Duke Energy rate increase partly approved by state regulators

The company scored a win on recovering coal ash removal costs, though, minus about $39.5 million and a requirement that the company come back to the commission to approve future costs.

Duke's Duke Energy Progress unit sought an extra $419 million a year to help pay for the state-mandated cleanup of coal ash ponds at its North Carolina power plants, replace older plants with natural gas-fired plants, develop solar power sites and "harden" systems to speed recovery after storms. The coal ash costs were the most controversial, and the North Carolina Utilities Commission decided the company should be allowed to charge customers for $232.4 million in costs already incurred.

In their order Friday, commissioners called these costs "known and measurable, reasonable and prudent, and used and useful in the provision of service to the Company’s customers."

This was $9.5 million less than the company requested in past cleanup costs, a change made after the commission said Duke paid too much for coal ash removal at its Asheville plant. The commission also hit the company with a $30 million penalty for failures in coal ash management, but that penalty will be satisfied by some complicated amortization as opposed to being paid up front.

"DEP admits to pervasive, system-wide shortcomings such as improper communication among those responsible for oversight of coal ash management," the commission said in a 278-page order filed late Friday.

As for $129 million a year in future coal ash recovery costs, the commission declined to approve those in advance. Instead, it told Duke to keep track of these costs and ask about them at its next rate case.

The order is complex and announced after 5 p.m. Friday. Duke Energy said it was studying it. The case can still be appealed to the state Supreme Court before new electricity rates are set, and two commissioners dissented in the decision.

"We are currently evaluating the North Carolina Utilities Commission’s order and its exact impacts on customer rates, which will remain below the national average even after going into effect," Duke spokeswoman Meredith Archie said in a statement Friday, adding that the order "appears to have produced a result that balances the needs of customers and the company."

Others weren't so happy. The Southern Environmental Law Center complained that the commission allowed the energy monopoly to increase the rate it charges customers each month before they use any electricity, going from $11.13 to $14.00 per month.

"We are disappointed that the commission did not stand up for customers – especially those struggling to pay their bills," Gudrun Thompson, senior attorney at the Southern Environmental Law Center, said in a statement. "While Duke is enjoying record profits, the commission undercut customers’ ability to reduce their energy use and lower their bills with cost-effective energy efficiency."

Duke Energy reported this week that it made more than $3 billion in profit last year.

Duke initially wanted to raise that fee to $19.50 a month but lowered the request after negotiations with the Public Staff, the state agency that represents consumers in rate cases. It was one of several changes negotiated with the Public Staff during the middle of the case. Not all parties to the case agreed to these changes, including Attorney General Josh Stein's office and environmental groups.

Beyond the coal ash issue, which Duke and the Public Staff never agreed on, the Utilities Commission essentially approved the deal they struck. It includes a 9.9 percent return on equity for the company, similar to profit margin. The commission said it cut the $419.5 million revenue increase Duke requested by more than half, although the final figure wasn't included in a new release announcing the decision.

As a part of the settlement approved by the commission, Duke will make a $2.5 million contribution from shareholder funds to the Helping Home Fund to be used for low-income energy assistance.

Duke must file rate schedules within 30 days, which regulators will review before they become effective. The schedules will show the impact on individual customer bills.

A rate case involving a proposed increase by Duke Energy Carolinas, which has also asked to charge ratepayers for hundreds of millions in coal ash cleanup costs, is set to begin before the Utilities Commission on March 5.

Duke Energy Carolinas generally serves the western half of the state and Duke Energy Progress the eastern half, but they're both part of Duke Energy.