The state of North Carolina is rolling out a new energy bill that aligns almost precisely with the objectives of Charlotte-based Duke Energy, a major regional power provider that is under fire for its dubious energy projections.
And for the extent to which it effectively owns the N.C. General Assembly …
Duke has been leveraging these relationships as it stares down a potential hostile takeover – one which prompted the utility to tap its network of bought-and-paid-for politicians in both North and South Carolina for public shows of support last month.
The North Carolina legislation – House Bill 951 – “is generally consistent with the electric public utilities’ current integrated resource plan,” according to its text.
That’s a reference to this plan – which could put ratepayers on the hook for billions of dollars worth of “stranded assets” as Duke struggles to balance its excessive reliance on environmentally unfriendly coal-fired power with its promises of a cleaner energy future. How much in “stranded assets?” Nearly $5 billion, according to a recent report.
Wait, though … are North Carolina lawmakers really okay with that?
Also, are they really okay with imposing new, multi-year rate hikes that could artificially boost corporate profits by essentially allowing Duke to “double up” on incentives tied to its system enhancements?
Because that’s in this bill, too …
Duke has vowed to be “carbon neutral” by 2050, but achieving this lofty goal means investing extensively in short-term natural gas infrastructure – the cost of which the utility intends to “recover” from ratepayers. That means the shorter the shelf life of these natural gas assets, the more hard-earned cash ratepayers will be forced to shell out for them.
This irreconcilable math (and other issues) prompted analysts to downgrade Duke recently – but it hasn’t stopped Tar Heel State politicians from asking “how high” whenever the utility tells them to “jump.”
In fact, on this legislation it certainly appears as though the legislative sponsors are mere pass-throughs … puppets, if you will.
The new legislative offensive comes a month after Duke was forced to play defense in response to a letter circulated by Elliott Management Corporation – one of the company’s ten largest investors. This letter explicitly rebuked the utility’s current leadership for its failure to generate adequate returns, saying ” top-tier results have proven elusive for Duke.”
Its proposed fix? Breaking up the company “into three focused sets of regionally clustered utilities.”
Duke provides power to an estimated 7.4 million Americans in Florida, Indiana, Kentucky, Ohio, North Carolina and South Carolina. It provides natural gas to an estimated 1.5 million customers in Kentucky, Ohio, North Carolina, South Carolina and Tennessee. More than a third of its customers are located in the Carolinas.
Many have suggested the Elliot Management proposal to break up the utility is part of an attempted takeover of Duke by Florida-based NextEra Energy – which is said to be eagerly eying the company’s Florida subsidiary.
NextEra – the nation’s largest energy company – also mounted a push recently to acquire the Palmetto State’s catastrophically mismanaged government-run utility, Santee Cooper. However, state lawmakers in South Carolina foolishly opted to allow politicians (and their appointees) to continue pulling the strings of this debt-addled albatross.
Which, readers will recall, is a demonstrably bad idea …
Duke’s influence over the North Carolina legislature comes at a time when it is struggling to repair relations with lawmakers and regulators in South Carolina following a disastrous rate hike process in 2019. Duke raised monthly costs on its Upstate South Carolina residential customers by 3.7 percent that year – and jacked rates on its customers in the Pee Dee region of the state by 6.3 percent.
By contrast, Virginia-based Dominion Energy – which recently acquired South Carolina-based SCANA – withdrew its request for a rate hike in 2021 owing to economic concerns associated with the coronavirus pandemic.
ABOUT THE AUTHOR …
Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina and before that he was a bass player and a dive bar bouncer. He lives in the Midlands region of the state with his wife and seven children. And yes, he has LOTS of hats (including the above-pictured Brooklyn Dodgers’ lid commemorating the 1947 major league baseball debut of Jackie Robinson).
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