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Increases in gas fuel costs account for 67% of residential retail rate increases since 2017 in parts of Duke Energy’s North Carolina territory — 46% in others.
April 18, 2024
Julie Murphy - JPM Strategies, (919) 219-6387, julie@jpmstrategies.net
Alison Wenzel - EDF, (832) 974-0649, awenzel@edf.org
(RALEIGH, N.C. — April 18, 2024) New analysis shows that the costs to fuel Duke Energy power plants with gas have been the primary driver of rate hikes for parts of its North Carolina territory since 2017. This analysis by leading energy analytics firm EQ Research was commissioned by Environmental Defense Fund (EDF) and comes as Duke Energy is seeking approval to build thousands of megawatts of new gas plants, representing one of the largest and most expensive gas buildout proposals of any utility in the country.
The EQ Research report concludes that, “...a shift towards greater amounts of natural gas generation has predictably meaningful effects on the overall rates paid by electric utility customers, exposing them to greater rate volatility driven by volatility in natural gas prices.”
“Despite story after story this year from Duke Energy Carolinas customers about the burdens of high power bills, Duke continues to pursue one of the most aggressive proposals for new fossil power-plant construction in the nation. The massive proposed investment, coupled with volatile fuel prices, means far more risk to North Carolina families’ bills,” said Will Scott,EDF Director of Southeast Climate and Clean Energy.
The independent analysis, based on information from publicly-available filings to the N.C. Utilities Commission made by Duke Energy, highlighted several key findings:
- In the Duke Energy Carolinas (DEC) service territory, increases in fuel costs account for roughly 67% of the increase in residential retail rates since 2017, making the portion of the rate increases attributable to fuel costs more than double the amount from all other rate components.
- The Duke Energy Carolinas service territory has been subjected to more rate hikes associated with high fuel costs because gas represents a higher percentage of DEC’s generation mix.
- In the Duke Energy Progress (DEP) service territory, where gas currently represents a slightly lower percentage of the generation mix, increases in fuel costs account for roughly 46% of the increase in the residential retail rates since 2017.
- High gas prices contributed to bill increases in both of Duke’s territories, and the territory with more gas plants (DEC) was burdened with higher bill increases than the territory with fewer gas plants (DEP) as a result of high gas prices.
- Because of the processes and timelines for regulatory approvals for Duke to recoup fuel costs, there is often significant lag time from when the high gas charges were incurred and when the high gas charges are imposed on customers, making it difficult for ratepayers to have clarity around the true costs of their energy use.
“The analysis, using Duke Energy’s own data, is clear,” added Scott. “Building gas comes with an ongoing, volatile price risk that is borne not by Duke Energy shareholders, but entirely by ratepayers. Deeper investment in affordable, clean energy alternatives would speed our state’s progress in reducing climate and health-harming pollution, and also help protect ratepayers from unpredictable fuel price shocks.”
To learn more about the health, climate and cost impacts of Duke Energy’s investments in natural gas, read this EDF blog.
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One of the world’s leading international nonprofit organizations, Environmental Defense Fund (edf.org) creates transformational solutions to the most serious environmental problems. To do so, EDF links science, economics, law, and innovative private-sector partnerships. With more than 3 million members and offices in the United States, China, Mexico, Indonesia and the European Union, EDF’s scientists, economists, attorneys and policy experts are working in 28 countries to turn our solutions into action. Connect with us on Twitter @EnvDefenseFund
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