As a result of the increase, there will be a total of $178.7 million, or 5.5 percent average, increase for N.C. customers implemented over the next two years. As of June 1, rates have already begun to go up. The first year includes increases of about 4.5 percent, or $147.4 million. Beginning on June 1, 2014, the rates will increase by an additional $31.3 million or 1 percent. Because of this increase, there will also be a return on equity of 10.2 percent and a capital structure of 53 percent equity and 47 percent debt.
“We are pleased the N.C. Utilities Commission has approved our settlement in this case,” said Paul Newton, Duke Energy state president – North Carolina. “We believe that the settlement reflects a balance between the needs of our company and those of our customers.”
At hearings across the state last month, the public was given the chance to voice their opinions on the rate hikes and though some applauded Duke for their efforts within the community, most of those in attendance at the Franklin meeting pleaded with the commission not to allow the increase citing the tough economic times that N.C. and its residents are still going through.
As a response to this, according to Duke officials, the company will contribute an additional $20 million to help low-income customers in the state pay their energy bills and provide training that improves worker access to jobs and increases the quality of the workforce.
“We understand there is never a good time to increase rates,” said Newton. “However, we believe this approved settlement will allow us to keep the rate increase to customers as low as we reasonably can, and still recover the investments we've made to modernize our system and to ensure safe, reliable and increasingly clean electricity in the future.”
Despite the Commission's approval of the rate increase, one last roadblock could be standing in Duke's way in the form of N.C. Attorney General Roy Cooper. Just two months ago, Cooper appealed a 7.2 percent rate increase by Duke all the way to the N.C. Supreme Court. His message to them was that customers had to be taken in to account when setting utility profit margins and evaluating requests for rate increases. In the ruling that was cast down on April 12, the court ordered the commission to determine the impact on customers before setting an allowable profit margin and agreeing to raise rates. Cooper now plans to appeal the newest increase in front of the Supreme Court as well.
“This order puts utility profits ahead of people. It talks about how much consumers are hurting but sticks them with higher rates anyway,” said Cooper. “A true analysis of the effect on struggling consumers as required by the North Carolina Supreme Court should result in lower rates so we plan to appeal this ruling.”
According to Cooper, the Supreme Court ruling should serve as a guide for the commission in considering all rate hike requests, and that the commission's decision to approve the rate increase does not adequately consider the impact on customers.