by Jason Y. Lee
Durham City Council Chambers were standing-room only last night as concerned citizens told the N.C. Utilities Commission that they opposed Duke Energy's proposed 18.6 percent rate hikes for residential customers.
The proposed rate hikes, spread over Duke Energy's 1.8 million North Carolinian customers, would generate $640 million for Duke Energy. Almost three-quarters of that would go toward recouping the $4.8 billion the company says it has spent since 2009 building new plants, updating existing ones and complying with new federal and state environmental rules.
Duke Energy operates under the regulated utility system—the state essentially grants it a monopoly in parts of the state and, in return, the utilities commission regulates certain aspects of its business such as new plant construction and proposed rate hikes.
The Durham hearing was the fourth the utilities commission has held across the state, following ones in Marion, Franklin and High Point. Citizens at those meetings turned out in force, with posters and demonstrations.
The people of Bull City were not to be outdone. About 40 people from Occupy Durham marched down Main Street with a hip-slung snare drum keeping time for the crowd's chanted slogans: "No hike, no way! Duke Energy, we won't pay!" Passing cars honked at signs like "Hey Duke Energy! YOU take a hike!"
The Occupiers see the rate hike as another instance of the 1% leveraging their risks on the backs of the poor. "Every person that's here—white, people of color, from the suburbs, from the city—their energy bill immediately goes up 19 percent," said Ben Crawford, who graduated with a doctorate in music composition from Duke University. "It directly affects people's bottom lines. And who's running Duke Energy? The 1%."
According to Securities Exchange Commission filings, Duke Energy CEO Jim Rogers earned $8.8 million in fiscal year 2010—an increase of 29 percent over 2009. He does not receive a salary; his stock options and awards and other perks make up the bulk of his compensation.
The N.C. Waste Awareness & Reduction Network (NC WARN) also participated in the rally, swelling the ranks of supporters to over 80. The Raging Grannies, clad in gaudily feathered hats and overlarge maroon shawls, sang a protest song to the tune of the Battle Hymn of the Republic.
Duke Energy spokeswoman Betsy Conway says that the rate hikes help pay for infrastructure that benefits consumers in the long run. Some of the new plants, she points out, replace coal-fired plants, of which the average age is around 60 years. The regulated utility model, she says, gives companies the responsibility to maintain vital services at the least possible cost.
The citizens did not submit to this logic. "This translates to, we have taken a risk and now we want the public to pay for this risk," said Rafael Estrada of Durham. Many pointed out the fact that, in 2010, Duke Energy reported record profits of $1.3 billion.
Matilde Nankivil said it's only Duke Energy's monopoly status—it is the primary utility company serving North Carolina west of Raleigh—that allows it to preserve its profits and pass on investment costs to the customers. Her husband, Derek, added, "That's an investment. I don't think it's fair. Those things pay themselves off over time."
Several people criticized Duke Energy for its investment in coal. Jim Warren, executive director of NC WARN, said, "It's dumb as hell in an age of global warming and these guys are building a global warming machine."
The associate director of Democracy NC, Jennifer Frye, acknowledged she would feel differently about the rate hike if Duke Energy were using it for renewable energy.
Plenty of people also were angry about what they said was Duke Energy's insensitivity to its customers' financial burdens. Cited again and again was the fact that Duke Energy had increased rates 8 percent since January 2010, increased fuel surcharges 5 percent in September, and it was already seeking a different rate hike for next year.
Kat Benson of Durham took the podium with her young son in hand and her infant daughter strapped to her chest. She works a full-time job, she said, and her husband holds three jobs to pay household expenses, a mortgage and medical bills. When asked how she would cope with the proposed rate hike, she sighed and said, "We'll have to make difficult choices. I don't know what they would be." She added: "While my family will have to make sacrifices, we are luckier than others who will go without heat, medicine, and perhaps even food."
The City of Durham, too, has made its stance clear. A comment filed Oct. 31 and written by the senior assistant city attorney reads: "The City [of] Durham respectfully asks that the N.C. Utilities Commission not allow the rate increases for which Duke Energy has petitioned." The comment goes on to ask, "Is a return on investment of 11.3 percent necessary or even appropriate in this economy?" The city is referring to the 11.3 percent rate of return Duke Energy would be guaranteed by the hike, up from the current 10.7 percent. The City's comment also says the increase would significantly impact its budget.
The fifth and final hearing is to be held on Nov. 28 at the utility commission office in Raleigh, where both sides will present witnesses and evidence for testimony and cross-examination.
Lee is an intern at the Indy.