While Consumers Suffer, Duke Energy Looks to Profit

Jul 27, 2020

by Joel Porter

In June, the Bureau of Labor Statistics reported a 7.6% unemployment rate in North Carolina. Earlier this week the Raleigh News & Observer noted that 1.5 million utility accounts have gone unpaid during the pandemic, 1.3 million of which are residential. It’s fair to say that the unemployment number and the unpaid utility bills are related.

To help protect North Carolinians, Governor Cooper issued two Executive Orders to prevent utilities from switching off the lights, closing off water spigots, and ending waste removal services. This has been a lifeline for people trying to keep themselves safe while dealing with the day-to-day uncertainty of a global pandemic.

Unfortunately, this necessary relief for consumers has translated into lost revenue for utilities — and many of those utilities are cash-strapped city- and county-run enterprises.

As the News & Observer points out, the CARES Act provided financial assistance to states to help back-fill their busted budgets — and the state’s stalled NC House Bill 1200 provides $20 million for utility grants. Our friend over at Appalachian Voices, Rory McIlmoil, gets it right in the N&O article, saying, “The $20 million would help…but wouldn’t come anywhere close to meeting the need statewide.”

Unlike an electric co-op or city-run water and waste services, however, Duke Energy is an investor-owned utility. And while Duke Energy is also losing out on revenue they need to continue operations and employ staff, they have far more resources on hand to help them weather this crisis and come out on the other side.

That’s why it’s so disappointing to see Duke aggressively move to cash in on pandemic relief funds while showing such little sympathy for their customers.

Padding Their Coffers

Duke Energy has not requested a ‘PPP loan’ from the government, but they are beneficiaries of millions of taxpayer dollars through federal programs such as the Low-Income Home Energy Assistance Program (LIHEAP).

Through their industry trade associations (such as the American Gas Association and Edison Electric Institute), Duke is supporting the U.S. House of Representatives bill dubbed the “HEROES Act,” which funds LIHEAP with $5.1 billion and expands the eligibility requirements of the program so that anyone unemployed can apply. The bill also provides additional flexibility to use federal funds to fill state budget gaps (such as lost revenue from unpaid utility bills). In exchange for providing utilities with billions of dollars of relief, the HEROES Act requires a temporary moratorium on utility disconnections for struggling consumers.

But neither Duke Energy nor its industry trade associations mention these consumer- and local-protection provisions in their expressions of support for the bill. Instead, Duke Energy seems to view the HEROES Act as an opportunity to increase their cash liquidity by receiving tax breaks that will pad their losses (and protect their stock price).

Additionally, the Wall Street Journal reports that Duke Energy is part of a coalition led by accounting firm PwC and the National Association of Manufacturers. This coalition aims to pressure Congress to allow big utilities to cash in on doing the right thing for the environment by receiving additional tax credits. This change to tax law would enable the utility to both write-down the value of capital expenditures (such as coal and gas plants) and use credits they received for spending on research and development and clean energy investments. Lobby disclosure records also indicate that they are interested in refunds of Alternative Minimum Tax credits.

To further inflate their profit margins, both Duke Energy Carolinas and Duke Energy Progress are attempting to impose steep rate hikes on their struggling customers. Combine the windfall of their tax reform efforts, and Duke Energy may walk out of this pandemic with quite the payday while our neighbors are sweltering in the dark.

Leaving Their Customers Behind

We at Clean Air Carolina aren’t opposed to companies pushing for these types of tax reforms or increased funding for a program like LIHEAP. After all, in addition to helping people pay their bills, LIHEAP will likely help many companies stay afloat and could keep thousands of people employed. And we certainly welcome funding and investments that help speed up our transition to a clean energy economy.

But none of that excuses Duke Energy’s attempt to increase rates and ignore the dire straits their customers are in while lining their own pockets with relief funds. If Duke Energy expects to receive public funding to help them ride this out, we expect them to push harder on lawmakers to protect the public.