Duke Energy CEO Lynn Good on Thursday defended the electric utility’s proposal to raise rates in a territory that includes eastern North Carolina and Asheville, after one analyst described the increase as “very large.”
The Charlotte-based company in June filed a request with state regulators for an average hike of 14.9 percent across a variety of customer classes. For residential customers, rates could rise 16.7 percent in the affected territory, which includes the central portion of the state but not the Charlotte area.
Duke has said the increase, requested by its Duke Energy Progress subsidiary, will cover costs associated with cleaning coal ash sites, as well as investments to modernize power plants and generate cleaner electricity. Public hearings on the request, Duke’s first since 2013, are scheduled to begin next month before the N.C. Utilities Commission.
“That’s a pretty substantial number,” industry analyst Greg Gordon said about the 14.9 percent figure, on a conference call Thursday with executives to discuss Duke’s first-quarter earnings. Gordon noted that while Duke has put a “substantial amount of capital to work” and hasn’t filed a rate request in years–“it’s just a very large number.”
Good said it was a “fair question” but noted that Duke has undertaken “very aggressive cost management,” which offsets impacts of higher rates to customers. She also pointed out that the process of seeking higher rates can result in a settlement in which the increase is lower than the amount originally requested.
“I think we have a demonstrated record, if you look at the way we’ve approached the rate cases ... (of) bringing people together to come up with a solution that works for customers and investors,” Good said.
In a separate filing later this month, Duke is expected to seek a rate increase that will affect customers in the Charlotte area. Duke has not yet disclosed how much rates might rise, so impacts on customer bills remain unknown.
Thursday’s report shows Duke’s second-quarter profits rose about 35 percent from the same period a year earlier, reflecting higher income across all of the company’s business segments.
Duke earned $686 million for the quarter on $5.6 billion in revenue, compared with profits of $509 million on $5.2 billion in revenue for the second quarter of 2016. The company reported earnings per share of 98 cents compared with 74 cents a share a year ago.
The company said it is still on track to meet its adjusted earnings goal for the year of $4.50 to $4.70 a share.
In an interview with the Observer, Chief Financial Officer Steve Young said Duke also remains on track to meet a previously announced plan to trim $100 million in expenses over the course of 2017. The cuts, which could lead to some job losses, are meant to offset effects of warm weather on the company’s financial results this past winter.
Asked about job cuts Thursday, Young said “there’s no specific number” in mind and that so far “nothing significant” has taken place. In seeking to meet its expense target, Young said Duke will examine its use of vendors and contractors, who are not direct employees of Duke. The company will also seek to take advantage of natural attrition to lower costs from its own employee base, he said.
Duke has roughly 29,000 employees and 17,000 contractors, the vast majority of both spread across seven states. In the Charlotte region, the company has about 8,300 employees and 2,000 contractors.