“I don’t think Duke requires an electricity rate increase — not at all, not even 1 percent,” said Selma Sparks, a Franklin resident. “I’m 86 years old on a fixed income, and I’m sure a lot of other seniors here are on a fixed income. There’s no reason customers should have to pay for Duke’s errors.”
In its application, Duke Energy requests authority to increase its rates and charges to produce additional overall annual North Carolina retail revenues of about $611 million.
For an existing residential customer who uses 1,000 kilowatt-hours of power monthly, Duke’s proposed rates would increase the monthly bill from $103.96 to $122.68 — an 18 percent increase.
The proposed increase also includes an increase to the basic customer charge from $11.13 to $19.50 for most residential accounts. The basic customer charge would increase from $16.45 to $22.50 for most small general service customers, from $20.32 to $30 for medium general service customers, and from $154.85 to $204 for large general service customers.
Duke has requested that the proposed rates become effective on July 1, 2017 but the utilities commission has issued an order suspending the company’s proposed rate changes for a period of up to 270 days from July 1, 2017.
Reason for request
Duke Energy claims the rate increase is needed to primarily pay for the modernization of its electric system; to generate cleaner power through renewable resources; to manage and close its coal ash basins; to respond to major storms like Hurricane Matthew and to continually improve service to its customers.
In particular, $101 million of the request is related to new and existing generation facilities such as the Lee Combined Cycle gas-burning plant and two new large solar facilities; $53 million is related to the Lee Nuclear Project in South Carolina that Duke has proposed to cancel.
About $60 million of the requested rate increase is for costs related to Duke’s meter replacement program and a new Customer Information System. These cost increases are partially offset by the return of a deferred tax liability of $64 million as well as a net reduction of $57 million related to other changes in revenue.
In its application, Duke stated that the corporation has made several improvements since receiving its last rate increase in 2013, including the addition of new gas-fueled generation and new utility-scare solar facilities that replaced less efficient coal-fired generation. Duke also began construction of the Asheville Combined Cycle Plant and has almost completed construction of its new Sutton Blackstart Combustion Turbine facility.
Coal Ash cleanup
One major point of contention for residents is that Duke wants to increase customer rates to help recoup costs associated with its 14 coal ash basins across North Carolina.
Duke stated in its application to the utilities commission that it has started to comply with recently adopted federal and state rules regarding the handling of coal ash and the closure of coal ash basins. Duke’s application states that about $135 million of the requested $611 million is intended to recover ash basin closure compliance costs incurred since Jan. 1, 2015. Duke also seeks to recover $201 million toward ongoing ash basin closure compliance costs.
Tamara Zwinak said during the hearing that residents expect and demand corporate responsibility, which is something they’re not getting from Duke Energy.
“I was shocked when I came to the area and saw Duke passing on the cost of coal ash cleanup to customers,” she said. “You should be ashamed of yourselves. How can this longstanding practice you’ve engaged in be passed on to consumers? Didn’t you take into consideration the pollution you were causing?”
Residents across the state still haven’t forgotten the coal ash spill that occurred Feb. 2, 2014, when about 39,000 tons of coal ash was released into the Dan River from Duke Energy’s Dan River Steam Station storage pond north of Eden. According to Environmental Protection Agency documentation, the coal ash spill site extends about 70 miles downstream.
The coal ash — which is the leftover materials from coal-burning power plants — contains unburned carbon and various metals including arsenic, cadmium, chromium, copper, lead, mercury, nickel, selenium and zinc. The Dan River watershed is an integral part of the local ecosystem as it is home to two identified endangered species. The river is also used by livestock, for crop irrigation, outdoor recreational purposes and is a source of drinking water for North Carolina and Virginia residents.
Avram Friedman, who is executive director of the regional environmental group The Canary Coalition, also took the stand at the public hearing to oppose Duke’s rate hike. He said nuclear energy has no future in the U.S., but that doesn’t stop Duke from investing in nuclear energy despite the rising costs of nuclear plant construction and the accidents associated with them.
“They have the chutzpah to ask rate payers to pay for corporate irresponsibility,” Friedman said. “They’ve only partially cleaned up the coal ash that essentially they’ve created and they want us to front the money to build infrastructure that keeps us reliant on fossil fuels even though we need to stop burning fossil to avoid climate change.”
According to the EPA case summary, Duke agreed to pay $3 million for the Dan River cleanup. The agreement also requires Duke to perform a comprehensive assessment to determine the location of coal ash deposits and to remove deposits along the Dan River at an estimated cost of $1 million. Duke will also pay $2 million to the EPA for past and future response costs associated with the spill.
In a 2015 U.S. Forest Service report regarding the damage cost of the spill, author Dennis Lemly concludes that the combined cost of ecological damage, recreational impacts, effects on human health and consumptive use, and esthetic value losses totals over $295 million.
“Because the environmental impact and associated economic costs of riverine coal ash spills can be long-term, on the order of years or even decades, this 6-month assessment should be viewed as a short-term preview,” he wrote. “The total cumulative damage cost from the Dan River coal ash spill could go much higher.”
