The North Carolina Court of Appeals ruled Wednesday that state regulators misapplied the law when they approved a Duke Energy fuel rate adjustment.
Customers will not receive refunds.
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In a unanimous unpublished opinion, a three-judge panel found the N.C. Utilities Commission exceeded its authority under the statute in effect at the time. The judges declined to order money returned, writing that a 2025 change in state law would allow Duke to recover the same amount again, making refunds ineffective.
The case centers on a fuel rider — an annual adjustment that allows utilities to pass fuel costs directly to customers.
Under North Carolina law, those fuel costs are treated as pass-through charges. Utilities do not earn a profit on fuel itself. If natural gas prices rise, customers’ bills rise. Shareholders do not absorb that volatility.
“Ratepayers cover all the fuel risk in North Carolina,” said Matt Abele of the North Carolina Sustainable Energy Association. “When prices swing, customers absorb that cost.”
Electricity rates in North Carolina have increased more than 23% on average over the past five years, according to state filings.
For Lynnae Trujillo of Dunn, rising power bills have already strained her household budget. Learning that regulators were found to have exceeded their authority — with no refunds ordered — added to that frustration.
“I’m outraged that a court said it was unjust to charge this and they are still not offering anything back,” Trujillo said.
The legal dispute involved Duke Energy Carolinas’ effort to include remaining 2022 fuel under-recovery in its 2024 rider.
In 2023, Duke reported approximately $998 million in 2022 fuel costs that customers had not yet paid. Most of that amount was addressed in an earlier rider proceeding approved by regulators.
The portion challenged on appeal totaled about $19.1 million, according to Duke. The company says that amount reflected weather-related shortfalls in fuel recovery carried into later years.
The Utilities Commission’s Public Staff, which represents consumer interests, argued that the statute in place at the time limited how far utilities could reach back when recovering prior fuel expenses. The Court of Appeals agreed.
Judge John Arrowood wrote that the statute’s “plain language” limited true-ups to costs incurred during a designated test period and that the commission “erred as a matter of law” in allowing certain earlier under-recoveries to be included.
While the appeal was pending, lawmakers amended the statute in 2025 through Senate Bill 266, removing the test-period restriction cited by the court.
An earlier bill, Senate Bill 261, was sponsored by then–Sen. Paul Newton, a Cabarrus County Republican and former president of Duke Energy’s North Carolina operations, but it did not contain the test-period change. Newton resigned from the Senate in March 2025. The provision altering the fuel statute was added later in the legislative process and became law in July.
Duke Energy spokesperson Bill Norton said in a statement that “customer rates remain unchanged because they already reflect the prudently incurred costs that were under appeal.” He said the 2025 update “simply updated the procedures to ensure Duke Energy recovers no more than and no less than the actual costs.”
The company maintains that the fuel costs at issue were reasonably and prudently incurred and that it earns no profit on fuel.
WRAL asked Duke whether shareholders should bear any portion of fuel price risk when projections significantly miss, and what additional steps the company is taking to reduce customer exposure to natural gas volatility. Duke said it does not profit from fuel and that its diverse energy mix helps manage price fluctuations. The company did not provide additional details about shifting risk to shareholders.
Duke Energy reported nearly $5 billion in net income in 2025 across its multistate operations. Fuel costs recovered through riders are not included in profit calculations. Shareholders earn regulated returns on infrastructure investments through separate base rate proceedings.
The ruling leaves intact North Carolina’s system in which customers absorb fuel price swings — and underscores how legislative changes can determine whether money is returned when regulators are found to have exceeded their authority.
Duke has not indicated whether it plans to seek further appellate review.