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Wednesday, 13 July 2011 12:17

Duke’s rate hike request is perfectly justified

Written by 

To the Editor:

Duke Energy Carolinas (DEC) ignited a firestorm over its request to the North Carolina Utilities Commission (NCUC) to raise electric rates an average of 15 percent in order to collect an additional $646 million from customers to pay for investments in power plants and infrastructure.

Instead of being upset with DEC, customers should be upset with President Obama and his zealotry against carbon-based energy sources like coal and oil. In January 2008, then-presidential candidate Obama told the San Francisco Chronicle, “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.” That prediction is starting to come true.

Cap and trade didn’t pass Congress, but Obama’s 17,000 bureaucrats in the Environmental Protection Agency (EPA) are accomplishing the same result by generating thousands of pages of new regulations based on new interpretations of the 1970 Clean Air Act. These new regulations add billions of dollars in additional costs for companies like DEC that generate nearly half their electricity from coal-fired plants.

For example, DEC’s new Cliffside #6 coal-fired plant, which goes on-line in 2012, has taken four years to construct and cost $2.4 billion in order to meet EPA’s stringent air quality standards. DEC is also building two new gas-fired generating plants at a cost of $1.4 billion.

So DEC has spent $3.8 billion over just four years to replace generating units which couldn’t be economically updated to meet the EPA’s new standards. This cost can be paid from one source — customers’ pockets.

Customers should also be upset with the state of North Carolina which has mandated,  that by 2021 all power companies must generate 12.5 percent of their electricity from “green” sources — wind, solar, hog and chicken waste, etc. This mandate will add additional generation costs.

DEC has been a responsible corporate citizen. Its electric rates are determined by the N.C. Utilities Commission to return a state-mandated 10 to 12 percent profit. DEC’s current electric rate is 18 percent below the Southeast’s average, and considerably below the average in many other states. In 2007, DEC lowered its rates by 6 percent. In 2009, DEC requested a 12.6 percent increase and was granted a 7 percent increase over two years. That was their first hike since 1991.

The NCUC will determine over the next six months what DEC’s rates will be through public hearings and examination of DEC’s financial data. If you don’t want your electric rates continuing to soar over the coming years, I suggest you convince your state and federal legislators, and the president, that you want regulations mandating “green” sources, and excessive EPA air quality standards be changed to make economic sense.

I have no relationship with DEC, but I will defend its right to recover legitimate costs.

Vic Drummond

Franklin

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