Duke Energy residential customers will be paying about $50 to $60 a month more for electricity by 2033, on average, and about $80 a month more by 2038, according to the company’s latest projections.
The average is now about $145 a month, the company says. The expected rate increases were confirmed by Kendal Bowman, president of the utility’s N.C. operations, at Wednesday’s opening of an N.C. Utilities Commission hearing on its Integrated Resource Plan.
The plan explains how the giant utility generates and distributes power as it transitions from a reliance on fossil fuels to more use of alternative energy sources. The commission, which regulates electric rates, analyzes the plan about every two years.
There is widespread support for the transition as essential to reducing greenhouse gas emissions and responding to climate change. The effort was reflected in the landmark House Bill 951, passed by the Republican-dominated General Assembly in 2021, setting targets for carbon reductions over the next three decades.
But the costs of shifting to more solar, wind and other renewable sources are coming into greater focus, as are the rising prices of natural gas and other traditional fuels.
In July 2021, with lawmakers debating the carbon emission reduction targets, the N.C. Public Staff — which reviews and makes recommendations on rate requests — estimated that residential customers would increase by $3 to $5 a month in Duke Energy’s N.C. territory through 2035. Now, the cost increases borne by residential customers is projected to be much more significant.
Public Staff official James McLawhorn says state lawmakers made major revisions in the bill, which was approved in November 2021. The earlier analysis provides a comparison that is “apples to oranges,” he says.
At the hearing, Bowman said Duke Energy’s rates remain less than the national average and will continue to be with the projected rate increases. The company isn’t noticing a negative economic development impact from rate increases approved in recent years, she added.
She also noted that Duke is seeing surging demand for power, partly due to datacenters facilitating increased use of artificial intelligence. Late last year, the utility said power demand was increasing at the fastest pace in more than 30 years. As result, company officials say it needs an “all of the above” strategy to expand generating capacity.
But the Carolina Industrial Group for Fair Rates (CIGFUR), which represents an undisclosed number of N.C. manufacturers, is pushing the Utilities Commission to extend the timelines for achieving carbon dioxide emissions reductions set in HB 951.
“Carbon emissions’ reduction goals and corresponding deadlines are inherently arbitrary,” Bradford Muller, an executive at Charlotte Pipe & Foundry, said in a Utilities Commission filing tied to the hearing. “North Carolina should slow down and ensure reliability to meet explosive demand and allow innovation to catch up.”
He also slammed the impact of the rate increases for commercial customers, noting that monthly rates for Charlotte Pipe’s two plants in Stanly County could double or triple over the next 15 years, following a 24% increase over the past three years.
“These rate increases are unsustainable, and it is simply not possible for any manufacturer to pass electricity rate increases of this magnitude on to customers and hope to keep those customers,” said Muller.
Muller’s filing noted, “I have strong reason to believe several members of the N.C. General Assembly who were involved with the enactment of House Bill 951 would agree” with CIGFUR’s support for extending the timeline for achieving emissions reductions.
The industrial group’s view is at odds with many environmental groups and the alternative energy industry, which are criticizing Duke Energy for investing in new natural-gas plants that the utility says are necessary for reliability. They generally want the utility to invest more in renewables and adopt greater stricter conservation measures.
Rising gas fuel costs made up 67% of the company’s residential rate increases in Duke Energy’s N.C. territory since 2017, according to a report commissioned by the Environmental Defense Fund. It is opposing Duke Energy’s effort to build thousands of megawatts of new gas plants.
Bowman said the utility is moving at the right pace, “taking a very reasonable approach” to balance the needs for affordability and environmental improvements. She said Duke Energy needs to replace its aging coal fleet and improve its aging grid to achieve a “clean energy path.”
Last week, Duke Energy reached a settlement with the N.C. Public Staff, which represents ratepayers, Walmart and the Carolinas Clean Energy Business Association over the groups’ objections to the utility’s long-term plan. “We appreciate their constructive engagement to confirm the resources necessary in the near-term to continue meeting the needs of our region’s growing economy while protecting affordability and reliability,” spokesman Bill Norton said.
At Wednesday’s hearing, Christina Cress, a lawyer for the industrial group, noted that about 1 million Duke Energy customers are classified as low income under federal poverty standards. She also said that about 18% of the company’s ratepayers are having some difficulties paying their bills, according to company filings with the Utilities Commission.
Duke Energy has robust programs that assist customers who have limited incomes or are struggling with their bills, Bowman said.
The hearing is expected to last for about two weeks.
