Duke Energy to seek slightly smaller rate increase

The energy giant and state attorneys tasked with representing the public said they've agreed to a partial settlement, with Duke taking 9.9 percent return on equity, down from 10.75 percent.

Still at issue is whether the Charlotte-based company will be allowed to charge consumers the full, multibillion-dollar cost of cleaning up its coal ash pits, the two sides said. The company plans to excavate coal ash and move it away from waterways at eight of the 14 North Carolina sites. Ash would be dried out, covered and left in place in the other pits.

The North Carolina Utilities Commission postponed hearings that were scheduled to start Monday until Nov. 27 as the deal took shape.

One frequent critic denounced closed-door talks such as these, saying they shut down a full airing of how Duke does business.

They result is regulatory hearings where debate is curtailed and "everything becomes centered around the deal that has been made," said Jim Warren, executive director of the North Carolina Waste Awareness and Reduction Network. "It shields Duke Energy from full scrutiny."

The company's Duke Energy Progress subsidiary said in a separate regulatory filing that households would face a 15.2 percent rate increase, while industries and other types of users would face increases of various sizes.

That filing, though, came Friday. It's unclear how the settlement filed Monday would affect the bottom line for residents. The company originally sought a 16.7 percent price jump for households, adding an extra $17.80 a month to the typical household bill.

Part of the request was to increase the utility's base rate, charged regardless of monthly consumption, from $11.13 a month to $19.50 for residential users. It's unclear whether the settlement would change that.

Chris Ayers, executive director of the North Carolina Utilities Commission Public Staff representing consumers in the case, said the issue isn't addressed directly in the proposal and that there are "other numbers that have to flow in" before the fee is recalculated.

Duke Energy Progress operates in much of eastern North Carolina and around Asheville, serving about 1.3 million customers. Duke's western North Carolina subsidiary, with 2.5 million customers, is seeking a separate 17 percent increase on households that the commission will consider next year.

Together the two increases would total more than $1 billion in new annual revenue.

Duke argues both its North Carolina subsidiaries should be allowed to pass along the full bill for coal ash cleanup to consumers as part of the routine cost of burning coal to deliver low-cost electricity. The company said that it always obeyed existing environmental laws, and the Utilities Commission approved its spending.

The Public Staff and Attorney General Josh Stein want the company and its shareholders to pay a big chunk of those costs. They argue cleanup costs are higher than they should have been because Duke for years failed to properly dispose of coal ash.

Coal ash contains arsenic, lead, mercury and other elements that may be hazardous in sufficient concentrations. Environmentalists and state regulators say those heavy metals have been draining through the unlined bottoms of pits where liquefied coal ash has been stored for decades.

Hundreds of customers barraged the Utilities Commission, demanding it resist the company's request. They included Yin Yin of Chapel Hill, who said Duke has an obligation to fix a problem they've allowed to fester for decades by storing coal ash in ways she believes contaminated the environment.

"If my negligence of improper storage of chemicals on my property caused the contamination of my neighbor's well, would my neighbor be asked, in part, to pay for the cleanup? No!" Yin wrote in an email to the commission.

The commission will ultimately decide how much more Duke could charge.

In its last rate hike request in 2012, Duke Energy Progress sought an average 14 percent increase for households and 9 percent for commercial and industrial customers. The commission approved and the state Supreme Court allowed an average 5 percent increase.

The Duke Energy Progress filing also includes requests to recover $253 million in power plant upgrades, about $30 million in rebuilding costs after Hurricane Matthew in 2016 and other storms as well as transmission system upgrades. The parent company plans extensive construction, for which it will seek to charge its 7.5 million electricity customers in the Carolinas, Florida, Kentucky, Ohio and Indiana.

Duke plans to spend $25 billion over a decade to modernize its transmission grid, making it safer from cyberattacks and equipped to take in renewable energy from many new installations. The company also plans to spend $11 billion on natural gas and renewables over the next 10 years as it accelerates its move away from burning coal to lower-cost fuels.