Duke Energy Rate Request Being Negotiated With Regulators

The nation's largest electric company agreed Monday to seek a smaller rate increase on more than a million North Carolina customers, with a smaller potential profit margin, but still wants nearly $200 million a year to clean up the toxic byproducts of burning coal.

Duke Energy Corp. and consumer advocates working for the North Carolina Utilities Commission said they've agreed to a partial settlement as the company seeks a reduced 13 percent rate hike. The company is now willing to accept a 9.9 percent return on potential profit margin, down from 10.75 percent.

Still at issue is whether the Charlotte-based company will be allowed to charge consumers the full, multi-billion-dollar cost of cleaning up its coal ash pits, the two sides said. The company plans to excavate coal ash and move it away from waterways at eight of the 14 North Carolina sites. Ash would be dried out, covered and left in place at the other pits.

The state Utilities Commission postponed hearings that were scheduled to start Monday until Nov. 27 as the deal took shape.

One frequent critic denounced closed-door talks such as these, saying they shut down a full airing of how the Charlotte-based company does business.

They result in regulatory hearings where debate is curtailed and "everything becomes centered around the deal that has been made," said Jim Warren, executive director of the North Carolina Waste Awareness and Reduction Network. "It shields Duke Energy from full scrutiny."

The company's Duke Energy Progress subsidiary said in a separate regulatory filing that it's reducing its overall rate request from 15 percent to 13.2 percent. That would generate an additional $426 million a year, down by $52 million from the original request in June.

The company originally sought a 16.7 percent price jump for households, adding an extra $18 per month to the typical household bill of $105. The company now says households could face a 15.2 percent increase, while industries and other types of users would face increases of various sizes.

Duke Energy Progress operates in much of eastern North Carolina and around Asheville, serving about 1.3 million customers. Duke Energy's western North Carolina subsidiary, with 2.5 million customers, is seeking a separate 17 percent increase on households that the commission will consider next year.

Duke Energy argues both its North Carolina subsidiaries should be allowed to pass along the full bill for coal ash cleanup to consumers as part of the routine cost of burning coal to deliver low-cost electricity. The company said that it always obeyed existing environmental laws, and the utilities commission approved its spending.

The Utilities Commission's Public Staff, which represents consumers, and Attorney General Josh Stein want the company and its shareholders to pay a big chunk of those costs. They argue cleanup costs are higher than they should have been because Duke Energy for years failed to properly dispose of coal ash.

Coal ash contains arsenic, lead, mercury and other elements that may be hazardous in sufficient concentrations. Environmentalists and state regulators say those heavy metals have been draining through the unlined bottoms of pits where liquefied coal ash has been stored for decades.

Hundreds of customers barraged the utilities commission, demanding it resist the company's request. They included Yin Yin of Chapel Hill.

She says Duke Energy has an obligation to fix a problem they've allowed to fester for decades by storing coal ash in ways she believes contaminated the environment.

"If my negligence of improper storage of chemicals on my property caused the contamination of my neighbor's well, would my neighbor be asked, in part, to pay for the cleanup? No!" Yin wrote in an email to the commission.

The utilities commission will ultimately decide how much more Duke Energy could charge.

In its last rate hike request in 2012, Duke Energy Progress sought an average 14 percent increase for households and 9 percent for commercial and industrial customers. The utilities commission approved and the state Supreme Court allowed an average 5 percent increase.

The Duke Energy Progress filing also includes requests to recover $253 million in power plant upgrades, about $30 million in rebuilding costs after Hurricane Matthew in 2016 and other storms as well as transmission system upgrades. The parent company plans extensive construction, for which it will seek to charge its 7.5 million electricity customers in the Carolinas, Florida, Kentucky, Ohio and Indiana.

Duke Energy plans to spend $25 billion over a decade to modernize its transmission grid, making it safer from cyberattacks and equipped to take in renewable energy from many new installations. The company also plans to spend $11 billion on natural gas and renewables over the next 10 years as it accelerates its move away from burning coal to lower-cost fuels.