What is Duke Energy Carolinas asking its customers to pay for?

Duke Energy Carolinas wants to raise your electric rates.

In general, the utility’s lowest justifiable costs needed to provide consumers with dependable electricity are typically allowed by the S.C. Public Service Commission (PSC), the state agency that regulates Duke and Dominion Energy.

So what costs is Duke including to justify its rate hike request?

Among them: Baby showers, cookouts, decorations, flowers, funerals, ice cream, parties, and a lot more.

What do any of these costs contribute to providing you with energy? 

Nothing.

But they are included in Duke’s expenses listed to justify its request for an eye-popping 17.5% rate hike on residential and 11.9% on small business customers by 2026.

The S.C. Office of Regulatory Staff (ORS), which is responsible for auditing, crunching numbers and recommending to the PSC a fair rate increase for investor-owned utilities, found these Duke expenses.

But there’s more.

Sponsorships of fireworks shows, Christmas parades, senior expos, and a lot more events.  Duke wants you to pay for its public relations.

Also, ratepayers are being asked to pay for construction of the new Duke Energy Plaza in downtown Charlotte that is less than 50% full, membership dues to national associations that lobby on the utility’s behalf (not yours), compensation for Duke Energy executives who mostly work for the Board of Directors and shareholders (not you), employee bonuses for increasing revenue (from you) due to bad weather, and lawyer fees exceeding $525 an hour.

Then there is the $417,700 cost for copper wire that was to be used in the construction the Duke Energy Plaza. The utility changed its mind, and the wire sits somewhere on Duke’s property never used. Duke says that the wire is “so unique” it couldn’t be returned to the vendor, and the company does not say that it had been sold for scrap to save ratepayers money. 

Duke not only wants you to pay for this wire, it also wants you to pay for it every year until the utility comes in for another rate hike.  If that were to take three years, the cost to ratepayers for the unused wire would be $1.2 million. If Duke waited five years for another rate hike, customers would pay more than $2 million for the utility’s one-time $417,700 expense.

This isn’t the first time a utility serving South Carolinians has asked its customers to pay for costs that have nothing to do with providing power.

In 2012, South Carolina Electric and Gas (SCE&G), later acquired by Dominion Energy, wanted its ratepayers to pick up the tab for employee Zumba classes from a private trainer and expensive Ruth Chris Steak House dinners including alcoholic drinks for its board of directors.

When my organization went public with this information reported by ORS, the utility said that it was simply an accounting oversight.  SCE&G quickly removed these expenses from its rate case.

Duke might well do the same, citing the above unallowable expenses as an oversight in making its rate request. 

But ORS found these expenses simply by asking Duke to do a keyword search of its transactions.  The request included well over 100 keywords that were red flags for unallowable expenses that should be paid by shareholders, not consumers.

In total, ORS has determined that Duke’s increase in revenue requested should be reduced by more than $100 million. That would cut the additional revenue Duke wanted by about 30%. Most of the reduction ORS is seeking is due to other unallowable or excessive Duke costs, plus too high a return on equity used to justify a significant rate hike.

Duke is a Fortune 150 company. It should only be asking its customers to pay for reasonable expenses absolutely needed to serve the power needs of its customers.

Frank Knapp Jr. is the president, CEO and co-founder of the SC Small Business Chamber of Commerce, which is an intervenor in the Duke Energy Carolinas rate case (Docket # 2023-388-E).