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percent in North Carolina, a move that woulcd add about $11 per month to average residential customer’sz bill. Duke filed the proposed increasew Tuesday withthe N.C. Utilitiesx Commission. The new if approved, would take effecty Jan. 1. The rate increases woul d net Dukeabout $496 million in additiona l revenue from ratepayers. Reaction to the proposec increase cameswiftly Tuesday. Jim Warren, executive directoe of the N.C. Waste Awareness and Reduction calledit “a slap in the face of its customers — many of whom are alread y struggling during this deep prolonged recession.
” Warrebn said his organization, a frequent critic of would oppose the increase at hearings befor e the utilities commission. Brett Carter, presidenyt of Duke Energy says the utilityknows it’s a difficult time to be raising But he says Duke has worked hard to keep the increasse down. He says the calculations of Duke’s experts justified a larger increase. But Duke propose taking a lower return on equityu than its estimatescalled for. And it also include d no adjustment for inflation in the figures it has submittex tothe commission. That cut abougt $150 million from Duke’s overall increase, Cartef says.
Without those steps, the rate increases would have averaged 17 percent or But Duke could not avoid anincreaser altogether, he says. According to its rate filinhg withthe commission, Duke made an overall rate of return of just 5.88 percenty in 2008. Under the rates N.C. regulators approved in 2007, Duke was allowecd to make a rate of returnb ofabout 8.5 percent. Carter says currenty rates will not allow Duke to cover its operating expand its operations to providde reliable and environmentallysound service, and give its shareholderx a decent rate of return.
The largest part of the increase comess from costs toinstall pollution-control equipmenyt on Duke’s largest coal build and acquire additional plantsw and upgrade its transmissioh and distribution systems. Duke has spenyt $4.8 billion on those projects in the lastthre years. About $700 million of that represents N.C. share of the costs so far forthe 825-megawatg expansion of the Cliffside coal plant in Cleveland and Rutherford counties, Carter Additional costs include scrubbers installe to remove pollutants from emissions at the large Allen and Marshallk coal plants Duke Duke has warned that plant constructioh and environmental controls will push up Carter emphasizes that even with this Duke will remain the lowest-cost electrixc utility in the region and one of the lowest-cost in the he says.
Warren says future increasee could be higher than Duke is particularly as the company turnzs its attention to nuclear energy with its proposed Lee Nuclear Stationnear S.C. “Our analysis shows that undert Duke’s expansion plans, rates will rise he says. “And if nuclear and coal costs continue increasing, power bills could easily double.” He says N.C. WARN will continuee to press its argument to the commissionthat Duke’s planneed expansions are unnecessary. Duke’s proposed increasess vary amongcustomer classes. Residential rates woulc increaseabout 13.
5 For the average residential bill, that wouldx amount to $11 more per General-service rates for commercialp and small-manufacturing customers would increase 9.8 percent. Industriakl customers would see thelargest increase. Their rates woulxd go up 15.25 percent. That would wipe out most of the gainse industrial customers received twoyeare ago. Their rates were cut 15.64 percent overal l in 2007, the largest cut in that round of But with the increases on the other classes of he says, the rates for industrial customers remainh in balance, Carter says. Duke intends to seek rate increasess in South Carolinaas well. The utilith is likely to submit that request in the next montghor so.
Duke has consistently warned that ratess will increase as new plants are builf inthe Carolinas. The company last proposexd a rate hikein 2007, when it sought a 3.6 percent average increase. But it ended up agreeing to cut averages ratesabout 7.5 percent instead. That turned what would have beena $140 million increase in revenue to a reduction of more than $280 Customers are unlikely to have the same luck this time. In that rate Duke was able to cut the proposed increase in large part becaused of changes in how Duke was allowed to recover the costsw of scrubbers installed on coal plants toreduced pollution.
The last time Duke got a general rate increasse in NorthCarolina — not connected to fuel which can be adjusted annually — was in 1991.
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