Duke Energy is asking to hike electricity rates for Charlotte-area residents by 16.7 percent, part of a move by the utility to pass high costs for cleaning up coal ash sites on to its customers.
The request, submitted Friday to North Carolina regulators, affects rates in a territory that includes central and western portions of the state. If approved, it would be the first rise in the area since an increase granted to the utility in 2013. Other types of customers, besides residential, would also be affected, for an average increase across all groups of 13.6 percent.
In making Friday’s submission to the North Carolina Utilities Commission, Charlotte-based Duke said it is aiming to cover a variety of costs. Besides coal ash cleanup, those include investments to modernize power plants, generate cleaner power and improve reliability. Duke is seeking to begin charging the higher rates by April 1 but not later than May 1.
For a residential customer using 1,000 kilowatt-hours of electricity a month, a monthly bill would increase by $18.72, for a total payment of about $122.68, Duke said. Commercial and industrial customers would see an average increase in rates of 10.9 percent. Combined, increases requested Friday would generate an additional $647 million in annual revenue for the company, according to Duke’s own calculations.
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The request marks the start of Duke’s efforts to have customers foot the company’s expenses associated with closing coal ash sites around the state.
Duke came under wide scrutiny for coal ash, a byproduct of generating electricity, in 2014 following an ash spill into the Dan River near the Virginia border.
That incident triggered legislation ordering Duke to close all 32 of its North Carolina ash basins. Duke has said its shareholders will be on the hook for fines and cleanup costs associated with the spill itself. The utility has estimated its ash cleanup costs in the Carolinas will total $2.5 billion by 2021.
According to the company, coal ash accounts for more than half of the 13.6 percent increase in Friday’s request.
Environmentalists were quick to criticize Duke’s move to make ratepayers pay for coal ash costs as unfair.
“Duke shouldn’t be allowed to shift the billions it will cost to clean up its coal ash mess away from the company and its shareholders and onto the general public,” Dave Rogers, a North Carolina representative for Sierra Club, said in a statement.
The hike would especially hurt low- and fixed-income individuals, Rogers said, “who shouldn’t have to pay nearly $18 dollars a month before they even flip a switch in their homes, just to bail out Duke for its bad decisions.”
In an Observer interview, Duke’s North Carolina president, David Fountain, noted lower-cost electricity generated from burning coal has helped propel North Carolina’s economy for decades. Now, Duke is safely and responsibly closing ash-storage sites to comply with state and federal regulations, he said.
“Since we’ve all benefited from the coal-fired generation we all have a part to share in the costs associated with environmental compliance,” Fountain said.
In a separate rate request, submitted in June, the company’s Raleigh-based Duke Energy Progress subsidiary asked for a 14.9 percent average increase across customer classes. That increase, which affects a territory that includes Asheville as well as parts of central and eastern North Carolina, also seeks to cover costs associated with cleaning coal ash sites and various investments. Regulators continue to evaluate that submission, which seeks a 16.7 percent increase for residential customers.
In Friday’s filing, Duke said the higher rates were needed in part to pay for cleaner-energy investments. In one example, it noted spending about $557 million replacing older, less-efficient coal-fired units with cleaner-burning natural gas-fueled plants. Other investments have included solar projects and replacing customers’ older meters with higher-tech “smart” meters.
Duke said in the filing that its current rates aren’t providing sufficient revenues to meet day-to-day operating expenses “and also provide its investors with reasonable returns on their investments of needed capital.” The company also said Friday’s increase would still keep its rates lower than the current national average.
On Friday, Fountain said that Duke has made smart and prudent investments since its last rate case to lay the foundation for a smarter and cleaner energy future for North Carolina.
“We’re making investments in the system to really improve reliability,” he said, “and continue a transition to cleaner forms of generation.”
Friday’s filing begins what is expected to be a months-long process involving public hearings in Charlotte and elsewhere in the state before the commission makes a final ruling.
Some opponents began weighing in earlier this week.
In a filing to the commission Wednesday, Belmont resident Amy Brown and Salisbury resident Deborah Graham said the rate increase would be a double burden for them, because they both live less than half a mile from coal ash sites. The two argue the sites have lowered their property values and caused other losses and injuries.
Duke has sought other ways to cover its ash cleanup costs.
In March, the company filed a lawsuit against more than two dozen insurers over payments that Duke claims the companies have failed to turn over. Duke has said the proceeds would benefit customers by helping offset its total costs for ash cleanup. Insurers are fighting back, arguing that Duke long knew about the pollutant’s risks but failed to address the threat.
Company documents Duke released in February said “multiple” North Carolina rate hikes are likely by 2021. Those would cover the costs of a $1.1 billion power plant Duke is building in Asheville and $10 billion in grid upgrades planned over the next five years, the company had said.
Duke ultimately may not get the amount it requested Friday, as the negotiation process involving the commission can result in a lower figure. That was the case in 2013 when Duke sought an initial 9.7 percent increase.
The commission permitted a 5.1 percent hike, which took typical bills up an extra $7.60 a month.