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Hearing starts with questions over the size of Duke Energy's proposed rate hike

Duke Energy executives Lesley Quick (left) and Kendal Bowman are sworn in before testifying at a North Carolina Utilities Commission hearing in Raleigh on Monday, Aug. 28, 2023.
North Carolina Utilities Commission
Duke Energy executives Lesley Quick (left) and Kendal Bowman are sworn in before a North Carolina Utilities Commission hearing in Raleigh on Monday, Aug. 28, 2023.

Duke Energy executives and expert witnesses faced pointed questions Monday on the opening day of a multi-day regulatory hearing in Raleigh on Duke Energy's request to raise rates in central and western North Carolina.

Lawyers for consumer, business and environmental groups questioned Duke Energy witnesses about the size of the proposed rate hike — 15.7% over three years as originally filed in January.

That would come on top of a separate nearly 12% increase approved last week by the North Carolina Utilities Commission to cover higher costs for coal and natural gas. Marcus Trathen, a lawyer for a group of large industrial customers, asked Duke North Carolina president Kendal Bowman about the impact of the two big increases.

"From the industrial perspective, do you acknowledge that what appear to be modest rate adjustments can have a dramatic rate impact for large users like industrial customers?" Trathen asked.

"Yes, we understand that at Duke Energy, and we continue to work with our large industrial customers to figure out ways to mitigate that," Bowman said.

Most of the questioning at Monday's three-hour session focused on the size of the rate increase and on concerns about another issue: Duke's request for a 10.4% maximum return on equity, a measure of profitability. A lawyer for the Utilities Commission Public Staff, the state's utility customer advocate, noted that Duke's request is higher than the industry average.

Duke says it needs higher rates to pay for modernizing the electric grid and improving reliability during storms. There also are costs in shifting to more renewable energy and preparing for growth in electric vehicles.

The hearing continues Wednesday and is expected to last for a week or more. This hearing covers the company's Duke Energy Carolinas territory, which includes Durham, the Triad, Charlotte and the mountains.

Two weeks ago, regulators approved a similar rate increase for Duke Energy Progress customers in eastern North Carolina and the Asheville area. But the 11.3% increase over three years was less than Duke asked for. The same could happen in this case.

Duke already has reached agreements to reduce the 15.7% request for Duke Energy Carolinas customers. Last week, the company reached a deal with the Utilities Commission public staff, the state's utility consumer advocate, to reduce the requested $833 million revenue increase by $158 million, or almost one-fifth.

Regulators will have to decide whether to accept that and other "settlements" as they consider the overall rate hike request. It's not clear yet how the proposal would affect monthly bills.

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David Boraks previously covered climate change and the environment for WFAE. See more at www.wfae.org/climate-news. He also has covered housing and homelessness, energy and the environment, transportation and business.