Charlotte Observer
3:15 pm
Thu July 11, 2013

Duke Energy Defends Rate Charges, Settlement

RALEIGH Duke Energy Carolinas defended its handling of disputed charges in its North Carolina rate case Thursday, saying most of them were justified.

Two Duke officials took the witness stand before the North Carolina Utilities Commission on the rate case’s fourth day. While acknowledging some errors, they said the $200 million of revenue Duke gave up in reaching a proposed settlement of the case more than made up for them.

Duke has agreed to an overall 5.1 percent rate hike, its third since 2009, if the commission approves.

John Runkle, an attorney for N.C. WARN, which claims Duke attempted to overcharge customers, asked Duke official Carol Shrum if the settlement simply “makes everything OK?”

“The settlement is a process of negotiation and the company has made significant concessions in that process,”said Shrum, Duke’s director of rates and regulatory strategy. “We believe that settlement is firmly in the best interest of customers.”

The settlement with the commission’s Public Staff removes most of the $871,000 in political sponsorships and charitable donations that WARN challenged. Shrum testified that Duke is willing to remove the remaining $40,000 “in the spirit of compromise.”

Danny Wiles, Duke’s director of regulated accounting, told Runkle that “$200 million, in my judgment would more than cover that $40,000.”

WARN’s consulting economist listed $30 million in improper charges by Duke, largely for stock-based compensation of executives that Duke says is routine for utilities. This week economist William Marcus challenged another $549,000 in charges.

Led by a Duke lawyer, Shrum and Wiles explained those charges.

Nearly $1,300 for lunch with Chinese bankers? Related to a $6 billion credit facility that includes Chinese banks.

A $135,000 donation to the Foundation for the Carolinas? Part of a campaign to save customers money through electronic billing.

Nearly $1,900 for pecan processors? Gifts for economic development contacts.

Of that list, Duke agreed to remove $50 for Cincinnati Reds tickets, $419 for an Augusta, Ga. golf tournament, a $400 donation to the Foundation for the Carolinas and $9,882 in dues to the Southeast Energy Efficiency Alliance.

Wiles testified that Duke didn’t intend to omit charges from data WARN had requested.

Duke’s accounting categories don’t allow for broad searches, such as for “sponsorships, ” he said, and manual searches for some requests would have taken weeks. Some expenses showed no clear connection to the rate case because they were for in-house labor or didn’t involve third-party vendors, he said.

Two more Duke witnesses, as well as Public Staff officials, are expected to testify Thursday afternoon.

Charlotte Observer