NC industrial group: We shouldn’t have to pay $1.70 to aid low-income Duke customers

A trade group of industrial utility customers is asking the N.C. Utilities Commission to halt a program set to begin in January that would help low-income Duke Energy Progress residential customers afford their bills.

The proposed customer assistance program resulted from a settlement between Duke Energy, the N.C. Public Staff, the Sierra Club and a coalition of advocates represented by the Southern Environmental Law Center. If allowed to move forward, it would see customers enrolled in Duke’s Crisis Intervention Program and Low-Income Energy Assistance Program automatically receive a $42 discount on electric bills for at least a year.

The Utilities Commission approved the customer assistance program as part of a process that set rates for Duke Energy Progress customers for the next three years. Over that period, residential customers who use 1,000 kilowatts of power will see their monthly bills increase from $144.12 in September 2023 to $161.98 by Oct. 1, 2025.

Eligible low-income customers would have those increases offset by the flat $42 discount.

That discount would be funded by other ratepayers, with residential customers paying a rate of $1.57 for each 1,000 kilowatts of energy used and commercial and industrial customers paying a flat $1.70 each month. That additional monthly fee is what led to the complaint from the Carolina Industrial Group for Fair Utility Rates II, a coalition known as CIGFUR that routinely advocates before the Utilities Commission.

In an Oct. 17 appeal to the N.C. Supreme Court, CIGFUR argued that the Utilities Commission lacks the statutory authority to enact a discount program for electric utility customers. Furthermore, CIGFUR argued, such a program should only be funded by residential customers because only residential customers are eligible to benefit from it.

“Rather than reduce interclass subsidies by the greatest extent practicable as required by law, here the Commission approved a new interclass subsidy in contravention of the constraints on the its authority imposed by the (performance-based ratemaking) Statute,” Christina Cress, CIGFUR’s attorney, wrote in the appeal.

CIGFUR has also asked the Utilities Commission to prevent the program from beginning while the case goes before the N.C. Supreme Court.

Supporters of the customer assistance program argue that in addition to helping utility customers who are struggling, helping people keep their electricity connected provides a boost to every other customer. Duke is allowed to recover unpaid utility bills as part of its rate cases, meaning that if a customer cannot pay their bill and is disconnected with bills outstanding, Duke eventually receives that payment from the rest of its customer base — residential and industrial.

David Neal, a senior attorney at the Southern Environmental Law Center, said that by keeping customers connected, residential and industrial customers alike stand to benefit by not paying those bills further down the line.

“What we’ve seen in other states is, when prospective programs like the customer assistance program are put into place, it reduces that bad debt and reduces uncollectibles that otherwise those industrial customers would have to pay as part of their rates,” Neal told The News & Observer.

Neal also said he was surprised that CIGFUR is appealing, based solely on the $1.70 monthly fee that industrial customers, whose utility bills easily range into the thousands each month, are paying.

“That’s part of what’s been so surprising for us and why we really hope that CIGFUR will reconsider. I look at this and see the fact that it’s just $1.70 a month for industrial customers as a victory for them,” Neal said.

CIGFUR does not publicize the companies that are among its members, but Energy News Network reported recently that Carolina Pipe and Foundry is a member of CIGFUR II.

Cress declined further comment, citing the Utilities Commission’s pending decision on whether to implement the customer assistance program for Duke Energy Carolinas customers as part of that utility’s ongoing rate case. The commission is expected to make a final ruling in that case in mid-December.

The agreement emerged from a low-income affordability collaborative that was borne out of previous rate cases. CIGFUR participated in those discussions.

The flat $1.70 charge each month was an effort to appease concerns from commercial and industrial groups, said John Howat, a senior energy analyst at the National Consumer Law Center who also participated in the collaborative.

“With such a small contribution from that sector, it does limit the pool of funds which ultimately have bearing on the number of customers that are able to participate and the benefit levels available to those customers. So it’s clearly a compromise, this approach,” Howat said.

By comparison, Ohio has a low-income program in which small commercial customers pay about $5.15 per month while large industrial customers can pay as much as $471. In Massachusetts, where a discount program slashes a set percentage of low-income customers’ electric bills, commercial customers contribute $3.26 and industrial customers pay over $500 each month.

“Those examples provide evidence of the disparity between the very meager amount that was proposed in North Carolina and what’s going on in the field in other states,” Howat said.

According to Duke Energy, recent years have seen 50,000 to 62,000 customers served by Duke Energy Progress enrolled in the two programs that would automatically receive the subsidies. Duke would also consider whether those customers are eligible for energy efficiency or weatherization programs that could help upgrade their homes to drive down utility costs.

Duke Energy shareholders also agreed in the settlement to contribute $10 million over the next three years to help with energy efficiency efforts and $6 million to the Share the Light fund, which helps customers who have fallen behind on bill payments.

The customer assistance program “was the result of extensive collaboration with customer advocates. In light of the legal uncertainty due to the appeal, Duke Energy defers to the Commission regarding the complex decision of whether to implement (the program) before the legal issues are resolved,” Bill Norton, a Duke Energy spokesman, wrote in a statement.

In an Oct. 26 filing before the commission, Duke argued that in order for the commission to grant a stay, CIGFUR would need to prove that its members had suffered an injustice. In fact, a Duke attorney wrote, granting the stay would represent an injustice to the company that would have to redesign rates that went into effect on Oct. 1 and to consumers who would be confused about rates that could shift as many as three times by the time the state Supreme Court made its decision.

The Duke attorney also noted that an outcome where the stay is not granted but the Supreme Court ultimately strikes the program down could result in logistical challenges, particularly if low-income customers are ordered to repay their discounts. That would ultimately be up to the Commission.

“Low-income customers who qualify for the (discount program) are very sensitive to changes in their monthly bills and could be injured in the event they come to rely on the discount and then are ordered to return that discount or ultimately risk disconnection,” the Duke Energy attorney wrote.

Parties to the customer assistance plan settlement with Duke Energy included the N.C. Justice Center, N.C. Housing Coalition, Natural Resources Defense Council, Southern Alliance for Clean Energy and Vote Solar.

Mikaela Curry, a Sierra Club field manager, wrote in a statement, “This customer assistance program is one step in addressing significant inequities that occur for low-income ratepayers in North Carolina, who often carry the burden of high electricity bills. While large industrial and manufacturing customers are up in arms about an additional $1.70 a month, there are people all across our state struggling to keep the lights on.”

This story was produced with financial support from the Hartfield Foundation and 1Earth Fund, in partnership with Journalism Funding Partners, as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.