Duke Energy rates will climb 14.6% over 3 years in central and western NC
Rates are going up in January for Duke Energy customers in central and western North Carolina.
State regulators on Friday approved a three-year, 14.6% rate hike for customers of Duke Energy Carolinas, which stretches from Durham to Greensboro to Charlotte to the mountains. That was only slightly less than the 15.7% Duke asked for.
Rates will rise 8.3% beginning Jan. 15; 3.3% in 2025; and 3% in 2026. Duke says it will give details in early January about how the increase will affect customers' monthly bills.
A similar rate hike for Duke Energy Progress customers in eastern North Carolina and the Asheville area was approved in August. It raised rates in those areas 11.3% over three years. The first-year increase of 3.3% began Oct. 1.
Duke said it needs the extra revenue to upgrade the electric grid, improve reliability and prepare for more renewable energy, to reduce the pollution that causes global warming. In a press release Friday, Duke called the order "constructive."
The company statement said: “We are currently evaluating the NCUC order on Duke Energy Carolinas’ rate request and will determine the exact impacts on customer rates in the coming weeks. Our investments over the past several years – and those included in the multi-year rate plan in the coming years – strengthen the electricity grid to improve reliability for customers and facilitate a cleaner, more secure energy future in a manner that supports economic development across the state.”
The North Carolina Utilities Commission held a hearing in August, where lawyers for consumer, business and environmental groups questioned the original size of the proposed rate hike and how it would affect customers. Duke got most of what it asked for and that means the new rates could be a shock for low-income customers.
But Friday's order also approved a new customer assistance program. It provides a credit of $42 a month for qualifying households. Customers already getting aid through current Low Income Energy Assistance and Crisis Intervention programs will automatically have their bills reduced when rates rise.
"Rates for the lowest-income customers (those getting LIEAP/CIP federal funding) will actually go down," Duke spokesman Bill Norton told WFAE in an email.
The new Customer Assistance Program grew out of discussions between Duke Energy, the Utilities Commission consumer advocates, and environmental and social justice groups.
It's the first multiyear increase since North Carolina's 2021 energy reform law changed how Duke is regulated. In the past, Duke sought rate hikes year by year.
Friday's 279-page order by the North Carolina Utilities Commission also includes approvals for a long list of other Duke costs, policies and projects. They include:
- Recovery of COVID-19-related operating expenses through customer rates.
- A new system of "performance-based regulation" under which Duke can earn additional revenue through higher rates if it meets certain targets set by regulators for reliability, customer service, clean energy and other measures.
- "Residential decoupling," which allows Duke to adjust rates as needed to meet the cost of providing service, instead of according to the amount of energy it sells.
- A later opening date for a new gas-fired power plant in Lincoln County — November 2024 instead of January.
- Recovery through customer rates for most of the cost of the company's new $644 million uptown Charlotte headquarters. The company recently agreed to reduce what it charges consumer ratepayers for the project by $50 million. Duke consolidated Charlotte operations into the building this year and sold or gave up leases on several other properties. When the move was announced in 2021, Duke said it was reducing its Charlotte office space by about 60%, which would save $90 million over five years.
- Full recovery through rates of Duke's Grid Improvement Plan, a long-range plan to upgrade the electric grid. But the utilities commission said Duke must spread the cost out over 18 years, instead of the three years that Duke wanted.
- The new rate order sets Duke Energy Carolinas' allowed return on equity, a measure of profitability, at 10.1%, up from the current 9.6%.
David Neal, a lawyer with the Southern Environmental Law Center, applauded the new customer assistance program, which his group worked on with Duke. But Neal said in a statement Monday that other parts of the order fall short.
“Unfortunately, the commission missed several other opportunities to ensure fair rates for North Carolinians," Neal said. "The Duke Energy Carolinas order, which follows similar rate hikes for Duke Energy Progress, means that customers all over the state will feel the impact of Duke putting profits first – above a reasonable return on equity, meaningful performance-based regulation, and a community driven strategy for our grid.”
Jake Duncan of Vote Solar said the rate hike order fails to push clean energy and will cost ratepayers too much.
“Duke and the commission missed an important opportunity to focus investments on local energy generation and management, like rooftop solar and battery storage, that we know are affordable and reliable and lead to a more resilient, modern grid. We’re disheartened that customers’ money will be spent on expensive, unnecessary grid updates at a time when a forward-looking, community driven strategy for our grid is critical,” Duncan said.