Making Sense of the Duke Energy Progress Rate Case

Earlier this week, a coalition including Vote Solar, the North Carolina Justice Center, North Carolina Housing Coalition, Natural Resources Defense Council, and the Southern Alliance for Clean Energy — all represented by the Southern Environmental Law Center –  filed testimony with the North Carolina Utilities Commission on Duke Energy Progress’s 2023 rate case. Not sure what that means or why it matters? Let us break it down for you. 

What is a utility rate case? 

A rate case is a formal process to determine whether or not, or by how much, to increase how much utility customers — like you — pay to power their homes and businesses. Public utilities, like Duke Energy, develop a rate case proposal, which is then presented to the state’s utility regulators for approval, rejection, or changes. In North Carolina, utilities are regulated by the North Carolina Utilities Commission (NCUC), a group of seven commissioners appointed by the governor. Intervenors, like our coalition and other groups, have the opportunity to weigh in and convince the NCUC to make a ruling in the interest of clean energy and environmental justice.

What makes this rate case important? 

Several factors make this case notable. First, it marks the first rate case centered on Performance Based Ratemaking (PBR), a financial framework that aims to tie a portion of utility profits to how well they perform on certain criteria – more on PBR here! Unfortunately, the performance metrics proposed by Duke are out of sync with the public interest and aren’t tied to societal benefits like affordability or decreased carbon pollution. 

The case also focuses largely on grid modernization, or improvements made to the energy grid’s infrastructure. Grid modernization can increase reliability, reduce power outages, and meet increasing electricity demand, but only when implemented intentionally. Despite a rapidly changing energy landscape — including more widespread conversations about the need for energy equity and the North Carolina legislature passing a decarbonization mandate in 2021 — Duke’s approach to grid improvement hasn’t evolved with the times. Their proposal is largely a continuation of the grid plan that Duke introduced in 2017, which hasn’t changed significantly despite six years of opposition across two earlier rate cases and immense national and local inertia to achieve equitable decarbonization. 

Finally, the case is happening against the backdrop of historic inflation, economic uncertainty, and utility bills that are already too high for many Duke ratepayers. 

What is Duke asking for? 

In short: a lot. If approved, Duke’s proposal would raise electricity rates for residential customers by a considerable 18.9% — with much of the return on equity lining the pockets of shareholders. Duke is also asking for permission to spend a staggering $2 billion on grid investments over the next three years. The company claims that such an astronomical amount is necessary to cover costs associated with the clean energy transition, but that simply doesn’t hold up to scrutiny. Duke also hasn’t shown that it’s considered cleaner, more affordable alternatives. 

In all of its exorbitant requests, Duke makes no mention of environmental justice, or the ways in which low-wealth and systemically marginalized communities experience the most severe impacts of our fossil fuel infrastructure. 

Recommendations for the Commission 

Our expert testimony recommends that the NCUC improve Duke’s proposal and advance the Tar Heel State’s transition to an equitable, resilient clean energy economy. First, the NCUC should require a formal grid planning process, with a variety of stakeholders at the table. By reaching a consensus on what strong grid investments look like, we can make progress toward a modern energy grid that meets modern needs. 

Grid modernization is also intertwined with energy equity and, as such, must put equity at the forefront. Data from Michigan and Illinois show that grid reliability can vary greatly between environmental justice communities and more affluent communities. The NCUC should direct Duke to collect and share this information so that utilities, regulators, and advocates can better understand how we can make the grid work for everybody.

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