms. Long-term could be different as renegotiations surface.
Winslow explained those changes also will be dictated by Brunswick County’s growth — which experienced 2.05% in 2023. With it, demand for power needs will rise.
BEMC managed to go a full decade without raising prices on its customers. In 2020, rates were adjusted roughly to be $8.64 more on BEMC customers’ monthly electric bill. The rate change was prompted by an increased 17% in the cost of power, according to previous PCD reporting.
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“We initiated a combined strategy of streamlined internal operations and an increase in rate and it prevented an increase for 2023, as many others are responding to inflation and natural gas and labor increases through rates,” Winslow wrote to PCD Monday. “I am glad to see that our rates continue to be competitive with other utilities.”
BEMC has a much lower number of electric consumers per mile than Duke as well. Thus, Winslow called it “imperative” for BEMC’s affordability and reliabilty from member capital to be reinvested into its system, not to shareholder earnings.
He said the state cooperatives were involved in the NCUC process of HB 951 and expressed “overall support” of its carbon-reduction footprint.
“During the entire process, we advocated for our member’s expectation of least cost solutions that do not compromise the reliability of the electric system,” Winslow said, pointing to the rolling blackouts over Christmas as a “wake-up call” for North Carolinians. “I’ll be watching closely to raise concerns quickly if these tenants are threatened … and remind legislators and Duke Energy that reliability should not be compromised in our transition to a lower carbon portfolio.”
As part of Duke Energy’s rate increase process, public hearings have taken place, three last week in Raleigh, Roxboro and Waynesville. Three more are planned, including one slated for the southeastern North Carolina customer base on Tuesday, March 21 at 7 p.m. in Lumberton at the Robeson County Courthouse, courtroom B, 500 N. Elm St.
Those who sign up to speak will be given 3 minutes to comment on the rate hike proposal. However, that time allotment could decrease to 2 minutes depending on turnout.
Otherpublic hearings on Duke Energy’s three-year rate increase:
- March 20, 7 p.m —Greene County Courthouse, 301 N. Green St., courtroom one, Snow Hill
- April 20, 6 p.m. — Remote via Webex
Duke’s expert witness hearings on three-year rate increase:
- May 1, 2 p.m. — Dobbs Building, Hearing Room 2115, 430 N. Salisbury St., Raleigh
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