As Duke Energy rate hikes loom in N.C., deal could lessen blow for energy burdened

Queen Greene of Roxboro, North Carolina, was among the many Duke Energy customers who spoke out this year against the company’s proposed rate hike. 

“I should not have to choose between food this month and how much electricity I can use,” Greene said at a March public hearing in her hometown, about 30 miles north of Durham. “Why should I have to choose to be cold during the winter and hot during the summer?” 

Even when Greene turned her thermostat down or off this winter, she still owed more than $100 each month. “I got one-time help of $400,” she said, “but that doesn’t help me if the bill keeps going up and up.” 

A new customer assistance program could lessen the blow for households like Greene’s. 

Part of a side deal between the utility and clean energy advocates, the program will give a $42 monthly discount to tens of thousands of ratepayers — automatically enrolling anyone who received one-time bill payment assistance for 12 months. 

The deal, which is endorsed by the state’s ratepayer advocate and social justice groups, also requires shareholders to contribute millions of dollars to urgent home repairs that can help leverage federal grants for improvements that reduce energy waste. 

The stipulation covers both Duke utilities in North Carolina, but regulators have only ruled so far on rates for Duke Energy Progress. Testimony continued this week in the Duke Energy Carolinas petition to raise prices. 

While advocates criticized the Duke Energy Progress rate hikes as too steep, they praised commissioners for ordering the new program and the infusion of cash they negotiated. 

“In North Carolina, too many households struggle to pay their energy bills,” Mikaela Curry, field manager for the Sierra Club, said in a statement. The affordability stipulation, she said, may “ease the burden of keeping the lights on for these ratepayers and their families.” 

‘Wildly insufficient’ 

Decades of redlining and other discriminatory housing policies mean people of color and low-income people are more likely to rely on old appliances and live in homes built before the advent of energy conservation codes — driving their monthly utility costs past the point of affordability.  

The problem is especially acute in the South, where one in three households strains to pay for heating, cooling and powering their homes, according to the Southeast Energy Efficiency Alliance. 

When regulators greenlit Duke rate hikes two years ago, they ordered the company to work with stakeholders to examine the energy burden within its customer base. The results align with regional and national trends.

Nearly a third of Duke’s 3 million North Carolina customers are at or below 200% of the federal poverty level, earning $60,000 or less for a family of four. Almost half a million residential customers meet the company’s definition of “arrears struggling,” having fallen significantly behind on their monthly bills even before the pandemic.  

The company found that its poorest customers and those who struggled to pay their monthly bills tended to use more kilowatt-hours per square foot than wealthier households. “Additionally,” the report stated, “a correlation may exist between higher usage and bills and inefficient housing, heating, and cooling systems.” 

Duke does have some initiatives designed to help these customers, but they’re widely viewed as inadequate. A small program launched in 1978, for example, offers 10,000 older, low-income Duke Energy Carolinas customers a monthly bill credit of $3.17 — a tiny fraction of the average bill of $115.

“It was just wildly insufficient,” said Claire Williamson, energy policy advocate with the North Carolina Justice Center, one of the stakeholders that worked with Duke on its report. 

Duke Energy Carolinas, which includes Charlotte and most of the state’s Piedmont region, also has its own weatherization program, offering attic insulation and other improvements to reduce energy waste to qualifying households at no cost. In Duke Energy Progress territory — eastern North Carolina and parts of the Asheville area — customers can apply for federal weatherization funds administered by 20 community organizations around the state. 

Yet even after a series of federal laws doubled the latter, the volume still pales compared to the need. In Fiscal Year 2021, about $18 million helped just over 1,400 households with added insulation, air seals, and other energy efficiency improvements. 

That’s in part because weatherization programs face a host of challenges beyond the availability of funds. Most notably, they can’t cover certain critical repairs that must be made before weather stripping can be applied. 

“You can’t put in ceiling insulation if there’s a hole in the roof,” said David Neal, a senior attorney with the Southern Environmental Law Center, which represented the Justice Center, the North Carolina Housing Coalition, Natural Resources Defense Council, the Southern Alliance for Clean Energy, and Vote Solar in the rate case settlement.  

‘A really good deal’ 

The affordability stipulation helps overcome some of these challenges. First, there’s the infusion of $10 million over three years into urgent repair. Provided by Duke shareholders, that money can help households leverage the burst of federal weatherization funds coming into the state. 

“This is a once-in-a-generation investment,” Williamson said of the federal monies allocated from both the Inflation Reduction Act and the Bipartisan Infrastructure Law. “Having additional funds to go to health and safety repairs can really help unlock more dollars.” 

Another $6 million from shareholders will go to the company’s Share the Light Fund, which assists customers who are behind on their bills or need money to reconnect or start a new Duke account, regardless of income. 

“This is a really good deal for North Carolina low-income customers,” Neal said, “because the additional funding that’s going to come from shareholders isn’t going to affect rates.” 

Second, the Customer Assistance Program could set the stage for long-term change even after the spurt of federal dollars has eased.  

The program will target customers who’ve been aided by the Crisis Intervention Program, designed to prevent or reverse life-threatening emergencies like utility shut-offs, and the Low-Income Heating and Energy Assistance Program, which offers one-time payments to ratepayers with overdue bills. The federally funded initiatives are limited to customers at or below 150% and 130% of the poverty level, respectively. 

Based on past CIP and LIHEAP data, the company expects some 124,000 North Carolinians could benefit from the Customer Assistance Program each year. Automatic enrollment of these households, Duke says, is key. 

“This important design feature will help minimize administrative costs, maximize participation, and create an easy, seamless customer experience,” said Brad Harris, rates and regulatory strategy director for Duke, in testimony before the commission. 

‘Close to best practices’ 

The $42 monthly bill credit, which customers will receive for one year, was designed to ensure the average participant would pay no more than 5% of their income on electricity. Importantly for Duke, customers would pay a $14 minimum charge no matter what to cover utility poles and other fixed costs. 

For Greene in Roxboro and the average customer, the flat credit would more than offset rate increases in both Duke Energy Progress and Duke Energy Carolinas territory. Participating customers would also receive an automatic referral to weatherization programs that could help reduce their bills even further.  

After a three-year trial period, the hope is to expand the program to even more customers and offer graduated benefits based on income. “The customer assistance program is an innovative, new rate design that we hope to build on,” Neal said. “It’s the first time we’ve had something at this scale.”

The program could also give a needed boost to a utility that’s middling at best when it comes to energy efficiency, said Justin Somelofske, the attorney who represented the Sierra Club in the settlement. 

Outside the Southeast, “there­­­­­­­­­­ are many other states that are much more advanced in terms of implementing these bill-pay programs,” Somelofske said. “Duke is now entering the conversation of being close to best practices.”