Citizens see approval process for Duke Energy rate hike request as fixed

by Jordan Green

Testimony by Tom Lynch, a Norfolk Southern Railroad employee from Salisbury, set the tone for a hearing held in Winston-Salem by the NC Utilities Commission last week for a requested rate increase by Duke Energy.

“This piece of paper says the public utility commission’s public staff has already had an agreement,” Lynch said. “If this verbiage is correct, why are we at this meeting today if it’s already been agreed upon? Why are you commissioners — you’re being paid by us the taxpayers to represent us — you’re getting expense accounts to go all these places — and it’s a done deal? I want to know why.”

Indeed, Duke Energy had announced on June 17, two days earlier, that the power company had reached an agreement with the public staff of the NC Utilities Commission to increase customer rates by a total of 5.1 percent over the next two years to raise $235 million in revenue for plant upgrades.

Chairman Edward Finley explained patiently that the public staff of the state agency is a separate entity from the commission, which is a judicial board that will rule on the request next month.

Prior to the hearing, Giselle Rankin, a lawyer for the public staff, explained the timing of the agreement as a matter of scheduling.

“Maybe the hearings were scheduled a little later,” she said. “We like to have the public hearings beforehand. So we can hear the concerns of the public — particularly on matters of service problems. I’m not sure why these were scheduled this way.”

The hearing was conducted in a judicial format, with Finley playing judge, and Duke Energy and public staff as opposing parties, while three of Finley’s fellow commissioners sat in the jury box. Glen Harris, plant manager for the Dan River Steam Station in Eden, gave the opening statement on behalf of Duke. Tellingly perhaps, Giselle Rankin, attorney for public staff, forfeited her right to give an opening statement as representative of public.

Angry and mocking testimony by ratepayers occasionally who belittled the hearing as a charade occasionally gave the borrowed courtroom at the Forsyth County Hall of Justice a circus-like atmosphere, as Finley attempted with limited success to dampen applause and his three colleagues sat stoically, listening without comment.

The irreverent tone of the hearing carried over from a warm-up protest outside the courthouse that was coordinated by NC Waste Awareness Reduction Network, or NC WARN, and featured the singing of the Raging Grannies and drumming by Cakalak Thunder. Sammy Slade, an organizer with NC WARN, remarked, “This state is owned by Duke Energy, and so is this commission.”

Brian Watkins, a speaker from Greensboro, picked up the theme, lampooning Gov. Pat McCrory as “Pat Mc- Crook,” and referencing the governor’s career with Duke Energy.

“Now, how many commissioners are former Duke employees?” Watkins asked. He added, “Stacked deck.”

In fact, all four commissioners present for the hearing were appointed by Gov. Bev Perdue, McCrory’s Democratic predecessor.

Daniel Conrad, a staff attorney with the utilities commission said that three commissioners did not attend the hearing because their terms end before the scheduled vote on the rate increase in July. One of McCrory’s appointees was scheduled to be sworn in on Monday, followed by two others who will replace two commissioners stepping down on July 1.

Testimony given by Debra Demske of Winston-Salem was typical of the scorn expressed by ratepayers.

“I am a lifelong customer of Duke Energy, through no choice of my own,” she said. “I feel that it’s heartless to give Duke Energy another dime on the backs of private citizens and small business owners. I want Duke Energy to stop buying off our nonprofits. I know social workers who wanted to be here to tell you how the hike affects the families that they work with, but they can’t because Duke Energy provides funding to their agency. So, if anything, they’re going to have representatives here tonight speaking very highly of Duke Energy so they can collect some money in one hand while they’re handing it back to Duke with the other hand to pay these families’ electric bills. And that’s just wrong.”

Only two speakers made comments that were complimentary overall to the utility, but neither spoke in support of the rate increase.

Margaret Elliott, executive director of Crisis Control Ministry in Winston- Salem, acknowledged that “it was a smart move for Duke Energy folks to invite me here.” She said 920 Forsyth County families that are clients of Crisis Control Ministries have benefited over the past six months from Duke Energy’s “Share the Warmth” program, which provides heating and cooling assistance.

