NC attorney general challenges Duke Energy Progress rate hike

North Carolina Attorney General Jeff Jackson is asking state regulators to reject much of Duke Energy Progress' proposed rate increase, arguing customers could save nearly $960 million over the next two years if his recommendations are adopted.

The filing, submitted Wednesday in the utility's rate case before the North Carolina Utilities Commission, argues Duke's requested return on equity — a measure of the profit investors are allowed to earn — is too high.

Jackson's expert witnesses recommend lowering Duke Energy Progress' requested 10.95% return on equity to 7.4%, saying the utility could still make needed investments while charging customers significantly less.

"We did an independent analysis. We hired people who were experts in this. We generated 700 pages worth of evidence, all to show the Utilities Commission that Duke way overshot the mark," Jackson said. "The entire question is what is going to be needed over the next two years."

According to Jackson's office, adopting that recommendation would save customers nearly $960 million over two years, or about $420 for the average residential customer.

The filing also renews Jackson's call for a separate rate class for data centers and other large electricity users, arguing those customers should bear more of the costs associated with the additional demand.

"What's different about them is they use so much energy that it taxes the entire system," Jackson said. "We don't want families paying for the strain that it puts the entire system under."

Duke Energy Progress is seeking an overall 15% rate increase over two years. The company says the additional revenue is needed to strengthen the electric grid, improve reliability and support North Carolina's rapid growth.

Duke Energy said in a statement to WRAL: "We reached partial settlements in our Duke Energy Carolinas rate review that will significantly reduce projected costs for our customers, and we are aggressively evaluating options for Duke Energy Progress customers as well. Our priority is to keep customer rates low while still allowing us to make the needed investments to serve North Carolina’s growing economy."

Jackson noted Duke Energy recently reduced its request in a separate Duke Energy Carolinas rate case before hearings began, dropping its proposed residential increase from about 18% to roughly 11.6%.

"It's very unusual for Duke to say before the trial even begins, 'Okay, we were wrong. We're going to come way down,'" Jackson said. "To me, that means they're basically admitting they were not in the ballpark of reasonable."

The attorney general's office also argues the utility's proposed return on equity is higher than necessary to attract the investment capital needed to maintain and expand the electric system.

"The number one issue that we hear about from people is their electric bill," Jackson said. "That's why we made this a big priority."

The North Carolina Utilities Commission will begin hearings in the Duke Energy Progress rate case Aug. 4 before deciding whether to approve, modify or reject the company's request.