Supreme Court strikes down Duke Energy rate increase

Posted April 12, 2013

— The North Carolina Supreme Court on Friday struck down a 7.2 percent increase on electric rates that the state Utilities Commission awarded to Duke Energy Corp. last year.

The court ordered the Utilities Commission to reopen the rate case and evaluate the impact on consumers to determine an appropriate rate.

"This is great news for consumers who spoke loudly and clearly on how hard this rate increase would hit their wallets," Attorney General Roy Cooper said in a statement. "In a time of economic hardship, the effect on customers must be taken into consideration, not just profits. We’re glad the court agreed and hope rates will be set fairly."

Cooper challenged the commission's January 2012 decision to ignore opposition from hundreds of consumers at public hearings and approve the rate increase for Duke's 1.8 million customers in North Carolina. The increase, which took effect a month later, added $7 to the average monthly residential electric bill, to a total of $103.

The Public Staff, the state agency that represents consumers in utility cases before the commission, negotiated the 7.2 percent increase with Duke, noting that the utility had wanted to raise rates by 17 percent.

Paul Newton, North Carolina president for Duke, said the Charlotte-based company still believes the negotiated increase was "fair and well-reasoned" and will be upheld when the Utilities Commission reviews it.

"It is important to note that the (court) order is limited to the commission’s consideration of the ‘proper’ return on equity. It does not require any changes to the current rates and rate structure approved by the commission last year," Newton said in a statement.

The Consumer Protection Division in Cooper's office argued in court that the increase was exorbitant in light of the sputtering economy and the tight budgets many families face.

Charlotte-based Duke maintained that state law requires the commission to consider the changing economy only as it relates to shareholders, not consumers. The company said it has spent more than $4 billion on new, more efficient power plants and needs to recoup its investment.

"Given the legislature‘s goal of balancing customer and investor interests, the customer-focused purpose of (state law) and this court‘s recognition that the commission must consider all evidence presented by interested parties, which necessarily includes customers, it is apparent that customer interests cannot be measured only indirectly or treated as mere afterthoughts and that (return-on-equity) provisions cannot be read in isolation as only protecting public utilities and their shareholders," Justice Barbara Jackson wrote in the 18-page ruling.

"Instead, it is clear that the commission must take customer interests into account when making (a return-on-equity) determination," Jackson wrote. "Therefore, we hold that in retail electric service rate cases the commission must make findings of fact regarding the impact of changing economic conditions on customers when determining the proper (return) for a public utility."

Duke is seeking another 9.7 percent rate increase, while Raleigh-based Progress Energy, which Duke acquired last July, wants a 5.7 percent increase.

David Pomerantz, a spokesman for Greenpeace, said the environmental group would continue fighting utility rate increases until Duke changes its production strategy.

"Coal, gas and nuclear power plants may be profitable for shareholders, but the cheapest system for ratepayers will be based on renewable, efficient energy," Pomerantz said in a statement. "Ratepayers will keep standing up against Duke’s antiquated business model until the company gets behind a modern energy system."


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  • oleguy Apr 15, 2013

    But you do have Choices,, Cut back, dry clothes outside, Cut that hot water heater back to 85 degrees, turn off them lights,, Unplug your tv when not watching,, use solar, wind, thermold,,, How many have a Bunn coffee maker? Its on all the time, wash clothes in cold water,, Set your cooling at 80 deg,,,Open your windows, use fans, dress skimmpy in the summer, Heat your house to 65 deg,, dress warm,, Get off the grid... Its possible, use solar lights,, Live in 5 to 600 sq ft. of your house,,,You can cut your utility power use...

  • Lightfoot3 Apr 15, 2013

    But, but, but the executives NEED their millions!

  • lorenhart25 Apr 12, 2013

    Thanks to Laura Leslie and WRAL for this helpful article. It's good to see some real regulation of Duke Energy and the NC Utilities Commission, which seem to be working together for their own interests, at the expense of everyone else.

    No rate hikes for dirty energy! We need clean energy. Now.

  • Cock a doodle doo Apr 12, 2013

    All of you thinking you're getting a refund are very mistaken. In fact, the rate hike will not be reversed, it is just being blocked as is. Duke Energy will change verbiage the Supreme Court deems this rate hike not appropriate, and then it will stick. Nobody's power bill is going down people. Sorry.

  • lwe1967 Apr 12, 2013

    Glad to see that the Courts sided with the people for a change. They will have to refund it, but it will be given as a refund. Once they get your money, that's it.

  • stymieindurham Apr 12, 2013

    "The Duke Energy corporation, PAC, employees and their families have donated at least $241,800 to Pat McCrory’s gubernatorial campaigns and the State Republican Party."
    cvdurham - This doesn't mean anything. If it does would it then mean your obama is a hollywood movie star. Hmmmmm?

  • rushbot Apr 12, 2013

    matt_wood said at 1652: "And you misinterpret causality. We have high tax rates because of the high square milage, not the other way around. And you say our roads are horrible, but have you ever driven down I-95 in SC? I have and it S-U-C-K-S. So sure, if you want roads like that, go ahead and lower taxes. Fact is, NC roads are much better than many other states, including those horrible toll roads through MD, NJ, etc." .. .. are right about SC roads..they do not require their 2 lane roads to have a center that slopes to the road's edge and drains rain water..they just pave'em like your as all get out, but you don't want to have to drive on them during a rain storm...

  • matt_wood Apr 12, 2013

    "Matt, I see you averted the highest tax comment... Are you trying to say its because of those tax rates we have the most square mileage? I have to ask though. What good is all that square mileage if it is un-driveable? The offset should at the very least go hand in hand. Ill pay the tax but you better provide the service and right now, the service is poor based on the tax rate..."

    And you misinterpret causality. We have high tax rates because of the high square milage, not the other way around. And you say our roads are horrible, but have you ever driven down I-95 in SC? I have and it S-U-C-K-S. So sure, if you want roads like that, go ahead and lower taxes. Fact is, NC roads are much better than many other states, including those horrible toll roads through MD, NJ, etc.

  • publicassistance Apr 12, 2013

    "itlsss please..............this was about raising rates on us, so they can fix one of their own shoddy plants in Florida..... do any of you research anything ever?" - SouthernPackerFan

    Agreed. These crooks made a bunch of bad decisions and now want the rate payers to bail them out. Most of these increases are to fund shut downs and overhauls of failed or ill constructed plants.

  • Frov Apr 12, 2013

    The idea that investors who take a chance in the market in order to get a healthy profit should be guaranteed a profit (and a big on at that) on their investment is absurd, particularly when it is with a monopoly that controls a necessity like electricity. Heck, those of us here long enough were all forced to pay up front when they built the nuclear plants, but I for one don't remember ever getting any stock in the company (then CP&L) in return for my investment. Instead I get rate increases to go into the pockets of "investors". Now Duke does an unwelcome merger with Progress Energy, and they want us to pay for what they previously claimed would result in cost savings. They don't deserve rate increases, they deserve criminal indictments.