Duke Energy’s electricity rates are poised to continue skyrocketing over the next few years, but only some customers will feel the burn. While the utility lures the world’s elite technology giants to NC by offering cheap electricity, captive small business and residential customers are charged higher rates. The rate structure is patently unfair and is being challenged before the NC Utilities Commission by environmental watchdog NCWARN.
While this issue has been debated before Commission in the past, Duke Energy has successfully negotiated it away. The NC Attorney General also recognizes the unfairness but has yet to force a resolution to protect consumers.
Recruiting Energy Hogs to Increase Demand: Duke Energy has been recruiting companies such as Apple, Google and Facebook to build energy intensive data centers in North Carolina. These data centers use thousands of times as much electricity as the average small business customer, running 24-7 with no shifts or seasonality. This is part of the Duke Energy strategy to increase demand to justify new power plants rather than focusing on energy savings through efficiency and conservation.
Small Business and Residential Customers Milked: The Duke rate structure is shocking – in 2010, data center customers paid on the average 4.83 cents per kilowatt hour for electricity, residential customers paid 9.13 cents and small businesses paid 10.03 cents – that means small businesses paid more than double as much per kilowatt hour as the big dogs – Apple, Google and Facebook.
The rate structure is unfair – here’s a quick primer on how it works:
Duke Energy sets rates based on a single hour of a very hot summer afternoon. During that single summer hour, Duke’s electricity load hit its peak for the year. Based on that single hour, the utility then allocates all capital costs of power plants and related production costs. This approach ignores usage and demand throughout the year, when residential and small business customers use much less electricity than the data centers.
Other utilities use different allocation methods, usually taking into account all customers’ average electricity use year round. Even Progress Energy does not use the Duke method. If the merger is approved, which method will prevail?
Energy Hogs Insulated From Rate Shock: Energy hogs such as Apple, Google and Facebook, and big business such as Food Lion and Walmart, want to keep their energy costs down, so they like the unfair rate allocation. And since they are insulated from rate shock, they stay quiet about Duke’s continued investment in dirty coal and expensive, dangerous nuclear power.
Yet, these corporations’ sustainability aspirations say something quite different:
• Walmart: To be supplied 100 percent by renewable energy.
• Google: Striving to power the company with 100% renewable energy.
• Apple: has a goal to run its Maiden, NC data center with high percentage renewable energy mix.
The State Must Protect Ratepayers: The Commission, Public Staff and Attorney General Roy Cooper have the opportunity to protect ratepayers from Duke’s discriminatory rate structure. With NCWARN’s petition, the state can now require Duke Energy to utilize a more just allocation method. The Public Staff and the AG have recognized this bias for years, yet Duke consistently negotiates its way out of using a fairer allocation method.
Customers experiencing rate shock and those concerned about rising rates should support the NCWARN petition, and pressure the Commission, Public Staff and Roy Cooper to protect all ratepayers in North Carolina, not just the 1%.