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NC attorney general objects to Duke Energy grid investment rider

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NC attorney general objects to Duke Energy grid investment rider

North Carolina's attorney general has joined the state's consumer advocacy division in opposing Duke Energy Carolinas LLC's plan to recover grid investments through a pilot, three-year rider.

The Duke Energy Corp. subsidiary and several intervenors filed a settlement agreement June 1 in the utility's North Carolina rate case that calls for limiting the duration, cost recovery and scope of its planned grid investments. Under the agreement signed by Duke Energy Carolinas, or DEC; the Environmental Defense Fund; the Sierra Club; and the North Carolina Sustainable Energy Association, the utility would be allowed to recover costs from its planned Power/Forward Carolinas grid modernization initiative through the pilot rider.

All rider-recoverable and deferred costs, such as money spent on targeted undergrounding of electric transmission lines and pole replacement, would be subject to a 4.5% cumulative cap of total annual electric revenue. At the end of the three-year pilot period, DEC may petition state regulators for an extension.

North Carolina Attorney General Joshua Stein argues the grid modernization rider is "unfair to ratepayers."

"Although the settlement is couched as a limited pilot, it is actually a significant rate increase of 4.5% over the initial three years, which will fall more heavily on residential consumers, whom Duke projects will bear a 6.1% increase," the attorney general wrote in a June 15 filing with the North Carolina Utilities Commission.

The North Carolina Utilities Commission Public Staff, a consumer advocacy office, said the cumulative cap would actually result in a 6.9% total rate increase to residential customers over the three-year pilot, when factoring in deferred costs. The public staff in a June 7 filing with the commission said it continues to believe a 2% cumulative cap should be imposed on any rider, with targeted undergrounding projects excluded from rider recovery.

Stein, in his comments, said the cost recovery for the grid investments should be part of the normal ratemaking process.

"Allowing Duke to recover its costs during annual rider proceedings, even though ratepayers do not have the benefits of any offsetting savings Duke may enjoy during that time period, amounts to improper single-issue ratemaking," Stein wrote. "Duke's testimony demonstrates that there are no extraordinary circumstances that justify the commission approving a rider. The grid modernization costs are neither unexpected nor volatile, nor are they out of Duke's control."

Both the attorney general and public staff said the types of projects and the associated costs that will be included in the rider are "unclear."

The public staff contends the commission should require DEC to provide detailed information monthly to the staff and interested intervenors regarding projects under construction and scheduled for construction. These details should include the purpose, need, location and budget for the project, as well as the projected date for completion. (NCUC docket E-7, Sub 1146)