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Wednesday, 30 September 2009 18:51

Duke faces stiff opposition to proposed rate hike

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Duke Energy’s rate hike request met strong opposition at a public hearing before members of the N.C. Utilities Commission in Franklin last week.

Duke claims the 12.6 percent hike is needed to pay for upgrades to power plants and infrastructure across its system, including construction of a controversial new coal plant near Marion. If approved, the request would bring the utility more than $496 million per year in additional revenues. Duke says the rate hike will help maintain its credit rating.

Speakers representing environmental groups, local businesses, and local governments — along with plenty of private citizens — were nearly unanimous in denouncing the proposal. The giant utility was criticized for continuing construction of unnecessary coal plants, for its failure to invest more in renewable energy, for the timing of its request during a recession and for its decision to sell power made in North Carolina out-of-state.

“It is unconscionable to force a rate hike in for an unnecessary power plant,” said David Bates, the executive director of the Jackson-Macon Conservation Alliance, referring to Duke’s new coal plant. “There’s no such thing as clean coal, just less dirty.”

Bates spoke during the hearing and at a rally held prior to it in front of the Macon County Courthouse. About 20 protestors listened in at the rally, which was organized by the Sylva-based clean air advocacy group the Canary Coalition.

Duke Nantahala District Manager Fred Alexander told the utilities commission, however, that continued construction of the new coal plant, known as Cliffside, is a “great environmental story.”

“Once we turn the new unit on, we can begin retiring 1,000 megawatts of old coal plants,” he said. The old plants are dirtier than the new coal plant, achieving a net gain to air quality.

The hearing was a formal affair, with speakers swearing on the Bible before offering their testimony. In addition to the hearing officer running the meeting, there were two opposing tables at the front of the room: one for a Duke Energy representative and one for the Public Staff of the N.C. Utilities Commission. The Public Staff acts as a guardian of the public’s interest against the regulated monopoly enjoyed by utilities.

The independent oversight body is against the rate hike, according to Dianna Downey, spokesperson of the Public Staff.

“We have a team of accountants and engineers to study the rate hike request. At this point we believe the rate hike request by Duke is not justified,” said Downing, adding that the findings are still preliminary.

The strongest support for Duke came from John Burton of Bryson City, who is the treasurer for the Nantahala Outdoor Center, which relies on Duke for whitewater releases to accommodate rafting. He urged regulators to keep an open mind when considering Duke’s request.

“Electricity and utility costs have gone up less than everything else. Also, the quality of transmission has dramatically improved,” Burton said. “Duke has succeeded in keeping rates down and in improving reliability.”

Others from the business community, however, criticized the timing of Duke’s rate hike request.

Dan Roland of Franklin is the operations manager for Jackson Paper in Sylva, one of Duke largest commercial customers in the region. He said the company recently decided to expand in Jackson County, and while it expected a rate hike, it was surprised at the size and the timing.

“We are opposed to the rate hike request. While we understand the request, we question the short notice and the size of the increase ... it is a tremendous shock,” said Roland.

 

What’s it paying for?

Part of the debate at the hearing was exactly what Duke’s proposed rate hike will pay for. Many of those speaking against the proposal said the new coal plant, known as Cliffside, is not necessary since the state’s energy usage is declining. Duke, however, says only 20 percent of the rate hike is to fund Cliffside, and it argues it has already spent about $1 billion. State law allows utilities to collect money for new power plants while they are under construction. So even if the construction was abandoned, Duke could still try to recover the money already spent.

In addition to Cliffside, Alexander said the request was to pay for “billions of dollars of investments we’ve already made to build a cleaner and more reliable system.”

But critics said Duke has done little to invest in cleaner energy production or more efficient use of the energy it already produces. Julie Mayfield, the executive director of the Western North Carolina Alliance, urged the utilities commission to deny Duke’s rate hike.

“While there continues to be debate about the percentage of this requested increase that covers infrastructure improvements, previously installed environmental controls and Cliffside, what is clear is this: part of the rate increase is for Cliffside; Duke recently received a 4.5 percent rate increase to cover the increasing costs of coal; and none of the requested increase will cover renewable energy projects or energy efficiency programs,” said Mayfield, reading from a prepared statement.

Avram Friedman, the executive director of the Canary Coalition, said Duke was being duplicitous on several fronts. He said Duke Energy claims the Cliffside plant is to meet growing energy demand in North Carolina, but actual usage in the state is down 2 percent, he said. He also criticized Duke’s recent decision to sell electricity to an energy cooperative in South Carolina and another attempt denied by the utilities commission to sell electricity to Orangeburg, S.C.

“There’s no reason to place this extra burden on electric ratepayers,” said Friedman. “More than 100 new coal plants have been cancelled around the country in the past three years and Cliffside isn’t needed either. It makes much more sense to implement energy policies that will save ratepayers money, by offering economic incentives to invest in energy efficiency in homes, businesses and industry.”

At least two local governments in WNC — Swain County and the Cherokee Tribal Council — have passed resolutions opposing the rate hike request.

The last in the series of public hearings on Duke’s request is scheduled for Oct. 19 in Raleigh.

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