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Thursday, April 18, 2024

Duke Energy’s 15% rate hike to cost jobs, manufacturing leader says

 

(Updated in seventh graph with 5,000 fewer manufacturing jobs, correcting previous statement.)

State regulators’ approval of a nearly 15% increase in Duke Energy rates over the next three years will lead to hardship for some North Carolina manufacturers, the leader of an industry trade association says.

“We will see plant closures and job losses and operational shifts as an effect of this,” says Kevin Martin, executive director of the Carolina Utility Customers Association, which represents manufacturers operation in the two states. “I’m absolutely certain.”

Under the 279-page order, rates will rise 8.3% started Jan, 15, then 3.3% in 2025; and 3% in 2026. Duke will provide details in January on how the order will affect customers’ bills. It covers Duke Energy’s service area from Durham to Charlotte. A rate hike for Duke Energy customers in eastern North Carolina and the Asheville area was approved in August, raising rates by 11.3% over three years.

Utilities Commission Chair Charlotte Mitchell declined to comment on Martin’s viewpoint.

Duke Energy spokesman Bill Norton responded, “North Carolina continues to attract jobs and investment at a record pace, strongly supported by energy rates that will remain considerably below the national average even after this adjustment. We remain committed to providing the reliable, affordable and increasingly clean energy that our customers are asking for.”

In a statement this week, Gov. Roy Cooper highlighted the more than 14,000 new jobs and billions in corporate investment that were announced in the past year in North Carolina.

But Martin notes that N.C. manufacturing employment has declined by more than 5,000 jobs over the past year. He agrees with N.C. Utilities Commissioner Jeffrey Hughes, who in a dissent to the order argued that the approved 10.1% return on equity was too high. The current allowable return is 9.6%.

“A rate of return of common equity of 9.9% would have reduced the total North Carolina retail revenue requirement by approximately $92 million” over the three years,” Hughes said. The N.C. Public Staff, which represents ratepayers, had pressed for a 9.4% return on equity.

Industry analysts who cover Duke Energy have praised the regulatory decision, Martin says.It’s good for Duke’s shareholders, but not for any of Duke’s customers,” he says. “We’re not opposed to Duke making money, but this is a regulated monopoly that is allowed to go to regulators and gain a larger profit than we feel is reasonable.”

The company recently said energy demand is accelerating at the fastest pace in three decades, and suggested it may need to add generating capacity in a range of formats. Martin said the higher rates will enable Duke to earn “tremendous profit increases” because of how the utility is compensated as it adds capacity.

“I’d hope we’d learn from the COVID shutdown that we need to manufacture some of  everything here, but this will push more offshore,” he said.

Representatives of environmental groups have also criticized the N.C. Utilities Commission order as too favorable for Duke, Charlotte’s WFAE radio reported.

 

Five utility commissioners participated in the order, with outgoing commissioners Dan Clodfelter and ToNola Brown-Bland not voting. They have been replaced recently by newly appointed commissioners Tommy Tucker and Bill Brawley.

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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