Supreme Court strikes down Duke Energy rate increase
Posted April 12, 2013
RALEIGH, N.C. — 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."