GSA Business Journal
June 21, 2013
June 21, 2013
The
president of the S.C. Small Business Chamber of Commerce said before the first
public hearing on Duke Energy’s request for a third rate increase since 2010
that the request is “not justified and particularly not justified for small
businesses.” Frank Knapp Jr. has filed as an intervenor in the rate case.
By Bill
Poovey
The
president of the S.C.
Small Business Chamber of Commerce said before the first public
hearing on Duke
Energy’s request for a third rate increase since 2010 that the
request is “not justified and particularly not justified for small businesses.”
Frank
Knapp Jr. has filed as an intervenor in the rate case.
“We are
opposing the proposed rate hike,” said Knapp, whose
Columbia-based group has more than 5,000 members. “There is no justification
for it. The rate of return on equity is way too high.”
The
utility is seeking to increase rates by an average of 15.1% to boost revenues
by $221 million annually.
The
request would increase rates by an average 16.3% for residential customers, 14%
for commercial customers and 14.4% for industrial users. Duke Energy’s rates in
South Carolina are among the lowest in the Southeast, but rates are determined
in part by utilities’ profit margins, or return on equity. Duke is requesting a
return on equity of 11.25%, up from 10.5%. The PSC will determine whether to
allow that increased profit margin and decide what the 540,000 retail customers
in the state can afford.
Ryan
Mosier, a spokesman for the utility in Greenville, said previously that the
rate increase application is based on the actual costs of new power plants and
upgrades, as well as the 11.25% return on equity rate recommended by outside
consultants. He said that maximum profit margin is a limit, not a guarantee.
“Like any
other business, we still must manage our business and costs to achieve a return
on our investments,” he said.
The filing
for higher rates could start hitting customers’ pocketbooks in the fall. It
follows two recent increases for the Charlotte-based utility. In 2010, Duke
sought a 7.2% increase, or $104 million, and was allowed a 5.2% increase, or
$74 million. In 2012, Duke sought a 14.2% hike to raise annual revenues by $216
million. The PSC approved a 6% increase that added $93 million in new revenues.
Duke wants
the extra revenue mainly to provide $673 million for the new Dan River natural
gas plant in Eden, N.C.; $236 million for high-efficiency technology at its
Cliffside Steam Station in Mooresboro, N.C.; $141 million for safety and security
measures at the Oconee Nuclear Station near Seneca; and $135 million for
upgrades at the McGuire Nuclear Station in Mecklenburg County, N.C.
Knapp made
the comment hours before the S.C. Public Service Commission’s public hearing on
the request at Spartanburg Community College, the first in a series of hearings
also set in Greenville, Anderson and Columbia.
The PSC
takes up the increase in Columbia starting July 31.
The
schedule for the remaining hearings that start at 6 p.m.:- June 24, Greenville County
Council Chambers, 301 University Ridge, Suite 2400, Greenville.
- June 27, Anderson Civic Center,
Ballrooms A&B, 3027 MLK Jr. Blvd., Anderson.
- Aug. 1, Public Service Commission, 101 Executive Center Drive, Columbia.
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