RALEIGH, N.C. — The president of Duke Energy North Carolina took the stand Tuesday morning to defend a proposed 7.2 percent rate increase, one day after customers complained about the possible price hike.
The higher rates would affect 1.8 million customers statewide, beginning in February, if the North Carolina Utilities Commission agrees they are needed. The average household electric bill would go up by about $7 per month.
The rate increase is less than half of Duke Energy's original request of 15 percent on average across residential, industrial and commercial customers. The proposal cleared a major hurdle last week with the endorsement of the commission's Public Staff, which represents consumers.
Duke Energy President Brett Carter was grilled by attorneys from environmental and consumer watchdog groups, the city of Durham and the state's Attorney General's office.
Carter said the company needs the money to pay for $4.8 billion in greater employee benefit costs, power plant modernization, environmental compliance and other construction projects approved by state regulators since 2009.
He acknowledged the tough economics times, saying that families who are struggling pull at his heart strings. He said that’s why his company has agreed to pay $11 million to community programs that help low-income families cope with higher heating bills.
Carter was repeatedly quizzed on how the company came up with the $11 million figure and if it would really be enough to help cover the rate hike. Carter admitted Duke Energy will be coming back to ask for another rate hike next year and said that the $11 million would only be a one time contribution.
Alfred Ripley, who represents the North Carolina Justice Center, a non-profit group that advocates for the poor, says $11 million is not enough and is "a drop in the bucket."
Duke Energy is asking for the rate increases under the backdrop of the biggest utilities merger in U.S. history. The company is buying Progress Energy, and many Progress customers wonder if their rates will go up as well if Duke's rate hike is approved.
Duke Energy says the rates will remain separate, even after the merger. However, next year, Progress Energy plans to ask for rate raises as well. Right now, Progress Energy's rates are higher than Duke Energy's with about $1 more per kilowatt hour on average. Progress Energy says that's because its customers are more spread out and it costs more to get them power.
These are the figures, as of June 30, according to Edison Electric Institute:
- Residential: Duke Energy – .0894 cents/kwh; Progress Energy – 1.022 cents/kwh
- Industrial: Duke Energy – .0677 cents/kwh, Progress Energy – .0684 cents/kwh
- Commercial: Duke Energy – .0524 cents/kwh; Progress Energy – .0857 cents/kwh
Duke Energy's last rate increase in 2009 raised power costs by 7 percent, but the increase was spread over two years. State Attorney General Roy Cooper says he is standing with consumers against the proposed rate hike.
"A 7.2 percent rate increase is too much for working families and businesses during these tough economic times," Cooper said in a statement.