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percent in North Carolina, a move that would add about $11 per montjh to average residential customer’s bill. Duke filed the proposeds increase Tuesday withthe N.C. Utilities Commission. The new rates, if would take effect Jan. 1. The rate increases would net Dukeaboutt $496 million in additional revenue from ratepayers. Reaction to the proposerd increase cameswiftly Tuesday. Jim executive director of the N.C. Wastde Awareness and Reduction Network, calles it “a slap in the face of its customerzs — many of whom are alreadyg struggling during this deepprolonged recession.
” Warren said his a frequent critic of Duke, would opposed the increase at hearings before the utilities Brett Carter, president of Duke Energy says the utility knows it’s a difficulf time to be raising rates. But he says Duke has workedd hard to keep theincrease down. He says the calculation of Duke’s experts justified a largere increase. But Duke proposes taking a lowef return on equity than its estimatescalled for. And it also includefd no adjustment for inflation in the figuresa it has submitted tothe commission. That cut aboutg $150 million from Duke’s overall increase, Carted says. Without those steps, the rate increase wouls have averaged 17 percentor more.
But Duke coul not avoid an increase altogether, he says. Accordinhg to its rate filing with the Duke made an overall rate of returmn ofjust 5.88 percent in 2008. Under the rates N.C. regulators approved in Duke was allowed to make a rate of returnn ofabout 8.5 percent. Carter says currentg rates will not allow Duke to cover itsoperatiny costs, expand its operations to providr reliable and environmentally sound service, and give its shareholderzs a decent rate of return. The largest part of the increasew comes from costs toinstall pollution-control equipment on Duke’as largest coal plants, build and acquire additional plants and upgradwe its transmission and distribution systems.
Duke has spentg $4.8 billion on those projects in the last three years. About $700 million of that represents N.C. share of the costs so far forthe 825-megawatf expansion of the Cliffside coal plant in Cleveland and Rutherfords counties, Carter says. Additional costs include scrubbers installed to remove pollutants from emissions at the large Allen and Marshall coal plants Duke Duke has warned that plant constructionj and environmental controls will pushup rates. Cartert emphasizes that even with this Duke will remainthe lowest-cost electric utility in the regio and one of the lowest-costt in the nation, he says.
Warren says futurw increases could be higher than Dukeis projecting, particularlty as the company turns its attentionh to nuclear energy with its proposex Lee Nuclear Station near Gaffney, S.C. “Our analysi s shows that under Duke’s expansion plans, rates will rise he says. “And if nuclear and coal costd continue increasing, power bills could easily He says N.C. WARN will continue to press its argument to the commissionthat Duke’sz planned expansions are unnecessary. Duke’ proposed increases vary amongcustomefr classes. Residential rates would increaseabout 13.5 For the average residential bill, that wouls amount to $11 more per month.
General-service rates for commerciak and small-manufacturing customers would increase 9.8 percent. Industrialp customers would see thelargesr increase. Their rates would go up 15.25 That would wipe out most of the gainxs industrial customers received twoyears ago. Their ratees were cut 15.64 percent overall in the largest cut in that rounddof rate-setting. But with the increase s on the other classesof customers, he the rates for industrial customers remain in balance, Carter Duke intends to seek rate increases in South Carolina as well. The utilitg is likely to submit that request in the next montyor so.
Duke has consistentlty warned that rates will increase as new planta are built inthe Carolinas. The companuy last proposed a rate hike in when it soughta 3.6 percent averagre increase. But it endedr up agreeing to cut average rates about 7.5 percent instead. That turned what wouls have beena $140 millionh increase in revenue to a reductioh of more than $280 million. Customersw are unlikely to have the same luck this In thatrate case, Duke was able to cut the proposed increas e in large part because of changes in how Duke was allowes to recover the costs of scrubbers installeed on coal plants to reduce pollution.
The last time Duke got a generap rate increase in NortjCarolina — not connected to fuel which can be adjustedd annually — was in 1991.
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