Opposing Duke’s 2024 Rate Increase

INTRO

Opposing Duke Energy’s rate case filed on April 4th, 2024, Cause No.46038.

On April 10th, Mayor Scott Willis opposed Duke’s rate increase saying it “would burden residents when Duke reported a 17% increase in profit for 2023,” and urged Duke to “explore alternative solutions that prioritize the well-being of residents.” We hope public officials, community leaders and ratepayers join Mayor Willis in advocating for the best interests of our communities. See his statement in the Current and on Facebook.

Duke’s request for a $491.5 million rate increase would have detrimental economic and environmental impacts on our communities, and includes several costs that should be covered by shareholders rather than being passed on to ratepayers. It includes raising the profit margin for Duke’s shareholders to the highest in the state and prolonging the use of coal instead of shifting to renewable energy, which is cleaner and more affordable. Of all the utilities in Indiana, Duke has done the least to transition, with only 3% clean energy. This rate case does not include any new investments in clean energy which would help hold rates down for customers and lessen Duke’s environmental impact on our communities. By lowering their carbon intensity, Duke would also help cities meet their sustainability and resilience goals.

Given recent inflation and rising property taxes, we urge public officials and community leaders to consider the harm that higher energy costs will have on the local economy, as well as economic development in the region. Please also consider that Duke is expected to file (in a separate proceeding) for a new gas plant which would increase rates on top of this rate case and again disregards the transition to clean, fossil-free energy needed to address sustainability and resilience.

As Indiana’s largest utility monopoly, Duke holds substantial influence over the Indiana General Assembly and the Indiana Utility Regulatory Commission (IURC). This lack of competition, accountability and oversight has allowed Duke to shape energy policy and pricing with little regard for air, water, and climate pollution. This rate case includes elements of monopoly overreach. We need elected officials, community leaders and ratepayers to stand up for our communities—families, schools, businesses, places of worship, etc.

RATE CASE DETAILS

ECONOMIC IMPACTS

33% increase for families, $42 more per month!

Duke is requesting an overall increase of $491.5 million or 16.2%, but the economic impact of the rate increase varies by customer class and disproportionately affects families. For residential customers, it’s closer to a 33% increase. According to the Citizens Action Coalition, an intervenor in Duke’s rate case, the average family would pay $42 more per month for electricity by 2026. This would raise bills even higher than the exorbitant rates of 2022, which spiked due to fuel costs (see the chart below).

Electricity rates would also increase for commercial customers, such as schools, businesses, houses of worship, local governments, etc. These higher costs would ultimately burden citizens, whose taxes cover energy bills for tax-funded entities. Higher energy costs would be passed on to consumers. This rate case raises the cost of living across the board affecting our local economy and economic development efforts in the region.

Monopoly Overreach

Rather than investing into clean, affordable energy as is urgently needed and would save ratepayers, the proposed rate hike aims to further increase shareholder returns, giving Duke shareholders the highest profit margin in the state in what could be argued is monopoly overreach.

Not Prudent, Nor Justified

This rate case is not prudent. Duke’s prolonged reliance on coal is keeping energy bills higher than they would be if they transitioned to renewables. Wind and solar have lower capital and operational costs compared to fossil fuels and are not subject to fuel price volatility associated with coal, oil, and gas. Renewables provide inexpensive electricity, free of air, water and climate pollution, lessening environmental impact on communities and leading to lower utility bills. For example, CenterPoint and AES project saving their customers $80 million and $240 million, respectively, by retiring coal and switching to clean energy. Duke should be doing the same for its customers in Indiana.

This rate case is also not justified. Mayor Willis raised concerns about the fairness of increasing rates on the heels of a 17% increase in profit for Duke’s parent company. This substantial profit growth undermines the justification for a rate increase.

DUKE ENERGY INDIANA	DUKE ENERGY CORP Parent Company (North Carolina)
2022 net income $137 million Low because Indiana courts ruled coal ash clean-up costs incurred before 2019 could not be charged to ratepayers.	2022 net income $2.455 Billion
2023 net income $497 million	2023 net income $2.874 Billion
263% year-over-year increase in profits	17% year-over-year increase in profits
2023 Annual Report, p64	p16

Solar protects against rate increases

Investing in on-site solar is a great way to protect against rate increases and reduce carbon emissions. Solar is the cleanest energy you can get, right where you need it, and helps to build more sustainable and resilient communities. The Inflation Reduction Act offers a 30% incentive for homes, businesses, cities, non-profits and schools to go solar.

ENVIRONMENTAL IMPACTS

Duke’s environmental impacts also have economic and public health consequences. Cities across the country, including those in Indiana, are dealing with more severe and frequent extreme weather events as a result of increasing carbon pollution. Whether it's flooding from heavy downpours, infrastructure damage from severe storms and tornadoes, or a dangerous strain on water resources from extended droughts, these environmental impacts carry massive economic costs in terms of damages, loss of lives and livelihoods, disruption of economic activities, and costs of resilience to protect our communities. You can help mitigate these impacts by advocating for clean energy.

Worst Polluter

Duke is the largest source of carbon pollution in Indiana.

Only 3% Clean Energy

Over the last 2 decades, Duke has shifted about 20% from coal to gas, however they only have ~3% clean energy (hydro, wind & solar).

Lagging Behind Peers

Of all the utilities in Indiana, Duke has the most residential customers but has done the least to transition to clean energy, lagging behind peers.

Graphic from Sierra Club.

