In a different time, Christopher Ayers might be a highly visible, Ralph Nader-esque type crusader to limit increases in utility bills and push for consumer-friendly innovation. Today would be prime time for the executive director of the North Carolina Public Staff, at a hearing scheduled in Raleigh to examine Duke Energy’s pitch for its biggest rate increase in decades.
In reality, Ayers is a state employee who is highly respected within utility-industry circles and little known by anyone else. It looks to us like he is doing his job effectively, just outside of the public limelight. Which seems strange for someone in charge of the “Public Staff,” which the General Assembly established at former Gov. Jim Hunt’s insistence to represent the public interest in 1977, an era when Nader-style consumer advocacy was popular.
Ayers didn’t return requests for comment last week. The Public Staff’s top lawyer, David Drooz, did, noting: “We try our cases based on merits of the issues, and we do not try our cases in the press.”
Let’s recap how that has panned out: Duke’s unit covering eastern North Carolina and Asheville initially proposed a 14.9% average increase earlier this year, citing the need for a higher rate of return (jargon for profit) and recouping some costs of its coal-ash spill. The plan would have added more than $475 million in revenue for Duke, which later trimmed its request. An even larger, separate rate case involving Duke’s Piedmont region — including Charlotte and Triad – is expected to be heard next year.
The Public Staff responded, with no fanfare, with a proposal that suggested Duke raise its rates less than 1%.
That prompted negotiations between Ayers and Duke that are open to any party involved in the case — provided they sign a nondisclosure agreement. The Public Staff agreed to that stipulation because “it is essential to review that data to test the company’s decision,” Drooz says.
One party that won’t sign the NDA is Jim Warren, executive director of Durham-based nonprofit NC Warn, Duke’s loudest, most persistent critic. He wants a no-holds-barred hearing that would allow intense public scrutiny of the utility, which has consolidated control of most of the state’s electric and gas industries in the last decade.
Warren sounds as upset with the Public Staff as he is with the utility — and that is saying something.
“They are supposed to operate separately from the [N.C. Utilities Commission] and they don’t,” he says. “They’ve cut this same pattern in the last half dozen cases: Duke goes high, the Public Staff goes low, then Duke ends up getting what they want.”
Last week the two sides agreed to compromise on Duke’s allowable rate of return. Duke, which originally suggested 10.75%, has agreed with 9.9%, according to the partial settlement. That rate is in line with allowable rates for utilities across the U.S.
That change reduces the average increase in rates to about 10%, the Charlotte Business Journal reports. Last week, the two parties were still talking about other issues in the case.
“We are glad we are able to talk with the company and reach agreement on some of the issues,” Drooz says.
The N.C. Utilities Commission makes the final decision, and can reject any agreement, though that would be unusual.
As an advocate of transparency, I favor more open scrutiny of everything in the public sphere, including public utilities. The more open, the merrier, especially given Duke’s vast scope and potential conflicts of interest for Ayers and N.C. Utilities Commission Chairman Ed Finley, who both represented utilities earlier in their legal careers. (To be sure, both are considered men of great integrity.)
Fortunately, Duke also has had a series of ethical CEOs and senior managers who’ve balanced the needs for private profit and public good, while making missteps like every other business. Power costs are lower in the Carolinas than in most states, system reliability is greater, and Duke is a national industry leader because of wise decisions by the company, the Utilities Commission, and, perhaps, behind-the-scenes work by the Public Staff.
Let’s hope that tradition continues.
