Parkdale Mills, a 103-year-old North Carolina company is a longtime customer of Duke Energy and has enjoyed a good working relationship with the utility. While Parkdale is adamantly opposed to NC Senate Bill 559, our opposition is in no way due to Duke being the driving force and the only known non-legislative supporter of this legislation. Duke is making a lot of noise in its attempt to divert attention from the massive cost exposure potential related to the alternative rate mechanism proposal by focusing attention on the securitization section of SB559. Parkdale’s opposition is with Duke’s proposed multi-year ratemaking and return-on-equity banding, which will result in enormous rate hikes on all North Carolinians and businesses.
To set the record straight, the alternative rate mechanism section has no consumer support and contains no quantifiable customer benefits. The real great disservice to businesses and citizens across North Carolina is due to Duke’s misleading information and partial-truths regarding the true purpose of this bill — to create colossal profits for Duke shareholders.
Duke’s CEO Lynn Good was quoted in the Charlotte Business Journal, on Sept. 7, 2017: “It is also important that we pursue regulatory and legislative initiatives that underpin our ability to deliver returns and turn those investments into cash and returns to shareholders.” Duke recently admitted that the proposed new rate mechanisms could be used for paying for coal-ash clean-up and vast grid upgrades that could cost ratepayers billions of dollars. The truth is SB559 will drive Duke’s earnings for the next decade.
If this bill is enacted and Duke proceeds to utilize these “new regulatory tools” to make customers pay for the projected $10 BILLION in coal-ash clean-up costs and $13 BILLION grid modernization costs over ten years, the energy costs for Parkdale and fellow manufacturers will increase by an estimated 10-40%; and increase residential costs of over 50% and commercial costs 12-40% during the next decade. This equates to an approximate additional $4,000 for the typical residential customer and millions of dollars in extra costs for manufacturers and State government.
Although one amendment designed to make customers feel better about SB559 states “will not result in sudden substantial rate increases or “rate shock” to customers,” in Parkdale’s view, the projected double-digit increases - even if spread over ten years – are shocking and substantial. Monstrous rate increases like these will be economically crippling to businesses and citizens throughout our State. It will erode competitiveness with businesses in other states and countries, threaten job retention, job growth, and plant expansions. North Carolina government will pay higher rates and lose tax revenues. SB559 is simply a budget buster for all energy customers.
Amendments to the return-on-equity banding mechanism limits Duke to over-earnings of 125 basis points and the multi-year-rate plan is limited to three years. These amendments, while an improvement over the original bill filing, still permits Duke the opportunity to over-earn by about $142 million per year.
The real truth is that SB559 is on the opposite spectrum of what Parkdale and virtually all others - except Duke - would consider sound energy policy. If the energy regulators didn’t ask for these “new regulatory tools” — but Duke is pushing mightily for them — there’s your sign that this bill is bad for consumers and should be defeated.
A vote in the House or Senate for SB559 is a vote against manufacturing jobs and future investment in North Carolina.
Dan Nation is Director of Government Affairs with Parkdale Mills, which is the world’s leading manufacturer of spun yarns, with 12 plants and their global headquarters located in North Carolina.