Doubling Down on Coal

Instead of making urgently needed investments in clean energy, Duke’s proposed rate hike doubles down on coal. It includes delaying the retirement of coal plants which are dirty and expensive to run, increasing coal stockpiles for which Duke gets a profit and burning more coal which increases Duke’s carbon intensity.

Delayed retirements include Gibson 3 & 4 2029 🡪2031, Gibson 5 2026 🡪2030, and Cayuga 2 2028 🡪 2029.

Graphic from CAC

Alternative Solutions

Mayor Willis said that Duke needs to explore alternative solutions that prioritize the well-being of our communities. In this day and age, a rapid transition to clean energy is essential, as it is both cheaper and cleaner than expensive, dirty fossil fuel plants.

Electricity is a significant source of carbon emissions in Indiana. Cities within Duke’s service territory cannot meet their sustainability goals if Duke delays their transition to clean energy. This transition is imperative to shield our communities from the dire consequences of climate change. However, Duke has made minimal progress towards adopting clean energy and remains the only major investor-owned utility in Indiana planning to continue burning coal beyond 2030 according to this rate case. If carbon emissions are not reduced soon, we risk reaching a point where mitigating the severe consequences of climate change becomes exceedingly challenging and expensive. Duke’s profit-driven, short-sighted and sociopathic strategy endangers the future well-being of our children and communities.

Duke must dramatically change course in 2024 by withdrawing its rate case and starting a meaningful transition to renewable energy.

COSTS THAT SHOULD NOT BE PASSED ON TO RATEPAYERS

Duke’s proposal includes costs that should arguably be covered by shareholders rather than being passed on to ratepayers. Shifting these costs to consumers, especially in a monopolistic market and given Duke's substantial profits, constitutes an unfair financial strategy that prioritizes shareholder wealth over consumer welfare. CAC has identified these troubling costs in the Duke’s rate case:

Costs to clean-up decades of reckless dumping of toxic coal ash into unlined and leaking pits that have contaminated local soil and groundwater. Overall costs would have been less in the long run had they been properly lined. It also includes coal ash clean-up costs that the Court of Appeals already said could not be passed on to customers. Duke shareholders should bear the costs of properly disposing for coal ash waste in line with the polluter pays principle.
Lost Revenue Recovery for Time of Use. On the one hand, Duke is proposing to introduce an optional “time of use” rate structure that allegedly gives consumers savings for shifting their energy use to times of the day when rates are lower. On the other hand, Duke is asking for $16 million in advance to make up for these consumer savings. This raises many questions that should be carefully considered.
Experiment at Edwardsport - The Edwardsport coal gasification plant was very expensive to build, embroiled in scandal, and coming in at $1 billion over budget. It has been unreliable and loses money the majority of the time it operates. Now, Duke wants to conduct an expensive and risky commercial feasibility study at Edwardsport. However, carbon capture and sequestration (CCS) is a false climate solution with a long track record of expensive and failed attempts to commercialize. Despite the low probability of success for this unproven technology, Duke wants to secure approximately $8 million in federal incentives to run the study and is asking for approval in this rate case to have Indiana ratepayers cover the remaining $9 million. This amount could easily exceed the budget if Duke receives a blank check for this high-risk endeavor. The IURC should deny this request to protect ratepayers from the financial fallout of a likely unsuccessful study. Duke needs to have skin in the game to avoid wasteful spending and reduce the likelihood of undertaking speculative projects doomed to fail.
Costs for Lobbying and Trade Associations
Fees for litigating this rate case
Costs for a private aircraft

PUBLIC HEARINGS

Duke’s Rate Case - Cause No.46038

NEW ALBANY
There is also supposed to be a public hearing in New Albany, but no details yet.

FISHERS
June 27, 2024, 5 p.m. Hamilton East Public Library
The public hearing in Fishers is on June 27, 5 p.m. at the Hamilton East Public Library.

Great turnout for the Fishers public hearing to oppose Duke’s rate hike which would mean more heat waves and higher rates.

Duke Rate Increase Hearing | The Current

Kudos to Amanda Cross for speaking in favor of clean energy over more coal! “Hoosiers shouldn’t lose their hard-earned money because Duke Energy went against ratepayer wishes and threw good money after bad coal,” she said. “What happens when people have to choose between feeding their children healthy food and keeping the heat on in dangerously cold winters that Duke has made more dangerous with their carbon emissions? What happens when people have to choose between their prescription medication and keeping the AC running so they don’t die of heat exhaustion in heat domes that Duke itself has helped to reate?”
Thanks to Jason Tomcsi for speaking on behalf of AARP and older residents in Duke’s service territory. “Many of the Hoosiers most impacted by this request are on low or inflexible incomes, which makes rising electricity bills a challenge when combined with higher groceries, housing and medical costs,” he said. “Any increase, no matter how small, can make a significant impact on these Hoosiers and their families’ budgets.

Residents Push Back on Duke’s Rate Increase | FOX59

Thanks to Westfield Mayor Scott Willis, outspoken critic of Dukes rate hike!.“So if Hamilton County is growing, what about other counties that aren’t growing? You’re gonna give them a rate decrease?” Willis asked. “We all know it’s a statewide increase whether you’re growing or not.” Willis said Duke has seen a significant increase in profits and questioned why the company needed to raise rates. “When you see 263% increase in profits, and you’re asking, oh, by the way, for more of an increase, I think there’s a buffer there to invest and keep up with the growth in Hamilton County without constantly going to the well and asking for more money,” he said.

SUBMIT WRITTEN COMMENTS

The deadline for written comments is July 5th.