NC AG jumps into Progress Energy rate case

Barely a month after Progress Energy said it wanted to raise rates in North Carolina, the state Attorney General is jumping into the case.

The AG has a long history of involvement in utility matters over the years, but defers to another state agency, the Public Staff, to protect consumers. Attorney General Roy Cooper said that he has just one dedicated lawyer for utility matters, compared to dozens of attorneys, lawyers and engineers at the Public Staff.

Monday's one-paragraph legal notice filed with the N.C. Utilities Commission signals the regulatory body that the AG will press its case that corporate profit margins at public utilities must be held down during a prolonged economic downturn.

The AG lost the same argument this year before the Utilities Commission on Duke Energy's rate case. The AG has appealed and last week urged the N.C. Court of Appeals to throw out the Utilities Commission's approval of a 7.1 percent residential rate increase for Duke.

"When we see a situation that's important, we intervene," Cooper said. "We were concerned about double-digit profit margins in the middle of the worst recession since the Great Depression."

In last week's arguments before the N.C. Court of Appeals, Duke officials noted that the AG didn't get involved in that rate case until about six weeks before public hearings began.

Others have noted that the AG did not even make an appearance in the $32 billion merger between Progress and Duke Energy, which was approved in June by the Utilities Commission. One of the major concerns about the merger was the consolidation of power by Duke, which became the nation's largest electric utility, and the elimination of 1,860 positions by consolidating the two companies.

Those concerns were exacerbated when Duke fired Bill Johnson as CEO after having assured shareholders, regulators and investors that Johnson would lead the combined company.

Cooper said the merger raised no concerns to warrant his agency's involvement.

In July, after the merger was completed, the AG launched an investigation. The Utilities Commission is also investigating the firing of Johnson just hours after the merger was approved.

But the AG is getting involved early in Progress's first base-rate increase request in a quarter-century. Cooper said that's because the Progress rate request raises the same issue as the previous Duke case.

Raleigh-based Progress, a subsidiary of Charlotte-based Duke Energy, wants to raise residential rates by 14.2 percent. For a typical North Carolina household that uses 1,000 kilowatt hours of electricity a month, the request would increase power costs by nearly $180 a year.

The N.C. Utilities Commission will hold public hearings in February and March.