Holy Covenant UCC

An overflow crowd – irate at Duke Energy’s proposed 15 percent rate hike for North Carolina customers – filled a Charlotte hearing Tuesday night before the N.C. Utilities Commission.

More than 40 speakers took the microphone at the four-hour hearing, most of them attacking the proposal on one of two fronts.

Some protested the impact of higher rates on customers already suffering in a troubled economy. Others insisted Duke needs more revenue for the wrong reasons: to continue burning fossil fuels and investing in nuclear power, instead of moving toward renewable energy.

Many reminded commission members of Duke’s financial heft as one of the nation’s largest utilities, earning $1.3 billion and paying its chief executive $6.9 million in 2010.

“All around us, people are struggling to find enough to eat while (CEO) Jim Rogers’ pay went up 25 percent in 2010,” said Tommy George, a small business owner in Charlotte. “He’s making $50 in the time I’m speaking to you.”

Duke’s request includes a 17 percent hike for all residential customer classes. The largest group of those customers, however, would actually pay close to 20 percent more. Typical bills would rise about $18 a month beginning in February.

Charlottean Elizabeth Kincaid, who works in human services, described low-income clients who don’t accept free fans in the summer heat because they fear higher electricity bills.

“People cannot afford this,” she said. “I’ve heard them say that Duke’s rates are not as high as in other places. Neither are North Carolina salaries.”

It would be Duke’s biggest rate hike in at least 20 years, if the N.C. Utilities Commission grants the request. Three-fourths of the increase would help pay for $4.8 billion in Duke construction since 2009, for new power plants and for pollution-control equipment.

Tim Gause, Duke’s director of government and community affairs, said Duke faces a “perfect storm” in the need to retire old power plants and build new ones while the economy suffers.

“We’re doing all we can to control costs, but we have to protect our customers as well,” he said. “We can’t stop planning and investing in a power system that is so vital to our community.”

Several speakers, including the commission’s own consumer advocates, challenged the 11.5 percent return on equity, or profit cap, that Duke is seeking as part of the increase. Most U.S. utilities have been allowed returns of 10 to 10.5 percent in the past five years, the Edison Electric Institute reports.

A handful of speakers spoke up for Duke, crediting the company’s work in economic development and creating new energy jobs. Catawba Valley Community College official Garrett Hinshaw said Duke helped retrain laid-off industrial workers in his hard-hit region.

“They stepped up when no one else would,” he said.

But the advocates were outnumbered. About 30 people protested outside the Charlotte-Mecklenburg Government Center before the hearing, dramatizing the impact of higher rates on customers, and the health and environmental costs of Duke’s reliance on coal and nuclear power.

“We’re at an unprecedented turning point for the planet,” said Charlotte biologist Sally Kneidel. “Coal is one of the biggest drivers of that change.”

Some biologists expect a warming climate to lead to species extinctions.

Kneidel called coal and nuclear plants risky investments.

“It’s not fair for consumers to pay more so Duke can attract investors to these risky ventures,” she said.

Duke shareholder Paul Latten, an engineer and businessman from Huntersville, said he appreciates Duke’s performance in delivering energy. He said Duke should be able to keep up its good work without the rate increase it seeks.

“Some rate increase makes sense,” he said. “Intuitively, 17 percent (for residential customers) doesn’t make sense.”

More rate hikes ahead

The trend in rising rates, meanwhile, isn’t likely to end soon.

In 2009, Duke was allowed to raise rates 7 percent over two years. Bill Johnson, chief executive of Progress Energy – Duke’s intended merger partner – told a Charlotte audience last week that rates are likely to rise for another 10 to 20 years as utilities upgrade power plants and transmission networks.

Both Duke and Progress are expected to ask for rate hikes again next year.

“These costs will make it even more difficult for our brothers and sisters to stay warm and well-fed,” the Rev. Nancy Allison of Holy Covenant United Church of Christ told commissioners. She also predicted businesses will pass higher charges on to customers.

North Carolina’s unemployment rate inched up in August, to 10.4 percent, well above the national average of 9.1 percent. The Mecklenburg jobless rate is 11 percent.

The Charlotte hearing was one of six the utilities commission has scheduled, with meetings to be held later this month in Marion, Franklin and High Point. The commission will begin hearing testimony from Duke and other formal parties in the rate case in Raleigh on Nov. 28.