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News State / Region N.C. Supreme Court overturns Duke Energy’s 7.2 percent rate increase

The North Carolina Supreme Court ruled to overturn a portion of Duke Energy Carolinas rate increase on Friday April 12, sending the case back to state regulators for further action.

In a unanimous decision, the state's Supreme Court ruled that the North Carolina Utilities Commission failed to make the necessary findings of fact to support its decision to grant a 10.5 percent return on equity.

The hike was initially approved by the North Carolina Utilities Commission in January 2012 and went into effect in February that same year. The 7.2 percent increase that was granted, which was still less than the 17 percent that was requested, added about $7 per month to an average residential bill.

Over the past 14 months the increase has been implemented, residents have paid on average an additional $98 due to the rate hike. According to the court's ruling, which can be viewed by clicking here (pdf), states that the Utilities Commission "failed to make the necessary findings of fact" to support its decision and that "the Commission must make findings of fact regarding the impact of changing economic conditions on customers" when deciding how much a public utility can profit as part of a rate increase.

Macon County residents were pleased to hear of the Supreme Court's ruling and think that citizens are already doing all they can to make ends meet. “I think there needs to be a cap somewhere,” said Brenda McGuire Hicks. “The rising rates do not meet their service.”

“Duke's shareholders can afford to make a little less in earnings,” said Tracy Amajm. “This is not the time to be paying high profits to shareholders at the expense of the general public.”

Not all Franklin residents were against the rate hike to begin with.

"It says a lot about the state of North Carolina's economy when people at the highest levels of government are taking Duke Energy to court over this rate hike after it had already been approved by the state utilities commission," said Jimmy Kirchman. "But for the average person, this rate increase only amounted to $7 per month. There's not much you can do with $7 in a month."

North Carolina Attorney General Roy Cooper is responsible for the case making it to the Supreme Court and has been a prime component speaking out against the rate hike since Duke first proposed it.

Cooper said, “This is great news for consumers who spoke loudly and clearly on how hard this rate increase would hit their wallets,” said Cooper in a released statement. “In a time of economic hardship, the effect on customers must be taken into consideration, not just profits. We’re glad the court agreed and hope rates will be set fairly.”

Macon County Commission Chair Kevin Corbin is thankful the Supreme Court overturned the ruling. "We, the Macon County Board of Commissioners, were very vocal in opposing that rate increase," said Corbin. "In addition to approving a resolution opposing the increase, we lobbied other counties to do the same. We sent a copy of that resolution to the North Carolina Utilities Commission and that became part of the public record opposing the increase. I think it was the right thing to do and I agree with the decision that was made."

The case will now be reopened by the Utilities Commission and be further examined. Duke Energy is adamant that with further investigation, the rate hike will be upheld.

"Duke Energy obtained the Supreme Court order earlier this afternoon and our legal and regulatory teams are reviewing the court's decision,” said Paul Newton, president of Duke Energy North Carolina. “It is important to note that the order is limited to the Commission's consideration of the 'proper' Return on Equity. It does not require any changes to the current rates and rate structure approved by the Commission last year. We will continue to monitor the situation and provide any information required by the Commission or others. We continue to believe that the settlement agreement approved by the Commission authorizing a 10.5 percent ROE is fair and well-reasoned. We have no reason to believe that it will not ultimately be upheld."

While the court's ruling overturned the 2012 rate hike, sending it back to state regulators to reconsider, Duke Energy customers should not expect a refund just yet. While the state continues to look at the electric rates, customers can expect to continuing paying the increased rates until a final decision is made.

While Duke Energy's 2012 rate hike continues to be battled out in the courts, the company has since filed a request with the Utilities Commission for an additional rate increase of 9.7 percent or on average $14 per month for residential customers.

The overall 9.7 percent request, which is projected to go into effect on Jan. 1 2014, would allow Duke Energy to increase electric rates by approximately $446 million.

According to Duke Energy, more than 90 percent of the most recent request is driven by capital investments that Duke Energy Carolinas has made in the electric system that serves 1.9 million households and businesses in North Carolina. Macon County Commissioners have already joined other counties in the state in passing a resolution opposing Duke's most recent increase request as well.





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published: 10/18/2013
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