CYNTHIA SATTERFIELD: Duke Energy - less reliability, higher costs

EDITOR'S NOTE: Cynthia Satterfield is state director, North Carolina Sierra Club.

Consider the nerve of a company that would hike captive consumer prices by a third after the worst product failure in its history.

In a competitive marketplace, no company would dare to attempt that and expect to survive. But monopolies can get away with such customer abuse – and Duke Energy is trying hard.

Mere months after inflicting rolling blackouts that left half a million North Carolinians in the frigid dark on Christmas Eve, Duke is seeking regulators’ approval of not one but two massive price increases on the fundamental service it provides. One calls for a three-year base rate hike of 15.7% to 18.7% (depending on the territory), and the other adds a 16.6% charge to cover rising fossil fuel costs.

All told, Duke Energy wants to raise its customer rates by about one-third, compounding the effects of inflation on household budgets and businesses large and small across the state.

Meanwhile, the Charlotte-based utility reported a 2022 profit of $4.1 billion while paying CEO Lynn Good $21.35 million, a raise of almost 30%.

Fighting sensible reforms

This might seem like a good time for reforms that could save North Carolina electricity consumers more than half a billion dollars a year, but monopoly Duke isn’t interested.

On the contrary, the blackout bosses are lobbying feverishly in Raleigh to kill excellent legislation to investigate cost-saving energy market reforms.

House Bill 503, the Storm Resiliency Study Act, would fund a study led by the North Carolina Policy Collaboratory at UNC-Chapel Hill, assisted by an independent consulting firm with expertise in wholesale electricity markets. The study would make recommendations to the General Assembly by the start of its 2025 session.

A similar study in South Carolina found recently that ratepayers there would save up to $362 million a year if certain reforms were adopted – most notably if Duke and other utilities joined a regional transmission organization (RTO) to direct electricity from state to state as demand fluctuates.

A 2019 review concluded that North Carolina consumers could save almost $600 million a year if Duke Energy joined an RTO. The report recommended a more comprehensive examination like the one authorized by HB 503.

One reason for Duke’s Christmas Eve blackouts was that several of the company’s coal and natural gas plants failed in the cold. Another was that the monopoly utility was unable to buy power from a nearby regional transmission organization it had refused for years to join. The Southeast Energy Exchange Market (SEEM), of which Duke is a founding member, has been suggested as an alternative to RTOs, but during December’s blackout, SEEM effectively stopped operating - indicating that its functionality does not pass the test of how a real market should work.

Who matters most?

What’s Duke’s position now, after its notorious blackouts? Tough luck.

Duke’s lead lobbyist said during a recent State Energy Policy Panel discussion that joining an RTO would require sharing some control of the company’s power plants with other utilities. But why not allow other energy professionals to help make good decisions about our power supply?

Even worse, he said, Duke executives would have to fly to Philadelphia, of all places, to meet with their counterparts from other states to decide how best to allocate power to prevent future blackouts for their vulnerable customers. FYI: Charlotte’s airport offers 18 flights a day to Philadelphia, typically lasting about an hour and a half.

The question for North Carolina’s elected lawmakers is not what’s most convenient for Duke’s well-paid executives or its horde of lobbyists, but what’s best for North Carolina’s 11 million people who need reliable, affordable power – neither of which Duke provides these days.

Without energy market reform, more blackouts are possible, if not likely, while consumer costs keep climbing. At the mercy day and night of a myopic monopoly, North Carolinians are getting the worst of both worlds – and things could get worse still.

As a Duke vice president admitted to state lawmakers during a January hearing on the blackouts: “If we have similar conditions and similar operating environments in the future, operators will take the same actions.”

That’s unacceptable in the 21st century. North Carolina’s General Assembly should act now to keep it from happening, starting with a long-overdue study of energy market reforms.

Knowledge, as they say, is power.

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