Duke Energy is urging state regulators to approve rate increases at its two North Carolina electric utilities, including money to pay for cleanups of toxic coal ash.
Duke treasurer Karl Newlin told the North Carolina Utilities Commission Monday that if the company isn't allowed to recover coal ash cleanup costs, it could lead to a downgrade in its credit ratings and scare off investors. His testimony came during the first day of a public hearing on the proposed rate increases that are being conducted online.
Coal ash is the residue left after burning coal to make electricity and contains heavy metals that can cause cancer. Duke's critics say that the company and its investors should absorb the multibillion-dollar cost to clean up millions of tons of coal ash that have piled up at its North Carolina coal plants for decades.
But Newlin argued that if that happens, "the end result will be a marked deterioration in the companies' credit quality, which will inevitably lead to a higher cost of capital as the companies seek to attract investors to fund their extensive capital needs."
"The deterioration in credit quality will be exacerbated by more favorable regulatory treatment for its utilities in neighboring jurisdictions," Newlin said. "Investors vote with their wallets and will go elsewhere if the returns they see from the companies do not meet their requirements or they do not believe that credit quality will be maintained over the life to that investment."
Duke wants to raise revenues by an average of about 6% in its central North Carolina territory, Duke Energy Carolinas, which includes Charlotte. And it's seeking an average 15.6% increase for Duke Energy Progress, which includes eastern North Carolina and parts of the mountains.
Residential customers who use 1,000 kilowatt-hours per month would see their monthly bills rise from $102.71 to $108.43 in the Duke Energy Carolinas area, and from $120.44 to $137.73 in Duke Energy Progress territory, according to the utilities commission.
Duke has reached agreements with the state's consumer advocate as well as business and environmental groups that could reduce the amount of the rate increases, said Duke spokesperson Meredith Archie.
"However, we have not calculated the rate impacts of the proposed partial settlement since it will ultimately be reviewed and approved by the NCUC, along with the unresolved issues," she said.
Coal ash is among those unresolved issues. In 2018, regulators allowed Duke to recover coal ash costs, minus $100 million in penalties.
Duke wants the increases to pay for not only coal ash cleanups, but also for building new power plants and power grid upgrades and to recover costs of cleaning up after hurricanes and winter storms over the past two years.
Rita Leadem with the environmental group NC Warn said many of the grid upgrades are unnecessary and that Duke should invest more in solar energy.
"The smarter investment at this time would really be in the clean energy resources, backed up with battery storage, that would provide the resiliency that we need and really pave the way forward," she said.
Before making a final decision, the state utilities commission will hear from dozens of witnesses and attorneys from Duke Energy and other interest groups. The hearings are being held by video conference and streamed on YouTube and could take a month.
Duke hopes for approval by the end of the year.
WFAE reporter Nick de la Canal contributed to this story.
