NCUC Rules on Duke Energy Progress Rate Case: Takeaways for the Clean Energy Community

Last summer, Duke Energy Progress (DEP) filed an application to increase their retail rates with the NC Utilities Commission (NCUC). As advocates for clean energy, NCSEA pays close attention to any changes in utility rate structures; in particular, how the proposed changes impact access to energy efficiency and renewable energy options for customers.

Accordingly, NCSEA was heavily engaged in the DEP rate case proceeding that followed the utility’s ~10.8% rate increase application. Our team’s deep dive into DEP’s request uncovered three primary opportunities for clean energy, which shaped our testimony and arguments in the December rate case hearing: fair rate design, transparent access to energy consumption data for customers, and the need for true grid modernization in the utility’s proposed grid investment plans.

In late February, the Commission ruled on DEP’s rate increase request, and our team has identified several takeaways relevant to the clean energy community:

• Grid Modernization:
  • • NCSEA argued that the utility’s Power/Forward grid investment plans did not meet our definition of grid modernization. Given this, and the scale of this $13 billion component of the rate increase, NCSEA recommended that the Commission take up the issue outside of the rate case, in a separate docket with stakeholder involvement and Commission oversight.
    • Commission ruling highlights:
      • A technical workshop on grid modernization will be held in the second quarter 2018 (more, p. 15 of the ruling).
      • While the Commission will not yet open a separate docket on the issue at this time, they did conclude that the utility has not yet provided compelling evidence that the proposed grid investments will result in meaningful benefits to ratepayers despite its cost.
      • As such, the Commission will consider a separate docket in the future, pending the effectiveness of the upcoming workshop, outcomes from the upcoming Duke Energy Carolinas rate case (which also includes grid investment proposals), and their Integrated Resource Planning (IRP) and Smart Grid Technology plans (more, p. 99-100 of the ruling).  

• Rate Design:
  • DEP sought a 75% increase, from $11.13 to $19.50 per month, for the fixed-rate “basic customer charge” imposed on every residential ratepayer. NCSEA, after reviewing DEP’s costs to serve residential ratepayers, pushed for a decrease to $8.54, and pointed out that DEP’s proposed increase could hurt clean energy adoption rates. (Net metering customers, including rooftop solar adopters, would pay higher bills every month – even if they have a net consumption of zero kWh.) Other intervening parties also raised concern that DEP’s proposed fixed charge would disproportionately impact low-income customers. In addition, NCSEA opposed the utility’s request to reduce the differential between off-peak and on-peak time of use rates.
  • Commission ruling highlights:
    • DEP was approved to increase the fixed charge to $14.00 (more, p. 114 of the ruling).
    • The Commission also concluded that energy efficiency measures will not be discouraged by the fixed rate increase, stating that further support for EE is not needed as current programs already effectively promote EE, and will continue to do so following the fixed rate changes (more, p. 107 of the ruling).
    • DEP will not be required to file additional analysis in support of their proposed fixed rates in future rate increase applications (more, p. 108 of the ruling). The Commission also expressed confidence in the ability of DEP’s upcoming AMI implementation to deliver DEP insights into smarter future rate design (more, p. 115 of the ruling).
    • The Commission upheld the current time of use price differential between on-peak and off-peak rates, concluding that such changes be deferred at least until any rate changes that come out of DEP’s upcoming AMI deployment are made (more, p. 115-116 of the ruling).

• Data Access:
  • NCSEA supports giving consumers the raw data to have more visibility into their energy usage and allow them to partner with third parties for conducting analysis. The utility requested to recover $10.6 million per year for their upcoming new Customer Information System (CIS), as well as costs associated with their smart meter, or AMI, deployment. DEP wants to restrict customer access to the energy consumption data measured by smart meters to their own proprietary smart phone app, rather than allowing consumers to choose data analytics software that best meets their needs. Note: the Commission struck most of NCSEA’s expert testimony on data access in the DEP rate case for focusing on policy issues and not cost recovery.
  • Commission ruling highlights:
    • The Commission deferred action on data access, stating they will learn more about the availability of data and associated costs following DEP’s upcoming AMI deployment (more, p. 42 of the ruling).
    • DEP’s request to include $10.6 million per year in their revenue requirement for CIS charge was denied (more, p. 41 of the ruling).

• Coal Ash
  • The expensive issue of coal ash clean-up also received significant attention in the DEP rate case. DEP requested $419 million per year to help cover state- and federally-mandated coal ash clean up and associated preventive costs. NCSEA argued that costs should be recovered using an energy-related allocation factor, rather than a demand-related allocation factor, which DEP requested.
  • Commission ruling highlights:
    • The Commission adopted NCSEA’s position that costs should be recovered using an energy-related allocation factor (more, p. 19 of the ruling).
    • DEP requested an ongoing recovery of $129,115,000 per year; the Commission deferred future cost recovery requests until the next rate  case (more, p. 19 of the ruling).
    • The Commission disallowed $9.5 million of clean-up costs and imposed a $30 million mismanagement penalty for imprudent handling of coal ash (more, p. 18-19 of the ruling).

Overall, NCSEA counts both wins and losses among the outcomes of the DEP rate case. NCSEA is pleased to have been able to bring more awareness to several timely opportunities for clean energy throughout the case. We want to extend a sincere thank-you to our members and partners who enabled our great work, including the hiring of subject-matter expert witnesses, to happen.

As we prepare for the Duke Energy Carolinas (DEC) rate case hearing beginning in early March, we will continue to work on behalf of our members and partners to give these opportunities a platform. We are taking lessons learned from the DEP order into the DEC hearing, and we have special momentum going into this second rate case, as the Commission denied DEC’s request to strike NCSEA’s data access testimony, which was stricken from the DEP case. As always, we will be sure to update our members on NCSEA’s bi-weekly calls. In addition, be sure to follow our Twitter and Facebook pages and monthly newsletters throughout March for timely takeaways from the hearing.