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Is Duke Rate Hike Settlement A Deal Or A Dupe?

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Duke Energy has struck a deal with the state's top utility customer advocate that, on the surface, seems like a pretty good deal for ratepayers. But some advocacy groups wonder if we're being played.

A pattern is emerging: Two years in a row, Duke Energy has come in asking for a big rate hike - 9.7 percent in this latest case - only to turn around a few months later and settle for an increase half as big. 

"You know, this is the game," says Jim Warren, of the advocacy group NC WARN.

He thinks Duke Energy is treating the North Carolina Utilities Commission's consumer advocacy arm – called the Public Staff – like a hapless car-buyer. Duke posts an outrageously high sticker price so we feel like we got an amazing deal when we drive off the lot paying half that figure.

But did we really? asks Warren.  

"The public staff says 'We cut that way back,' but there's just no certainty that they got everything out of there that Duke sought to overcharge," says Warren.

Particularly, says Warren, since the negotiations between Duke and the Public Staff happened in private before the utilities commission held any hearings to collect evidence on the rate case.

But Robert Gruber – the executive director of the Public Staff – says his staff is very experienced and drove a hard bargain with Duke.

"You would have to see the 45 adjustments we made and how much we argue over it, to realize we don't just pull these numbers out of the air," says Gruber. "They're very contentious when we go through the analysis."

But, Gruber says, Duke does seem to be in the habit of aiming high: "I think they ask for more than they want, but I think they hope to get probably two-thirds of what they ask for and we've been able to keep it less than that."

A spokeswoman for Duke Energy declined to comment on the company's strategy because the settlement has not been formally filed with the North Carolina Utilities Commission.

Regulators will still hold hearings on the rate request next month, but the Commission usually ends up approving whatever Duke and the Public Staff agreed to in their settlement, which would mean a 4.5 percent bump in electric rates come September.