NCLM Takes Active Role in Electricity Rate Case

Scott Mooneyham, NCLM Director of Political Communication and Coordination

Cities are among the biggest electricity users in the state, so it should come as no surprise that the League of Municipalities takes an active role when it comes to requests by the state’s primary electricity providers, Duke Energy, to increase rates.

Five years ago, NCLM and Duke Energy Carolinas (mostly covering the western half of the state) reached a settlement that brought considerable benefits to cities when it came to the cost of street lighting.

In 2023, NCLM is once again engaged in the legal process that will determine the latest major rate case filed before the state Utilities Commission, this one filed on behalf of Duke Energy Progress, mainly covering the eastern half of the state.

At issue for cities and towns is not only a potential increase in the rates paid to keep the lights and heat on in buildings, but once again the cost of street lighting. In response, NCLM has hired outside legal counsel, through the Fox Rothschild law firm in Raleigh, and sought to intervene in the case on behalf of its members.

Just as in 2018, millions of dollars over many years are at stake.

That year, the settlement reached due to NCLM’s intervening reduced revenue requirements by $60 million over the first four years. The commission’s eventual order, agreeing with NCLM arguments, also led to savings for water and sewer plant operations and recreational facilities through the incorporation of time-of-use and critical peak pricing options that also enhanced energy efficiency.

This year, Duke Energy Progress seeks a base rate annual increase of 5.7% going back to November 2022, and a total base rate increase of 16% over four years. The proposed increase, though, is not uniform across different usages, and the lighting category—covering street lighting, traffic signal, area lighting and sports field lighting—would rise 30.4% over four years.

In its petition to intervene, NCLM noted the substantial financial interest of its members in the outcome as a large user of Duke Energy-supplied electricity.

At a Utilities Commission hearing in early May, Mayor Bill Saffo of Wilmington and Mayor Terry Mann of Whiteville, with the assistance of NCLM and its outside counsel, submitted written testimony that noted the disproportionate increase on lighting relative to other uses, and how cities and towns would bear the brunt of that increase.

Mayor Saffo pointed out that the total revenue generated by the increase in lighting came to only 4.7% of the total additional revenue, even as the rates would rise above 30%.

“Consequently, the drastic increase in Lighting rates, while extremely burdensome to Lighting customers such as Wilmington and other municipalities, will have a relatively small impact on DEP’s (Duke Energy Progress’) overall returns,” Mayor Saffo stated.

He also disagreed with Duke Energy’s characterization of the increase as “gradual.” “Increasing lighting rates almost twice as rapidly as any other rate class seems the opposite of ‘gradual,’” he said.

Mayor Mann stated that the proposed increase would penalize municipal residents twice, with them having to pay for increases in their own personal electricity use and having to pay for municipal increases as local taxpayers.

“We agree that DEP needs sufficient revenue to operate, and we recognize that we must work cooperatively with our investor-owned utilities to try to meet all of these needs. However, we believe that the requested rate increases are far too high, and we believe that the proposed increases in rates for services to municipalities should be carefully reviewed to assure all steps have been taken to minimize any rate increases and to advance the policy goals discussed in my testimony,” Mayor Mann stated.

Duke Energy initiated this rate case in October, and prior to the May hearing to consider expert witness testimony, the Utilities Commission had held five public hearings across the state and one virtual public hearing.

In its request, the company has stated that the increase is needed to pay for investments made since 2019 in nuclear plant safety and reliability, traditional and renewable generation and storage, ongoing work to retire coal-fired plants, the addition of carbon free technologies, and upgrading transmission and distributions systems.

As if this writing, settlement talks and/or a decision by the state Utilities Commission were expected in coming weeks. Look for an update in coming issues of Southern City and other NCLM communications.