Chris Herndon: Rate cuts will be fleeting thanks to Duke's self-serving devotion to gas
Duke Energy's recent announcement of a reduction in electricity bills, attributed to lower gas prices, might seem like cause for celebration. After all, who doesn't welcome some financial relief on his or her monthly power bill? But this short-term respite isn't worth the long-term risks customers bear because of Duke Energy's big bet on gas.
While lower gas prices can trickle down every so often to briefly ease the cost burden on families and businesses, over the longer term customers are much more often left holding the bag for Duke when gas prices rise. If Duke turned away from gas and toward more significant commitments to clean, renewable energy, North Carolinians could benefit from more stable and predictable power bills, rendering us less susceptible to the unpredictable swings of fuel markets.
Relying heavily on gas, as Duke does and proposes to continue doing, exposes consumers to the volatility of global energy prices. The Sierra Club and partners, through the Southern Environmental Law Center, filed a brief and proposed order asking the N.C. Utilities Commission to reject Duke's proposed carbon plan, which stalls on investing in reliable, clean energy in favor of clinging to dirty fossil fuels.
We all remember the pain at the pump and in our monthly power bills when Russia's war on Ukraine first ramped up, for example. Gas is a commodity, with costs that fluctuate dramatically based on geopolitical tensions, market speculations and other uncontrollable factors. Demonstrating that point right here at home, Piedmont Natural Gas recently announced an average rate increase of $7.50 per month.
On the other hand, clean, renewable energy sources such as wind and solar offer a substantial advantage — with a fuel price tag of exactly zero. By investing more in renewables, we can stabilize electricity prices over the long term, making power more predictable and affordable for everyone.
The data show that gas costs are a significant driver of Duke Energy's recent rate hikes. A recent analysis by the Environmental Defense Fund and EQ Research, using Duke Energy's own data, shows natural gas prices were responsible for as much as 67% of the rate increases experienced by some Carolinas customers since 2017. This not only highlights the direct impact of fluctuating gas prices on customer power bills, but also points to the broader issue: Duke's reliance on gas means that, as its price rises, so do our energy bills. Brief, occasional price breaks don't outweigh the financial burden customers bear when the scales tip the other way.
The underlying issue with Duke Energy's current strategy lies in its financial incentives. The company's business model is heavily skewed toward onboarding big capital expenditures, including gas plants, from which Duke Energy earns about a 10% return — as they do on all capital spending. If you're a shareholder, this is fabulous news; it guarantees a steady stream of profits. But if you're a Duke Energy customer, you'll feel the hit right in your wallet, month after month.
Duke passes every penny of fuel costs on to its customers, so the corporation has no incentive to make decisions that would ease that burden. And since we live in a state where Duke gets to operate as a monopoly, ratepayers have no choice but to keep footing the bill for Duke's self-serving fuel choices.
Lower power bills are great — while they last, but Duke's reliance on fossil fuels, including gas, makes each of us vulnerable to price spikes, which history shows is the overwhelming culprit for Duke's rate hikes.
By investing more in cleaner, cheaper, renewable energy sources, Duke can help protect us from high energy prices, fight greenhouse gas emissions, and create a more sustainable, resilient energy future. Short-term profits and outdated practices serve only the few Duke Energy owes its customers a carbon plan that prioritizes clean energy, stable pricing and a long-range view of its impact on our lives.
Chris Herndon is chapter director of the NC Sierra Club.
