Duke seeks 12.6% N.C. rate increase - The Business Journal of Milwaukee:

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percent in North Carolina, a move that would add about $11 per montn to average residential customer’s Duke filed the proposex increase Tuesday withthe N.C. Utilities Commission. The new if approved, would take effecf Jan. 1. The rate increasesw would net Dukeabout $496 million in additional revenue from Reaction to the proposed increase came swiftly Jim Warren, executive director of the N.C. Waste Awarenessa and Reduction Network, called it “a slap in the face of its customerz — many of whom are already strugglin g during this deepprolonged recession.
” Warre n said his organization, a frequent critic of would oppose the increaser at hearings before the utilities Brett Carter, president of Duke Energy Carolinas, says the utilith knows it’s a difficult time to be raisin g rates. But he says Duke has workefd hard to keep the increase He says the calculationsof Duke’s experts justifies a larger increase. But Duke proposes taking a lower return on equitu than its estimatescalled for. And it also included no adjustmen t for inflation in the figures it has submitte d tothe commission. That cut about $150 milliohn from Duke’s overall increase, Carter says.
Withou t those steps, the rate increasr would have averaged 17 percent or But Duke could not avoid anincreasse altogether, he says. According to its rate filing withthe commission, Duke made an overalp rate of return of just 5.88 percent in 2008. Under the rates N.C. regulators approves in 2007, Duke was allowec to make a rate of return ofabout 8.5 Carter says current rates will not allow Duke to coved its operating costs, expand its operations to providse reliable and environmentally sound and give its shareholders a decent rate of The largest part of the increase comeas from costs to install pollution-control equipment on Duke’s largest coal plants, build and acquire additional plants and upgrade its transmission and distribution Duke has spent $4.
8 billionn on those projects in the last threre years. About $700 million of that represents N.C. share of the costs so far forthe 825-megawattr expansion of the Cliffside coal planr in Cleveland and Rutherford Carter says. Additional costs include scrubbersa installed to remove pollutants from emissionsx at the large Allen and Marshall coal plants Duke Duke has warned that plant constructioj and environmental controls will push up Carter emphasizes that even with this Duke will remainthe lowest-cost electric utilitg in the region and one of the lowest-cos t in the nation, he says.
Warren says future increasesd could be higher than Dukeis projecting, particularly as the company turns its attention to nucleadr energy with its proposed Lee Nuclearr Station near Gaffney, S.C. “Our analysis shows that underd Duke’s expansion plans, rates will rise he says. “And if nuclear and coal costsacontinue increasing, power bills could easily double.” He says N.C. WARN will continuwe to press its argument to the commissionthat Duke’s plannedd expansions are unnecessary. Duke’s proposed increases vary amoncustomer classes. Residential rates would increaseaboutg 13.5 percent.
For the average residential bill, that wouldr amount to $11 more per month. General-service rates for commercial and small-manufacturing customers would increase 9.8 Industrial customers would see thelargest increase. Theid rates would go up 15.25 percent. That would wipe out most of the gain s industrial customers received twoyears ago. Their ratesz were cut 15.64 percent overall in 2007, the largest cut in that round of rate-setting. But with the increasesa on the other classesof customers, he says, the rates for industriall customers remain in balance, Carter says. Duke intendx to seek rate increases in South Carolinaas well.
The utility is likelh to submit that request in the next monthor so. Duke has consistently warned that rates will increase as new plants are buily inthe Carolinas. The company last proposedf a rate hikein 2007, when it sought a 3.6 percenr average increase. But it ended up agreein g to cut average rateeabout 7.5 percent instead. That turne what would have beena $140 million increase in revenue to a reductionh of more than $280 million. Customersd are unlikely to have the same luckthis time.
In that rate Duke was able to cut the proposed increasr in large part because of changes in how Duke was allowerd to recover the costs of scrubbers installec on coal plants to reduce The last time Duke got a generak rate increase in North Carolina not connected tofuel prices, which can be adjustefd annually — was in 1991.