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NC utilities push back on petition seeking relief from 'demand charges'


According to Market Intelligence, December 2022


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NC utilities push back on petition seeking relief from 'demand charges'

North Carolina's electric utilities are pushing back on a petition that seeks to eliminate minimum and maximum demand charges for commercial and industrial customers during the coronavirus pandemic.

Carolina Utility Customers Association Inc., or CUCA, filed a petition with the North Carolina Utilities Commission seeking "expedited approval of temporary adjustments to electricity billing demand charges" for commercial and industrial customers of Duke Energy Carolinas LLC, Duke Energy Progress LLC and Dominion Energy North Carolina.

"The purpose of this petition is to bring to the commission's attention and seek approval to address the immediate and adverse economic ramifications that certain minimum and maximum monthly demand charges will have on industrial and commercial ratepayers whose energy usage is being temporarily curtailed as either a voluntary or compelled response to the COVID-19 State of Emergency," CUCA wrote in its March 31 filing. "Alternatively, some industries are ramping up production to meet additional needs related to COVID-19, which could cause some businesses to exceed their maximum contract demand charges."

CUCA is asking North Carolina regulators to require the state's electric utilities to "temporarily eliminate both the monthly minimum billing demand charges and maximum contract demand charges" for commercial and industrial customers whose "normal operations have been disrupted" by the state of emergency enacted in response to the COVID-19 pandemic.

"For many manufacturing and energy-intensive businesses, these minimum charges will result in millions of dollars of liabilities for energy and capacity not used or useful and, worse yet, at a time when significantly less to no revenue is being realized from curtailed operations," CUCA wrote in its petition.

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The Duke Energy Corp. utilities and Dominion Energy Inc. subsidiary Dominion Energy North Carolina, known legally as Virginia Electric and Power Co., responded that they have "voluntarily suspended all customer disconnections for nonpayment" and received commission approval to "waive late charges and other fees" during the state of emergency.

"As the Commission is well aware, minimum demand charges are not 'penalties' as CUCA seems to characterize them, but rather represent fixed costs that are unaffected by usage and are part of the overall rates approved by the commission to recover the companies' costs to serve customers," Duke Energy Carolinas and Duke Energy Progress wrote in an April 9 response.

"The companies respectfully assert that voiding commission-approved tariffs and allowing all [commercial and industrial] customers on the requested rate schedules to avoid paying a portion of their bills is not legally permissible and would result in these costs unfairly being shifted to other customers that are already paying their respective fair share of similar fixed components," the Duke Energy utilities added. "[Duke Energy Carolinas and Duke Energy Progress] provide an essential service and, perhaps now more than ever, it is important that we keep our facilities in operation and our employees working for our customers to ensure safe and reliable electricity service for their benefit."

All of the utilities indicated they have the ability to work with individual customers to provide certain relief "during force majeure events" and "under certain extreme conditions like the COVID-19 state of emergency."

"To the extent customers can and do show a significant increase in demand as a result of the State of Emergency, [Dominion Energy North Carolina] is committed to working with such customers to adjust demand charges when their businesses return to normal operations," the utility wrote in its April 9 filing.

(NCUC dockets E-22 Sub 585, E-2 Sub 1249 and E-7 Sub 1237)