A
partial settlement between the North Carolina League of Municipalities and Duke Energy Carolinas (DEC) promises substantial benefits to cities and towns in the western half of the state, both in terms of savings and as they seek to convert street lighting to new LED technology. The settlement comes as a part of the ongoing DEC rate case before the N.C. Utilities Commission and after the League intervened on behalf of its members and their interests.
Meanwhile, the Utilities Commission has issued a final order granting Duke Energy Progress (DEP) a much lower rate increase than the company had requested for customers in the eastern part of the state, and included other benefits to cities and towns in that decision. It was also a case in which the League intervened.
In the DEC case, the partial settlement should pave the way for faster, more efficient conversion to LED technology, saving money for municipal taxpayers, making communities safer and leading to more efficient energy use. The lowering of existing rates for traditional street lighting will save cities and towns $2 million, savings that can go toward conversion costs. Equally important, key disincentives to LED conversion will be removed. The streamlining of rate structures, a lower transition fee and the ability to spread payment of those transition costs will help in the transition.
Other details of the partial settlement include:
-LED prices will remain flat; DEC will not seek a rate increase. Although there will still be a transition fee to switch to LED from an existing high-pressure sodium (HPS) or metal halide light that hasn’t failed, that transition fee is reduced (from $54 to $40, though the League recommended the fee's elimination entirely) and there is opportunity for the municipal customer to spread the billing of those transition fees over four years.
-DEC will re-evaluate LED transition fees every two years between rate cases and reduce the fee if applicable. The only time the rate could rise is after a rate hearing. It could be reduced between hearings.
-The settlement closes HPS lighting technology and replaces it with LEDs upon fixture failure, with no transition fee, unless the customer requests the old technology for appearance consistency.
-DEC will continue to engage with the League and its members on lighting issues.
Separately, state regulators last Friday issued an order granting Duke Energy Progress (DEP) a much lower rate increase than the company requested for its customers. The N.C. Utilities Commission, which oversees rate cases, ultimately approved less than half of what DEP filed for. The League intervened in the case to highlight that the expenses municipalities and public authorities incur for electric service are paid by citizen taxpayers, and that they will ultimately bear any increase in rates levied upon municipalities or public authorities. The League requested that regulators ensure rate increases and associated rates of return are fair to all customer classes; take steps to eliminate disincentives or barriers to innovation; and provide a structure, oversight and timetable for constructive dialogue on these issues among the stakeholders in the interim periods between rate cases.
Among positive outcomes from the case, DEP has agreed to host a technical workshop in the second quarter of 2018 for all stakeholders to discuss the company's
Power/Forward program, announced last year as an initiative to modernize the state's electric system. The League values this as a potential move toward quick installation of advanced metering infrastructure (AMI), so the utility can implement new and innovative rate designs for customers. AMI is advantageous for customers in that they will have information about their energy usage during different times of the day and will be able to make better choices about that usage to save money on their bills.
Additionally, per the state's order, DEP and the public staff of the Utilities Commission entered into an agreement that requires DEP to maintain its current differential between on- and off-peak energy rates in its time-of-use (TOU) rate. DEP had proposed TOU rate designs that narrowed the differential between on- and off-peak rates, which the League viewed as problematic for all customers as it did not provide enough incentive to shift usage from peak periods. In light of the rate increase, it is especially important that customers have incentives to conserve energy and have opportunities to reduce their bills. The DEP rate case emerged last year, asking an increase worth $419.6 million annually (revised down from a $477.5 million request), proposing that the basic monthly charge for residential customers rise from $11.13 to $19.50. The settlement orders that the charge rise only to $14. A
news release from the Utilities Commission outlines the history of the rate case.