05/31/17 — Duke Energy requests fee hike

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Duke Energy requests fee hike

By Rochelle Moore
Published in News on May 31, 2017 7:10 AM

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Upper Neuse Riverkeeper Matthew Starr found spots in 2014 where what he believed to be coal ash was seeping into the Neuse River.

Duke Energy Progress is seeking state and federal approval to pass on a portion of its estimated $5.1 billion coal-ash cleanup cost to its wholesale and retail electric customers.

Duke recently filed a request with the Federal Energy Regulatory Commission for its wholesale customer base, which includes 32 cities, including Fremont and Pikeville, served by the N.C. Eastern Municipal Power Agency. NCEMPA, which buys electricity at wholesale from Duke, sells electricity to its member cities. Each municipality sets its own electric rate, factoring in local operating costs.

Duke Energy Progress is also preparing to file a rate increase request with the N.C. Utilities Commission for its retail customer base, which includes customers throughout Wayne County.

The retail increase is planned to include costs associated with the closing of coal-ash basins, efforts to modernize electric systems and to support emergency response during major storms, like Hurricane Matthew, said Jeff Brooks, Duke Energy spokesman.

The amount of the rate increase has not been disclosed but will be in Duke's filing with the N.C. Utilities Commission on June 1, Brooks said.

"To address new state and federal standards established for coal ash, the proposed rate adjustments will also include costs associated with responsibly managing coal ash and safely closing ash basins," he said.

Duke Energy estimates it will cost $5.1 billion to close ash basins across the Carolinas, including 31 in North Carolina.

The cleanup includes 6 million tons of coal ash at the H.F. Lee plant in Wayne County. The plant, which closed in 2012, has four basins of coal ash, which will be excavated. An onsite reprocessing unit will be used to remove carbon from the ash that will be used in concrete products, Brooks said.

The cleanup of basins across the state is planned to be finished by 2028, Brooks said.

Duke Energy Progress plans to seek N.C. Utilities Commission approval to $300 million spent in 2015-16 on coal-ash cleanup, Brooks said. Additional cleanup costs incurred this year are also expected in the rate increase filing.

The closing of the coal ash basins was triggered by legislation following the 2014 coal ash spill into the Dan River in 2014. The rate increase request does not include any costs associated with the spill, Brooks said.

"Duke Energy customers will never pay for the company's response to the 2014 coal ash release at the Dan River Steam Station or for any coal-ash related fines or penalties the company incurs," Brooks said.

"We take responsibility for our actions in those matters and those costs will be borne by Duke Energy shareholders."



Duke Energy Progress recently struck a deal on its wholesale power purchase agreement with NCEMPA that allows for the recovery of coal-ash removal costs, said Michelle Vaught, vice president of corporate communications for ElectriCities, which manages NCEMPA.

The agreement is under review by FERC, and a decision is expected within 60 days. The terms of the agreement will also determine the level of rate increase Duke Energy Progress' retail customers could face, Vaught said.

"Utilities are generally allowed to recover costs associated with compliance with environmental laws," Vaught said.

"The amount that will ultimately be paid is contingent on any disallowance ordered by the N.C. Utilities Commission for DEP's retail customers."

FERC regulates the electric wholesale market, and the NCUC regulates the retail sale of electricity.

NCEMPA recently reduced electric rates by 4.5 percent, effective April 1, for its 32 member cities. NCEMPA's agreement with Duke Energy Process is not anticipated to lead to any change in electric rates, since coal-ash cleanup costs are included in NCEMPA's current rate plan, Vaught said.

"We are pleased to have reached a reasonable settlement that means we can avoid a potentially lengthy and costly process before the Federal Energy Regulatory Commission, a process with an uncertain outcome," said Roy Jones, ElectriCities chief executive officer.

"Also, we don't anticipate this settlement will impact our current rate plan, so public-power communities will continue to benefit from the wholesale rate reduction announced earlier this year."

NCEMPA does not plan to increase its customer rates until 2020, at which time NCEMPA's rate plan calls for a 3 percent increase. Another 3 percent rate increase is planned in 2021 and a 8.5 percent rate decrease in 2025, reflecting NCEMPA paying down its longterm debt in January 2026, Vaught said.