by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
Customers of many other utilities across the nation have been happy to see their electricity rates fall thanks to recent federal tax cuts. North Carolinians have to be wondering if we could see the same thing happening here.
The Public Staff of the N.C. Utilities Commission (NCUC) has looked at the numbers and thinks yes, we should. They have requested that the NCUC reject Duke Energy Carolina’s request for a 13.3 percent rate hike in favor of a 6.4 percent rate cut.
Charlotte Business Journal explains:
Duke had initially called for more than $612 million in new revenue from a rate hike it proposed in August. This winter, Duke adjusted its proposal down to $598.7 million in additional annual revenue — about a 13.3% increase of current rates.
The Public Staff says Duke’s revenue needs don’t justify an increase in rates. After dismissing costs they consider unreasonable or imprudent and adjusting the return Duke should expect to make on its investments, the Public Staff’s technical and financial experts proposed cutting the annual revenue significantly. …
The Public Staff calls for cutting about $210 million in revenue to reflect the lower taxes that Duke Carolinas will pay under the recently enacted federal income tax cut. It proposes slashing $190 million more from the annual revenue requirement by setting Duke’s return on equity at 9.1% rather than the 10.75% Duke Carolinas proposed as well as requiring that the capital structure be made up of 50% equity and 50% debt.
Duke had proposed 53% equity and 47% debt. … The staff also recommends cutting about $113 million in annual revenue by requiring Duke to pay some of the costs for upgrading its coal-ash disposal practices.
The Public Staff is an independent government agency whose role is to advocate for utility customers before the NCUC, a role it has not always fulfilled. Same as with utility requests, the NCUC is under no requirement to take any or all of Public Staff recommendations.