In his research before the hearing, Fred Crawford of Whittier said he found the risks of coal ash outlined several times in Duke’s annual reports that stated those risks could affect returns for its stockholders. Even fully aware of the risks to the environment and the bottom line for its investors, Duke continued with the coal ash practices.
“I am a stockholder — I understand at times investments don’t get the return we had hoped,” he said. “They ignored the risks imposed and that cost should be borne by the enterprise only.”
Residents who testified during the public hearing all expressed concern about placing an undue financial hardship on people in Western North Carolina.
N.C. Rep. Kevin Corbin, R-Franklin, said a 15 percent increase was too much.
“Most of us would be happy if we got a 15 percent raise in five years, so 15 percent in one year creates a hardship especially with people on fixed incomes,” he said. “I consider 15 to be excessive for the citizens of our district.”
Donn Erikson of Franklin pointed out that Duke is not struggling financially. In fact, Duke Energy came in at 121 on Fortune magazine’s list of Fortune 500 companies.
“Duke is a big company — it can afford to do things right but has a history of not doing things right,” he said. “If a company is allowed to simply raise rates to rectify irresponsible management practices there will be no incentive to modify the way they’re doing business.”
Sparks agreed that working people in WNC couldn’t afford to pay more than they already are to Duke and that the company needed to reach into its own reserves before increasing rates for its customers.
“The last bill I got was unbelievable, but I paid it. You need to use what you’ve got, don’t take mine,” she said.
Harry Horton of Franklin said he’s in the same boat as Sparks. He retired to Franklin three years ago but his financial plan for retirement didn’t work out, leaving him without many resources.
“Finally I was able to get Section 8 housing or I’d be on the streets — every dollar counts,” he said. “I don’t have a car — I walked here tonight.”
Several nonprofit organizations in the region can attest to the difficulties families experience when it comes to paying for heat in the winter. Mountain Projects has a heating assistance program for Haywood and Jackson County residents that on average assists 200 to 250 families a year depending on the amount of donations the organization receives.
Executive Director Patsy Davis said she sees the greatest need in the elderly who often are forced to make difficult decisions when their power bills increase.
“When I talk with our seniors, many have expressed they have outlived retirement income and the amount paid into Social Security many years ago hasn’t kept pace with the cost of living,” Davis said. “My fear is we will have more seniors and families having to make hard decisions like keeping warm versus getting medicine. Some of those we serve barely make it from paycheck to paycheck.”
Robert Smith, former board chairman of the Jackson-Macon Conservation Alliance (now MountainTrue), pointed out during his testimony that several western counties are designated by the state as the most economically distressed counties, including Macon, Swain, Graham, Cherokee and Clay. He said it wasn’t fair to ask poor families in these counties to pay the same increase as families in economically advantaged counties in the eastern part of the state.
“This would slam customers close on the heels of a rate hike in 2013, when our base charge rose another 5 percent,” he said. “While this increase may be minimal for the wealthy decision-makers at Duke, these costs translate to real sacrifice for working families in my part of the state.”
In addition to voicing their opposition to the rate increase, residents also shared their concerns about Duke’s service in the western counties.
For the most part, residents praised Duke Energy workers for their customer service and quick response times when they experience a power outage. However, they did have complaints about Duke’s mistakes that have been slow to get resolved.
Deborah Lolly of Franklin said she’s had 96 outages at her home in the last couple of years, which she said is unacceptable considering she has three people over the age of 65 in the home. Her husband suffers from COPD and relies on electricity to power his CPAP machine at night.
Recently when she called to report another outage, she said this time she spoke to a new employee who informed her the neighborhood outages were due to some faulty equipment that the company knew about but hadn’t yet replaced. Once that was replaced, Lolly said the outages have stopped, but the problem should have been fixed a long time ago.
“We can’t afford to keep paying more and more to Duke,” she said. “We paid $200 to Duke last month so we could keep the power on.”
Duke staff was directed to investigate the matter on Poplar Cove Road in Franklin.
Margaret Crownover of Franklin, a retired teacher of 40 years, said she appreciated her electric service from Duke but didn’t appreciate the fact she was overcharged by the company for 17 years. Even though she’s never used gas to heat her home, for some reason she said Duke had her listed as a gas customer, which means she was charged at a higher rate than other electric customers. Crownover said Duke never offered to pay her back for their mistake, which cost her a lot of money over the years.
“Everyone needs to talk to family and friends — tell them to call Duke tomorrow to see if they have your information right,” she said. “I’ve never had gas in my house and they charged me a higher rate of usage for 17 years.”
Duke staff was directed to investigate this situation as well.
Share your thoughts with the N.C. Utilities Commission
The North Carolina Utilities Commission still has two more hearings to conduct in Greensboro and Charlotte in the coming weeks before an expert witness hearing is held in Raleigh on Feb. 19. This hearing allows Duke Energy and the commission to examine and cross-examine each other’s expert witnesses on the proposed rate increase.
Based on the timeline of hearings and procedures, the earliest the commission could make a decision on the proposed rate increase would be April.
By the numbers
For existing residential customers, Duke Energy Progress’s proposed rates would change the bill of a residential customer using 1,000 kilowatts a month as follows:
Existing ($/month): $104.68
Proposed ($/month): $122.48
Change ($/month): $17.80
Change (%): 17 percent