In a blow to Duke Energy, state regulators last week declined to reconsider the most substantive element of their decision in a rate hike case that the Charlotte-based utility contested.
The Public Service Commission said it would not listen to arguments about why Duke Energy Carolinas — which serves 591,000 Upstate customers — should be entitled to a return of equity greater than the 9.5% cap placed on it.
“To the extent that I propose upholding the Commission’s original rulings, I move that we find there is substantial evidence in the entire record to support our findings of fact and conclusions of law,” Commissioner Thomas J. Ervin wrote in a written proposal that was unanimously approved by the board on June 19.
Following a May decision by the PSC, Duke Energy Carolina residential ratepayers began paying about $4.71 more a month — or $122.45. Utility executives were seeking a $15.57 monthly uptick.
Duke also agreed to drop its proposed Residential Basic Facilities Rate charge, or BFC, to between $11.70 and $13.09 a month instead of the $29 it initially asked for.
However, company executives held fast in their assertion that it needed to yield a 10.5% return on equity, or ROE, for investors. The commission set the figure at 9.5%.
In Public Service Commission filings, both intervenors assert the May 1 decision limiting Duke to a 9.5% return on equity and preventing it from recovering the state’s share of $469 million in coal ash remediation and disposal costs was made within the scope of law and precedent.
Duke deputy general counsel Heather Shirley Smith said the PSC’s cap was “arbitrary and capricious.”
“The undisputed evidence establishes that 9.5% is well below authorized ROEs for the company’s peers in the Southeast with which the company competes for equity capital. The higher ROEs awarded to company’s peers reflect the risks attendant upon owning and operating vertically integrated utilities, including nuclear generation,” Smith wrote.
Walmart and the Office of Regulatory Staff filed petitions protesting Duke’s rehearing request.
“DEC argues in its petition for rehearing or reconsideration that the commission should reconsider, and increase, the approved ROE because 9.5% is below the average awarded to DEC’s peers in the Southeast,” ORS counsel Jeff Nelson wrote. “DEC provides no evidence or citation to support its claim that this position is proven by “undisputed evidence” in the record. In fact, 9.5% is much closer to the national average than DEC’s requested 10.5%.”