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Duke Energy rate hike still has critics

Proposal that cuts potential rate increase by more than half doesn't deter critics.

By Bruce Henderson
bhenderson@charlotteobserver.com

Duke Energy heads into next week's rate hearing in Raleigh with plenty of potential critics left despite its settlement agreement with the N.C. Utilities Commission's influential Public Staff.

While the settlement was important for Duke, none of the other nine parties to the case - mostly large-customer and advocacy groups - has reached similar agreements.

N.C. Attorney General Roy Cooper declared he would fight on even before the Public Staff agreement was committed to paper.

Duke would welcome others joining the settlement, spokeswoman Paige Sheehan said.

"Until we see something on paper, we're not really sure how it impacts us and whether it's something we can join or will oppose," said Robert Page, a Raleigh lawyer who represents industrial customers. "It may be something we're still talking about Monday. If it's something we can't support, we'll be prepared to go forward."

The Public Staff settlement ratchets Duke's 15-percent initial request down to 7.2 percent for all customer classes, trimming the $646 million in new revenue sought by Duke down to $310 million.

Duke agreed to defer recovery of $51 million from a new unit at its Cliffside power plant and made accounting adjustments that saved another $8 million. It will donate $11 million to its Share the Warmth program that helps N.C. customers pay their energy bills.

Even at less than half the amount Duke first sought, a 7.2 percent hike would be its largest in North Carolina in more than 20 years.

Duke's last hike, in 2009, spread an effective 7 percent hike over two years.

Jim Warren of the N.C. Waste Awareness and Reduction Network, which advocates for renewable energy, said his group still plans to press its case before the commission.

"We still think (the rate increase) is too much and moreover, it's part of a broader, worn-out business model," Warren said by email.

"Why should Duke's home state be stuck with a 20th-century business model - more fossil and nuclear power - when they're investing heavily in solar, wind and efficiency in other states?"

Duke says it needs the money to pay for $4.8 billion in Carolinas construction projects that state utility commissions approved. Echoing many Duke customers, the attorney general's staff says the turbulent economic times will make even a reduced rate hike hard on residential customers.

Cooper's staff has not filed detailed arguments before the Utilities Commission.

One group of large industries says it's bad timing for Duke to raise rates when it is losing struggling industrial customers at an "alarming rate." A second industrial group, represented by Page, recommended a hike limited to 7.45 percent over two years.

Three advocacy groups - N.C. WARN, the N.C. Justice Center and the N.C. Housing Coalition - argue that Duke has unfairly offered Google, Facebook and other power-hungry data center owners low rates at the expense of residential customers. Higher rates will increase that disparity, they say.

Duke disputes those claims, saying the data centers helped replace Duke's 21 percent drop in sales to Carolinas industrial customers over the past two decades.

"The attraction of data centers to North Carolina has added jobs and resulted in lower costs of electricity than would have existed without them," Brett Carter, Duke's N.C. president, said in written testimony.

Henderson: 704-358-5051

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