Area municipal governments are saying a proposed rate increase by Duke Energy would be “unpalatable” during tough economic times.
Duke Energy Carolinas provides power to many residents in Catawba County, and the company is asking the N.C. Utilities Commission for about a 15 percent average increase in electricity rates.
The city of Conover passed a resolution Monday that voices opposition to a proposed electricity rate increase by Duke Energy, which provides to city residents, as well as the city itself.
The rate increase would cost the city alone about $50,000, said Donald Duncan, Conover City Manager.
“It will have an impact on services and operations,” Duncan said, adding that now is the time for citizens to voice opinions about the proposed increase.
The average rate increase will be 17 percent for residential, 14 percent for commercial and industrial and eight percent for lighting energy users. The proposed rate increase would affect most residential and commercial energy users in Catawba County, except the cities of Newton and Maiden. Newton and Maiden are part of the energy cooperative Electricities.
If approved, new rates would likely go into effect February 2012.
About 75 percent of the rate increase will allow Duke Energy to start recovering $4.8 billion in capital investments and costs related to system modernization. About 15 percent of the increase is for “additional financing and other costs” while 11 percent will balance out the recession’s impact on Duke Energy’s sales, according to Duke Energy’s website.
“Seeking this increase in electric rates better aligns the rates our customers pay with the cost to provide affordable, reliable and clean electricity today, and for decades to come,” according to a statement on duke-energy.com.
Despite dedicating 11 percent of the increase to the recession’s impact, Duke Energy is still making money. The utility posted a second-quarter net income of $441 million on Tuesday, reversing a year-earlier loss.
Duke Energy Carolinas’ average electricity rate of 8.98 cents per kilowatt hour is lower than the national average of about 12.01 cents per kilowatt hour. If the rate increase was passed, however, Duke Energy Carolinas’ rate would be competitive with the South Atlantic Region’s rate, which is about 10.90 cents per kilowatt hour.
Municipalities around the state, like Conover, feel the increase comes at a challenging time for customers.
“In these economic times, that’s going to be a huge hit on their disposable income,” Duncan said. “I think it will slow our economic recovery. It would be like the city of Conover raising water rates during a drought.”
Duncan said he thinks other governments will join the effort in opposing the increase, and said other cities and towns have already approved similar resolutions.
The N.C. Utilities Commission, which approves or denies electric rate increases, will hold several public hearings before making a decision about the hike. Any customer of Duke Energy can plead their case at the hearings.
“It will important for the citizens to voice their opinions,” Duncan said, adding one of the closest public hearings to this area will be held in Marion during the fall.
After the public hearings in October and November, the N.C. Utilities Commission will hold evidentiary hearings about the proposed increase.
The NCUC is scheduled to make their decision about the increase in January, with new rates going into effect in February.