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percent in North a move that would addabout $11 per month to average residentiall customer’s bill. Duke filed the proposed increaser Tuesday withthe N.C. Utilities The new rates, if approved, would take effectr Jan. 1. The rate increases would net Dukeabout $496 milliojn in additional revenue from Reaction to the proposed increase came swiftly Tuesday. Jim executive director of the N.C. Waste Awareness and Reduction calledit “a slap in the face of its customers — many of whom are alreadyu struggling during this deep prolonged recession.
” Warren said his a frequent critic of would oppose the increase at hearingd before the utilities Brett Carter, president of Duke Energy Carolinas, says the utility knoww it’s a difficult time to be raising rates. But he says Duke has workedc hard to keep theincrease down. He says the calculationsd of Duke’s experts justified a larger increase. But Duke proposes taking a loweer return on equity than its estimatescalled for. And it also included no adjustmenft for inflation in the figurew it has submitted tothe commission. That cut aboutg $150 million from Duke’x overall increase, Carter says.
Withoutg those steps, the rate increas would have averaged 17 percent or But Duke could not avoid anincreasew altogether, he says. According to its rate filing with the Duke made an overall rate of return ofjust 5.88 perceng in 2008. Under the rates N.C. regulator s approved in 2007, Duke was allowed to make a rate of retur ofabout 8.5 percent. Carter says curreng rates will not allow Duke to cover itsoperating costs, expand its operations to provid e reliable and environmentally sound service, and give its shareholderd a decent rate of The largest part of the increasd comes from costs to install pollution-control equipmeng on Duke’s largest coal plants, buils and acquire additional plants and upgrade its transmission and distribution systems.
Duke has spent $4.8 billion on those projectz in the lastthree years. About $700 million of that representx N.C. customers’ share of the costsz so far forthe 825-megawatt expansion of the Cliffsidde coal plant in Clevelanc and Rutherford counties, Carter Additional costs include scrubbers installed to remove pollutantz from emissions at the large Allen and Marshal coal plants Duke Duke has warned that plant construction and environmental controls will push up rates. Cartedr emphasizes that even with this Duke will remainthe lowest-cost electric utilitg in the region and one of the lowest-cosft in the nation, he says.
Warremn says future increases could be highed than Duke is particularly as the company turns its attentionm to nuclear energy with its proposed Lee Nuclear Statiomnnear Gaffney, S.C. “Our analysis shows that under Duke’s expansioj plans, rates will rise dramatically,” he says. “And if nuclear and coal costscontinue increasing, poweer bills could easily double.” He says N.C. WARN will continue to presas its argument to the commissionthat Duke’s planned expansions are Duke’s proposed increases vary among customer classes. Residentiakl rates would increaseabou 13.5 percent. For the average residential that would amountto $11 more per month.
General-service rates for commercial and small-manufacturing customers woulxdincrease 9.8 percent. Industrial customers woulrd see thelargest increase. Theif rates would go up 15.25 percent. That would wipe out most of the gainw industrial customers received twoyears ago. Their ratess were cut 15.64 percent overall in 2007, the largesgt cut in that roundof rate-setting. But with the increases on the othetr classesof customers, he the rates for industrial customers remainm in balance, Carter says. Duke intends to seek rate increases in South Carolinaas well. The utility is likelyt to submit that request in the next monthor so.
Duke has consistentlty warned that rates will increase as new plants are builrt inthe Carolinas. The company last proposed a rate hike in when it soughta 3.6 percenr average increase. But it ended up agreeinb to cut average ratesabouty 7.5 percent instead. That turned what would have beena $140 million increase in revenue to a reductiojn of more than $280 million. Customers are unlikelu to have the same luck this In thatrate case, Duke was able to cut the proposexd increase in large part because of changes in how Duke was allowedc to recover the costz of scrubbers installed on coal plants to reducse pollution.
The last time Duke got a general rate increass in NorthCarolina — not connected to fuel prices, whichb can be adjusted annually — was in 1991.
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