Ed Burgess’s testimony presents an analysis of Duke Energy Carolina’s (DEC) Application to Adjust Retail Base Rates and Performance-Based Regulation (PBR) and Request for an Accounting Order (Application), as well as the North Carolina Attorney General’s Office’s position on the Application. The analysis provides:
- A brief overview of DEC’s request in this case;
- Presents findings and recommendations;
- Background information on PBR and multi-year rate plan (MYRP) regulatory constructs, in-depth analysis of specific assets of the rate increase and MYRP that DEC is proposing, as well as recommendations to reduce costs and increase affordability for DEC customers; and
- Analyzes DEC’s cost of service study (COSS) and provides recommendations to reduce inequitable cost-shifting between customer classes and produce a fairer, more cost-reflective apportionment of revenue responsibility.
Additionally, CEG experts Dan Cassara and Justin Brant provided additional testimony regarding DEC’s requested return on equity (ROE) and its approach to customers with loads exceeding 20 megawatts. Dan Cassara’s testimony demonstrates that DEC’s proposed ROE is too high and recommends an alternative, while Justin Brant’s testimony addresses the need for a dedicated framework to address very large load customers.
In summary, the three testimonies provide the Commission with the following recommendations to adopt to protect ratepayers from excessive and unnecessary rate increases:
ROE Recommendations: Approve an ROE of 7.4% that saves ratepayers $1.37 billion and meets DEC’s cost of equity, enabling the company to attract needed capital and providing investors with an opportunity to make a fair return.
MYRP Recommendations: Adjust billing determinants that reflect projected load growth, remove unnecessary pro forma cost adjustments inflating base rates, enforce the 4% revenue cap to keep MYRP2 rates at their lowest permitted level, and require future MYRPs to transparently account for all spending so that ratepayers and regulators have a complete picture of what they are paying for.
Cost of Service Recommendations: Require DEC to use the Probability of Dispatch (POD) and Non-Coincident Peak – Class (NCP-Class) methodologies in its COSS, and prepare new revenue apportionment results based on these updated approaches.
Large Load Recommendations: Establish a dedicated customer class and tariff framework for large-load customers exceeding 20 megawatts, such as data centers, and establish measures to protect existing ratepayers from the risk of cost-shifting associated with the interconnection and service of customers with loads exceeding 20 MW.
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