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Utilities Commission Mulls Rate Dip To Offset Consumer Tax Hike

Duke Energy/Flickr

A utility sales tax hike in North Carolina is set to take effect in July.  That means your bill will go up.  But first the utilities commission must decide whether to help offset that increase by decreasing rates.  The state’s consumer advocate wants the commission to do that because taxes are going down for Duke Energy. 

Duke Energy’s corporate income tax will go from 6.9 to 6 percent starting January 1.  In 2015 the rate dips to 5 percent.  Meanwhile, the sales tax customers pay is going up in July from 3 to 7 percent.  That’s not fair says Jim Hoard with the Public Staff, the state’s consumer advocacy agency in utility rate matters. 

“It’s just a matter of equity from our point of view,” says Hoard. 

So the proposal is to knock a quarter off what the average Duke customer pays each month and 15 cents off what Progress customers pay.  Without it, Duke customers will pay 97 cents more and Progress customers 83 cents more. 

That savings may not seem like a lot, but it amounts to about $20 million for Duke Energy.  That’s also about how much Duke stands to gain from the lower corporate income tax.  So Duke’s smaller tax bill would be a wash, if the Public Staff gets its way.  

The utility wants to leave rates the same.  Duke Energy spokeswoman Lisa Parrish says the company could factor the lower corporate income tax into a future rate case.  That could be at least two years from now. 

“We believe that you need to consider rising costs on the one side and expenses on the other and not adjust rates for one single expense,” says Parrish.

Electricity bills won’t change much until the higher sales tax rate takes effect in July.