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

Over the past year, NCSEA engaged in two Duke Energy rate cases: First, in last fall’s Duke Energy Progress (DEP) proceeding, followed by this year’s Duke Energy Carolinas (DEC) proceeding. In both cases, NCSEA advocated for essential policies such as: fair rate design; transparent and collaborative grid planning; empowering customers by providing easy and meaningful access to their energy usage data; and cost-effective investments to modernize our grid. An order on the DEP rate case was issued in February and, late last week, the Commission filed a comprehensive order concluding the DEC rate case.

In the most recent rate case, DEC sought cost recovery through increasing both customer rates and the fixed charge each DEC customer must pay. DEC also requested the implementation of an annual rider to fund the investments proposed in DEC’s Power/Forward Carolinas “grid modernization” plan.

The 402-page Commission order addressed many other aspects aside from Power/Forward and grid modernization. NCSEA counts both wins and losses among the details of the Commission’s order on DEC’s rate case, and offers the following initial takeaways for the clean energy community:

Wins:

• The Commission ordered DEC to engage and collaborate with stakeholders to address grid modernization issues in an existing proceeding, such as the Integrated Resource Planning and Smart Grid Technology Plan dockets (Order, p. 149)
• The Commission ordered DEC to file details of new time-of-use, peak pricing, and other dynamic rate structures within six months of the date of the Order (Order, p. 125)
• The Commission ordered that DEC shall recover coal ash remediation costs by the energy allocation factor, which is the appropriate method for any such recovery and advocated for by NCSEA (Order, pp. 325-326)
• Commissioners Clodfelter and Brown-Bland, separately concurring in part and dissenting in part with the Order, extensively agreed with NCSEA’s position on keeping residential customers’ monthly fixed charges as affordable as possible

The DEC Rate Case Order also included some determinations that we consider to be partial wins:

• While the Commission ordered an increased monthly fixed charge, which NCSEA disagrees with, the Commission also ordered the Public Staff to open a docket in 2019 to reconsider cost of service methodologies to determine future fixed charges (Order, p. 87)
• The Commission authorized an increase in the fixed charge from $11.80 to $14.00, less than the $17.79 that DEC had requested but more than the $11.08 that NCSEA believes is appropriate (Order, p. 112)

NCSEA is disappointed that the Commission did not act on NCSEA’s request that DEC should offer a residential time-of-use rate schedule comparable to DEP’s R-TOU schedule (Order, pp. 89-92). We consider this issue to be a “loss” for now, but will continue our advocacy on this subject in all relevant future proceedings.

Following the conclusion of the rate case hearing and submission of post-hearing legal briefs, NCSEA, Environmental Defense Fund (EDF), and Sierra Club entered negotiations with DEC for a compromised, rewritten Power/Forward grid plan.

Power/Forward, as initially proposed by DEC, failed to support a truly modern and resilient electric grid, in addition to being unjustifiably expensive. NCSEA, EDF, and Sierra Club negotiated sensible and clean energy-friendly changes to the Power/Forward plan while reducing DEC’s proposed investment from a staggering $7.8 billion over 10 years to $2.5 billion over 4 years. The revamped Power/Forward plan proposed in the partial settlement and stipulation we presented to the NC Utilities Commission prioritized “true” grid modernization efforts, took procedural steps to ensure that DEC’s investments advance North Carolina’s energy economy along a cleaner, more affordable, and transparent path, and allowed scrutiny and limited cost recovery through an annual rider proceeding.

In its June 22 Final Order, the Commission determined that DEC had not proven that the necessary “extraordinary circumstances” existed to authorize a rider, and because it includes a rider, the Commission lacked legal authority to approve the partial settlement and stipulation. NCSEA knew this outcome was a possibility, but nonetheless succeeded showing that Duke Energy can move quicker than it currently is to deploy energy storage, electric vehicle charging infrastructure, integrated distribution planning, and other technologies that benefit clean energy.

These negotiations resulted in Duke Energy finally – and publicly – recognizing the benefits of energy storage, electric vehicle charging stations, consumer access to energy usage data, and, most importantly, a long-term integrated resource planning (IRP) process that incorporates the benefits provided by clean energy resources. Duke Energy cannot reasonably claim to be building the grid of the future if it does not take the first very elementary step of including integrated distribution system planning in its overall system planning with greatly increased stakeholder participation and transparency.

The Commission directed DEC to engage intervenors in other proceedings regarding its Power/Forward plan, and we look forward to further collaboration with our members, Duke Energy, and other stakeholders to ensure that the benefits of the partial stipulation and settlement are realized through other proceedings and venues. As always, NCSEA will monitor the implementation of the provisions included in the Order and will be sure to keep our members updated with relevant details.