Duke CEO: No More Rate Increases For Several Years
In the coming month, Duke Energy hopes to get regulatory approval to raise rates in North Carolina by about five percent and in South Carolina just over eight percent. WFAE's Julie Rose sat down with Duke CEO Lynn Good yesterday to talk about what comes next.
Lynn Good wants you to keep in mind that annual rate hikes have not always been the routine for Duke and Progress. When Progress North Carolina customers saw a 5.5 percent boost in their rates earlier this year it was the first in 25 years. And until this latest round of Duke Energy increases that kicked in at the start of 2010, North Carolina customers experience some 19 years of unchanged rates.
GOOD: So we have had very long stretches of no rate increases. And this series of increases were really driven by all the modernization investment that we put into place to address challenges with our older coal fleet. So we built plants. As we look ahead we don't see a need for new generation for several years. So our capital spending will be more to maintain the system and we hope to do that in a way that doesn't drive a rate increase for several years.
ROSE: So is "several years" five to 10 years? Three to six years?
GOOD: I don't want to be that specific at this point. We need to see how the business develops, but we certainly don't have plans through 2015 – that was a part of the settlement. And our commitment is to keep our rates as low as we possibly can.
ROSE: Your predecessor Jim Rogers talked a lot about nuclear as part of the future of Progress and Duke, but just in the last year you've called off four of the six reactors you had on your slate. Help me understand what the future of nuclear is with Duke Energy. It looks like you're stepping back from what Jim Rogers talked about.
GOOD: We continue to believe nuclear is important. If you look at how much of the generation of electricity in the Carolinas is from nuclear, it provides 50 percent of what we produce. So they're very important assets - the Oconee plant, the McGuire plant, the Catawba plant – very important assets to the state.
But those assets are scheduled to begin retiring as early as the 2030s – Oconee, Robinson, retiring that early. So we continue to believe we would like to pursue the option of replacing nuclear with nuclear and the Lee plant represents an opportunity for us to do that.
ROSE: What's your role in recruiting new big customers - I guess I'm thinking of the big data centers. What's Duke's role in bringing those to the state?
GOOD: I would say we are instrumental in economic development in North Carolina. We're part of the infrastructure in NC. If you look at the way the state has responded to the economic downturn, we've had unemployment at or above national average. We've had industries that have been impacted whether it's financial services, textile industries, furniture industry over the decades. So we have been very involved in looking for ways we can work with legislative and community leaders to bring industry to the state of North Carolina. I think it's for the benefit of the state, for the benefit of our customers, and we, of course, provide electricity to them. But I would say our primary focus is on economic development for the state.
ROSE: But these data centers don't bring many jobs once construction is completed. It's amazing how few people actually work in these giant facilities. So there's been some thought, some concern, that in those cases the public isn't getting enough out of it. Especially when you consider these large users – they're getting economic incentives and nice rate packages – and industrial customers pay a lower rate than residential and small business customers anyway. So when it comes down to it residential and small business customers are subsidizing these companies that aren't employing many people.
GOOD: What I would say is we're very proud of work we've done with economic development. At this point it's data centers. We've also been instrumental in bringing other forms of industry and commercial development to the state. I'm very proud of, and delighted to have, a chance to work with community leaders in accomplishing that. To have an opportunity to bring industry to the state that uses electricity 24-7 is actually a benefit to residential and commercial customers, because when we have a base of electricity that's used 24-7 that supports the infrastructure and costs of providing that electricity to the state, it's actually to the benefit of the rest of our customers. So I see it as a win-win for not only the state but for the customers of duke energy.
ROSE: Having a base, meaning reliable income you can build into the cost of providing energy?
GOOD: I don't think about it as income. I think about it you have a resource - let's take a nuclear plant - it produces power 24 by 7. If we have that cost structure spread over more customers and more megawatt hours it's to the benefit of all of them. And that's the way I think about it. You think about the way Duke Power originally grew up, it grew up around textile industry, around big industrial users that used power all the time. And we have built, as a result, an infrastructure that's one of the cheapest forms of electricity in the United States - well below the national average. And that was really built on the way the company and the industry and the state developed. And to have an opportunity to perpetuate that into the future should be an objective that's to the benefit of everyone.