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Wednesday, 19 August 2009 14:18

Duke lobbies for rate hike amidst protest

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Swain County commissioners expressed their disapproval of an 18 percent hike in electric bills being sought by Duke Energy to pay for construction of a new coal plant.

Most of Jackson, Macon and Swain counties get their power from Duke.

In a resolution passed unanimously last week, commissioners protested the rate hike on the grounds that this region is partially supported by hydropower, a far cheaper form of power.

Duke has 10 hydropower dams straddling five rivers in the region. Swain County commissioners said they had always been told by Duke that the electric rates in the region would be lower than elsewhere because of those hydropower operations.

The water is free, unlike the fuel that powers coal, natural gas or nuclear plants. Duke’s rates are currently 31 percent below the national average. Other than annual adjustments to cover fluctuating fuel costs, there hasn't been an baseline rate increase since 1991.

Swain County forwarded its resolution to the N.C. Public Utility Commission, which holds final say on a rate increase.

As a regulated monopoly, Duke cannot raise power rates without permission from the N.C. Utility Commission. Duke operates under a profit ceiling. However, Duke claims that it needs to raise rates to cover the construction costs of a new $2.4 billion coal plant being built near Hickory and the increased cost of coal. The company has another $2 billion in capital investments in new power lines and pollution controls on plants.

Of the 18 percent hike, 13.5 percent would cover capital costs for projects like the new coal plant while 4.5 percent is intended to cover the increased costs of coal, according to Avram Friedman, director of the Sylva-based Canary Coalition. One theory is that Duke is asking for a bigger rate increase than it expects to get in anticipation of bargaining down.

Friedman proposes an alternative solution: don’t build the new coal plant.

Duke says the new coal plant is needed to meet the future demand for electricity. Friedman says the public should scale back its appetite for power. Instead of building a new coal plant, the money should be invested in energy efficiency programs and renewable energy, Friedman said.

“The Utility Commission must stop allowing Duke Energy to waste customers’ money while risking an environmental and health tragedy,” Friedman said. “North Carolina wants to be part of the national surge toward energy efficiency and clean power that is creating thousands of jobs everywhere.”

A bill passed by the state legislature in 2007 allowed utilities to start billing ratepayers to front money for new plants while still under construction. Previously, utilities couldn’t enact a rate hike tied to a new power plant until that plant came on-line. It forced utilities to secure financing for new plants through the financial markets rather than on the backs of rateplayers. Under the old financing rules, Friedman doubts the coal plant would have been built.

Friedman was among 43 arrested for a peaceable mass demonstration against the coal plant at Duke Energy’s headquarters in Charlotte on Earth Day this April, going down in history as the largest act of nonviolent civil disobedience on climate change in the country.

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