AARP Asks Utilities Commission to Strongly Factor Public Testimony in Duke Rate Request

In response to the NC Supreme Court's decision in April

that requires the North Carolina Utilities Commission to factor the interests of residential consumers in order to justify the 10.5 percent return on equity it granted to Duke Energy in 2012. AARP is arguing that double digit profit guaranteed to Duke is inconsistant with the state's economic realities.

Below is a copy of a letter AARP sent to members of the Commission today.

 

April 23, 2013

Public Utilities Commissioner Edward Finley

Dobbs Building
430 North Salisbury Street
Raleigh, NC  27603-5918

Dear Chairman Finley and Commissioners,

The North Carolina Supreme Court has clearly ruled that the plight of residential electric consumers during present economic conditions in the state is a factor that must be considered when determining a utility’s “rate of return on equity” or “ROE” in rate setting.   AARP filed a “friend of the court” brief in the Attorney General’s appeal of the 2012 Duke Energy rate case, which the Court has reversed and remanded to the Commission.  In our brief, we argued that the authorized 10.5% ROE is considerably out of step with the economic conditions that most energy consumers (particularly older consumers and low-income consumers) are currently experiencing in North Carolina.  Consumers count on the Commission to fairly balance the interests of energy consumers and utility investors, and to fully explain how a double-digit profit for Duke Energy is consistent with the realities of the current struggling economy.

As you reconsider Duke’s rate request, we urge you to strongly factor what the public testimony demonstrated before the settlement last year and again in public hearings this year – the public is buckling under the weight of excessive and constant rate increases.

According to the latest Bureau of Labor Statistics Report, North Carolina has one of the nation’s highest unemployment rates at 9.2 percent, with underemployment near 20 percent.  One-out-of-five residents live in poverty resulting in families struggling to make ends meet.  In 2012, there were nearly a quarter of a million disconnects largely due to non-payment.

Despite these sobering statistics, the Commission in 2012 failed to adequately recognize the impact on consumers when approving utility rate increases.  In its reversal and remand of the last Duke rate case, the Supreme Court was clear—state law requires a consideration and balancing of the consumer interest. Specifically, with regard to the issue of “return on equity” (ROE) the court stated:  “It is undisputed that section 62-133 dictates that the Commission considers ―changing economic conditions when making an ROE determination.” Further, the court warned against treating consumers as “mere afterthoughts” when rate decisions are made.

At this very critical juncture there are many paths you can follow. In the 1999 CUCA case (Docket G3, Sub 186; available at www.ncuc.net, in which the Court remanded a rate decision on natural gas pricing, the Commission sent out a request for recommended procedures.  After several parties commented, the Commission decided to hold a second evidentiary hearing, limited to the issues in the Court ruling.  It then requested proposed orders and then issued an order on remand.

With the growing public concern about this case and subsequent rate hike requests, we urge you to take further public comments on this case. The ROE the Commission ultimately authorizes is millions of dollars that will be stripped from residents, money that residents could use to pay off debt, to save for retirement, or to spend in ways that stimulate the North Carolina economy.  These consequences are why the state law requires a balanced decision that is fair to utilities and their customers.

Additionally, we hope you will agree that residents deserve a refund from Duke Energy for the overpayments made since last year.

Yours for a Better North Carolina,

Doug Dickerson,

Director, AARP North Carolina