On Monday, the N.C. Utilities Commission began contentious evidentiary hearings for Duke Energy's $205 million rate increase request.
At the hearings, non-profit advocacy group NC WARN is accusing Duke Energy Carolinas of committing either "corporate fraud" or "gross incompetence" in its original request for a $446 million increase in annual rates. When the Duke and Progress Energy merger was approved last July, the N.C. Utilities Commission specifically ordered the company not to pass on expenses related to the merger on to its customers, even noting that customers should, in fact, see savings from the deal. This February, Duke Energy submitted a rate increase request for $446 million. Regulators at the N.C. Utilities Commission slashed the request, cutting many million-dollar items and citing some as "errors" on the part of Duke Energy.
Katherine Fernald, an accountant for the Commission's Public Staff, which is supposed to represent the public's best interests, testified at hearing about some items she cut from the original request:
- $1.17 million in travel expenses: "Based on the Public Staff's further review of the Company's flight logs and the purposes listed for the flights, an additional 24% of aviation expenses have been removed for flights deemed not directly related to Duke Energy Carolinas customer benefits."
- $598,000 in expenses "[...] related to advertising sponsorships, charitable donations, and contributions to political organizations that were charged to various accounts."
- $1.28M in lobbying costs, including "[...] federal and state lobbyists' salaries and lobbying expenses charged by outside lobbyists."
- $1.2M in outside services, including "[...] items that relate to the Duke-Progress merger and costs that do not relate to the provision of electric service for Duke Energy Carolinas customers."
The Public Staff did increase one item, however—"other post test year expenses." When asked why, Fernald replied that the increase had been made "for purposes of settlement."
NC WARN's Jim Warren said of the situation: "The Commission's Public Staff caught many of these deliberate attempts but then they gave millions back just to close the deal." Led by NC WARN, groups including Greenpeace and the Blue Ridge Environmental Defense League are arguing that Duke originally intended to overcharge customers, as evidenced by the fact that they comfortably settled for a rate increase less than half that of the original request.