(Story updated with new information in sixth paragraph on business community support for HB 951)
A pending vote at the N.C. General Assembly pits Duke Energy against major N.C. businesses over a bill that would change how the electric utility is regulated.
House Bill 951 would allow Duke to raise rates over three years instead of one and provide more financial backing for its plans to modernize the electric grid and shift from coal to natural gas and alternative energies. After months of closed meetings, the bill was unveiled on June 15.
“They were trying to put it on the fast track and wanted it passed by the Fourth of July,” says Dan Nation, a veteran Parkdale Mills executive who is lobbying against its passage. “But I’ve never seen companies come together so quickly from all different sectors to rise against something like this.”
The business-backed Carolina Utility Customer Association has fought Duke’s proposed rate increases for decades. But Nation says the stakes are higher this time because the bill would reduce the influence of the N.C. Utilities Commission. He’s most alarmed at a potential 50% increase in electric rates over the next decade, an estimate provided by an industry consultant. Duke and the commission’s Public Staff say that projection is overstated.
“We think it’s important that the Utilities Commission retains power because Duke is a monopoly,” says Nation, who oversaw manufacturing plans for most of his 42-year textile industry career with Gastonia-based Parkdale and Spartanburg, S.C.-based Milliken. “When we make a poor decision, we just have to suck it up. When Duke makes a poor decision, they just go and raise rates.”
The N.C. bill has received significant business community support, including praise from the NC Chamber, Charlotte Regional Business Alliance and Greater Raleigh Chamber. The groups contend the changes can help create a better path to clean energy and provide adequate protections for customers.
The debate comes after Duke CEO Lynn Good told investors in May that the utility expects to boost its profit margins over the next few years as it reduces greenhouse gas emissions to mitigate global warming. Duke investors have received total returns of about 45% and 75% over the last five and 10 years respectively. That is on par with the utility industry averages but less than half the S&P 500 Index’s performance in the same period. Earlier this year, Duke rejected Wall Street activist investor Elliott Management’s pressure to break up into three parts to boost its shares.
Beyond investors, Good has to juggle demands from lawmakers, environmental groups and the public to shift energy production away from fossil fuels while maintaining reliable service and competitive rates. Duke says gaining more certainty over rates over a longer period improves its ability to make the best decisions.
Should the bill pass, manufacturers are much less likely to expand in North Carolina, Nation says. Parkdale has invested several hundred millions dollars in plants in other southern states over the last decade because of rising energy costs in North Carolina, where it started in 1916. Parkdale still has 1,000 workers and nine plants in the state and ranks among the industry’s most successful operators, he says.
Despite those concerns, backers of the bill point to expansion announcements by manufacturers topping $2.8 billion this year and pledges for more than 3,000 new job jobs. Much of the investment involves pharmaceutical companies, which are substantial energy users.
The bill’s timing is also “horrendous,” Nation says, because North Carolina’s 30,000-employee textile industry is still rebounding from the pandemic, which stalled sales in some sectors.
While N.C. lawmakers say they listened to many parties in crafting the bill, Nation says his group had “zero input.” His suggestion is for those parties to reconvene to negotiate a new plan. Loosening regulatory control over Duke might be easier to accept by business interests if the state approved a competitive wholesale power sales, as occurs in more than 20 states, he says. North Carolina has proven resistant to that reform, however.
“When you have the Southern Poverty Law Center, the high tech industry and manufacturers all ticked off, that tells you something is wrong with the bill,” Nation says.