“I appreciate how closely this company works with nonprofits like us and responds to our feedback,” Elliott said. “And it’s not always positive feedback. Every year Duke Energy holds about eight meetings all across the state for representatives of all 80 agencies like us to attend to learn about any new programs that will benefit our clients.”

Bob Leak, president of Winston-Salem Business Inc., called Duke Energy “a partner in the economic development process in North Carolina.”

“We have been fortunate in North Carolina to have been competitive on our electric rates because of the efforts of the North Carolina Utilities Commission and the power companies,” he said. “It is important that we keep our industrial rates competitive as we try to compete in a very competitive global marketplace. Duke Energy is more than just electrical energy provider; they’re a partner in the economic development process. They have a talented group of individuals who are available to meet with prospective companies to discuss power availability and overall costs. They have a program to assist large energy users such as data centers and large manufacturers such as Caterpillar with controlling their electrical costs.”

Some opponents of the rate increase criticized the discounted rates provided to large, industrial users as being a disincentive for conservation.

Mike Hughes, a utility spokesperson, said during a break in the hearing that the rate structure is based in part on the fact that industrial customers use energy around the clock with the result that their demand for energy is more predictable.

“From a societal perspective, these customers generated and maintain jobs and industrial investment,” Hughes said. “The rationale is trying to find the right balance between entities that create and sustain jobs and individual households.”

I appreciate how closely this company works with nonprofits like us and responds to our feedback.’ Margaret Elliott

Hughes added that the utility offers discounted rates through a program that encourages them to use electricity during non-peak hours and penalizes them with a tariff if they use electricity during times when there is high demand on the grid. For example, a customer might have to wash a load of laundry after 9 p.m.

“There are very few customers who opt in to do that,” he said. “We hear a lot from folks about conservation. For most of our customers, that lifestyle

choice is not something they’re willing to make.

Electricity is plentiful and we’ve gotten used to it being there when we need it.”

The utility has requested three rate increases in the past six years. In each case, the public staff and the utility have settled on a rate increase of about half what the utility requested.

David Drooz, an attorney with the public staff, said the first two rate increases were respectively 7.5 percent and 7 percent. If the commission approves the 5.1 percent increase as proposed in the settlement agreement on the current case, the cumulative rate increase will be 19.6 percent.

Duke Energy spokeswoman Lisa Parrish said that with approval of the proposed rate increase, customers will still be paying lower rates than they did in 1991, adjusted for inflation. The company equates the cost per day for an average household to a figure between the cost of a gallon of gas and a premium cup of coffee.”

Hughes said the rate increase will allow the utility to modernize its fleet and retire obsolete coal plants, while investing in the Dan River natural gas plant in Eden and so-called “clean coal” technology at the Cliffside plant on the Rutherford/Cleveland county line.

“Imagine replacing a 1940 Plymouth with a 2013 Prius,” Parrish said. “We retired old, less efficient plants built in the 1940s and replaced them with newer facilities that are more efficient and kinder to the environment, and we’re asking the utilities commission to allow us to recover our costs.”

Several speakers asked the utilities commission to turn down the requested rate hike because many citizens are still struggling to find work and survive as unemployment benefits run out.

Winston-Salem Councilman Derwin Montgomery, who represents the East Ward, noted that the council recently approved a budget that reduces overall tax bills for 70 percent of property owners. With the city being a large customer of the utility, he said taxpayers will ultimately foot the bill. Montgomery is the pastor of First Calvary Baptist Church, and he told commissioners that the church budgets $20,000 for electricity, which comes out of parishioners’ pockets. As a result, any rate increase would hit Winston-Salem residents in at least three ways.

NC Sen. Earline Parmon (D- Forsyth), who was not present for the hearing, also opposed the rate increase in a written statement read aloud by Kim Porter of Winston-Salem.

Caroline Warren, a recent college graduate, told commissioners that she is essentially the breadwinner for her partner, who is unemployed, and his father, who was recently disabled in a motorcycle accident. She said her parttime hours as a GED teacher at Forsyth Tech were recently shaved down, and she waits tables. The rate increase would impose a burden on her household, and also those of her students.

“I know that it’s a great investment of their time for them to take off work and childcare to come to get to class,” she said. “So I know this rate hike would hit them very hard.”