Duke Power Co rate increase

The N.C. Utilities Commission will hold a public hearing this week in Marion about a proposed rate increase by Duke Energy, a rate hike that environmental groups claim is being asked for so the power company can pay for its controversial Cliffside project.

However, a spokeswoman for Duke Energy said the rate increase is being requested to pay for improvements already made and is not a "Cliffside rate hike." Paige Sheehan, a spokeswoman for Duke, said the improvements being made to the coal-burning Cliffside plant in Rutherford County will actually result in cleaner and more efficient operations.

The Marion hearing will be held at 7 p.m. Thursday in the main courtroom at the McDowell County Courthouse. It is one of several public hearings being held by the N.C. Utilities Commission across the state about the proposed rate hike. One hearing was held last week in Durham and another is scheduled for today in High Point. After Marion's hearing, another one will be held in Franklin on Sept. 22 and the last is set for Oct. 19 in Raleigh.

In addition, opponents of the rate increase and the Cliffside plant are scheduled to bring their concerns to both the McDowell County Commissioners and the Marion City Council this week.

Earlier this month, 25 statewide organizations sent members of the state's Utilities Commission a letter outlining their reasons for denying Duke Energy its proposed rate hike and requesting that the commission halt construction of the No. 6 unit at the Cliffside plant. These environmental groups believe that a large proportion of the rate hike is to fund the construction of the Cliffside unit which they say violates the commission's obligation to "promote least cost energy planning…(and) provide just and reasonable rates."

Cliffside's No. 6 unit is now under construction in Rutherford County. If allowed to become operational, it would emit 6 million tons of carbon dioxide every year for the life of the plant, the equivalent of adding 1 million polluting cars to the road, according to Dr. Richard Fireman, a member of Physicians for Social Responsibility and public policy coordinator of N.C. Interfaith Power & Light, a program of the N.C. Council of Churches.

"This is unacceptable in an era of rapidly accelerating climate change," said Fireman.

Environmental groups opposed to the Cliffside project also point to a report by Physicians for Social Responsibility and the National Wildlife Federation that they say highlights the vulnerability of North Carolina to the effects of "rapidly accelerating climate change." These groups contend that Cliffside's Unit No. 6 would make the situation worse.

The letter signed by the statewide groups reads "There is no doubt that building new power plants, such as Unit No. 6, will continue to increase our rates much more than by using energy more efficiently, increasing co-generation, and deploying renewable energy. According to Duke University economist John Blackburn, Duke Energy's own data shows new plants can be avoided by modest increases in energy efficiency and with renewable sources of energy at levels already required in North Carolina."

June Blotnick, director of Carolinas Clean Air Coalition, said "While electric rates in other parts of the country are plummeting, North Carolinians are being forced to pay for Duke's short-sighted investment in Cliffside. It's unfair to consumers who are already struggling to pay their bills and who will be stuck with more rate increases once climate legislation and a national renewable energy standard are approved by Congress."

Dr. Lew Patrie of the Western N.C. Physicians for Social Responsibility said he opposes Duke Energy's Cliffside power plant.

"Coal combustion from the plant would release carbon dioxide into the atmosphere adding to the ever-increasing threat to human existence from global climate change," he said. "Furthermore mercury emissions into the air, water and soil from that plant would be especially detrimental to exposed fetuses, infants and children, placing them at risk for lifelong developmental defects."

Lee Taylor, a Marion attorney, said she will speak to the county and city officials about this matter. Duke Energy, she said, is claiming to need an overall increase of 12.6 percent in revenues to compensate for its capital expenditures on infrastructure, including the ongoing construction at Cliffside. The rate increase will vary among the different sectors within Duke Energy's customer base. But, when all the sectors are added together it will theoretically equal a 12.6 percent increase in annual revenues for the company.

"These hikes would be in addition to the 4.5 percent fuel increase that Duke received in July of 2009," said Taylor.

In addition, opponents of the Cliffside project say Duke is seeking to increase its profits by selling electricity outside of its designated service area in North Carolina. They contend this also proves that Cliffside No. 6 is an unnecessary burden on customers in North Carolina already dealing with declining incomes.

"No one should be forced to pay for something that is not necessary, yet alone for a coal burning power plant that pollutes our air, poisons our children, consumes precious water resources, and will destabilize our coastlines and cause countless premature deaths," read a statement by Fireman. "The doctors and wildlife enthusiasts, plus people of faith are asking our fellow concerned officials in city and county government, business and industry owners, working men and women, and the elderly and poor who don't need any more financial burdens to join together to let the N.C. Utilities Commission know that we are outraged by this rate hike and want Cliffside cancelled."

However, Sheehan said her company is not asking for a rate hike solely because of the Cliffside project.

"Duke Energy is asking to raise customer rates to pay the company back for investments already made in the system," she said. "About three-quarters of the requested increase is to pay for investments to make the system cleaner and more reliable."

Sheehan said the last general rate increase happened in 1991. "Less than 20 percent of the total increase will pay the financing costs associated with the Cliffside modernization project," she added.

Duke Energy is upgrading the existing Cliffside power plant by building its No. 6 unit there. Duke officials said much of the requested rate increase would pay for building what they say will be a cleaner, more reliable system.

"Contrary to the claims made by some, this rate case is not a debate about whether to modernize the Cliffside power plant," said Brett Carter, president of Duke Energy Carolinas, in a statement. "That decision was made in one of the most extensive and public regulatory proceedings ever in North Carolina. The rate case is an opportunity to continue managing the total price tag of the project to our customers. Under a new North Carolina law, Duke Energy is asking to collect financing costs from customers as we build the plant. This economical and common sense approach will lower the total cost of the project.

"Construction of the new Cliffside unit is almost halfway complete. When it goes on line in 2012, we'll begin shutting down 13 older, less efficient coal units, totaling 1,000 megawatts of power generation. Our request for a rate increase and the Cliffside modernization project are both part of our comprehensive plan to deliver on our promise to customers.

Sheehan said the shutting down of the older units will make the project carbon neutral by 2018.