Sunday, March 25, 2018

It's only the cost of a Big Mac meal: My dislike for Duke Energy grows over rate increase requests

Wilbur Ross and Bo Somers must be two peas in a pod. They may not look alike but their take on increasing the price of consumer goods is nearly identical.

Ross is a billionaire and the current Secretary of Commerce in the Trump Administration. Here’s how he justified price increases due to tariffs on steel and aluminum: "In a can of Campbell's Soup, there are about 2.6 pennies worth of steel. So if that goes up by 25 percent, that's about six-tenths of 1 cent on the price on a can of Campbell's Soup. I just bought this can today at a 7-Eleven ... and it was priced at a $1.99. Who in the world is going to be too bothered?"

Somers is Duke Energy Deputy General Counsel who is defending proposed rate increases for his boss before the North Carolina Utilities Commission: “One extra Big Mac, fries and a drink.” He was saying that consumers need not worry about a request for an additional $5.99 a month because it’s what you would pay for a McDonald’s value meal as he described. Obviously, he wants McDonald’s to suffer (not to mention thousands of his customers) so Duke can get its rate increase.

To paraphrase others before me, “You Just Can’t Make This Stuff Up.” That these two somewhat reputable representatives of government and a major utility would say these things is simply showing their stupidity and lack of concern for the well-being of citizens and customers. While Ross has no control over his boss, Somers is representing the monopoly utility in a request to further plunder its customers which have no alternative solution to turning on the lights, refrigerating food  or washing clothes. Fortunately, natural gas is available to some of us for heating water and using a stove.

In late January on the op-ed page of The News & Observer, I opined about my love-hate relationship with Duke Energy, loving that electricity flows to my home when I need it, which is usually all the time, and hating the company when I learn of the power company’s greedy requests for rate increases while freely spending profits to increase stock value.

Since then, I’ve had a slight change of heart on the love side. As one of its customers, I do not love Duke Energy. Better said, I may “appreciate” the Charlotte-based utility which supplies electricity to my home. But, the way I see it, just as good, inexpensive health care is a right not a privilege, electricity at a reasonable price is a must for people’s existence. It has become a right.

While I appreciate, but not love, Duke Energy, my dislike grows stronger with every rate increase request and stupid statements from company executives such as Somers.

Duke Energy should not be allowed to flex its monetary muscle and overcharge its customers. With cuts in tax rates, Duke is trying to determine where to place increased profits. More than likely it will be used to drive upward the value of its stock so executives such as Duke CEO Lynn Good can be paid $21.4 million as she was in 2017. She’s just doing her job but with the aid and abet of operating a regulated monopoly that is allowed a decent yet absurd amount of profit, mankind be damned. When the desired level of surplus gross income is not generated, she and her large team of lawyers and lobbyists ask for a rate increase, even for grossly mismanaged over-planning.

Duke spent $640 million to plan but not build a nuclear plant in Cherokee County in western North Carolina. The company has asked the Utility Commission for a rate increase to recover the expenditure. Duke also wants to recover all expenses related to cleaning up coal ash when the company is responsible for making the mess in the first place. If the Utility Commission approves it, the increase should be only for the value of dollars at the time of the original storage. So, if the coal ash was stored in 1980, the cost of cleanup in 1980 dollars is what Duke should get, if anything at all. The company also spent $110,000,000 to fight for the right to water flow of the Catawba River and lost. Now Duke wants a rate increase to recover that expenditure, most of which was accumulated on the appeal process after being denied at first.

Duke will pay out a $3.56 per share dividend in 2018. That doesn’t sound like a lot when you say it as a per share basis, sort of like the can of Campbell’s Soup analogy or the reference to a Big Mac meal price. But, with more than 700.61 million outstanding shares, Duke Energy this year alone will pay nearly $2.5 billion dollars in dividends: $2,494,353,160. In 2017, it was similar.

Add to that nearly $300,000,000 is reduced corporate taxes after the rate falls to 21% from 35%, and that’s a whole bunch of money. When spent on itself while asking for rate increases, it’s no wonder that my dislike for Duke Energy has grown. And when someone such as Somers asks customers to give up a Big Mac meal once a month, you just want to cry, but you have to laugh. And, get upset. It’s just $5.99, but on the other hand, it’s just $2.5 billion in stock dividends.