ElectriCities & Duke Contract Appeal

2009-08-15_11-41-51-455When ElectriCities screws up we’re always more than eager to post that.  This time ElectriCities is fighting for the municipal co-ops it represents. That’s a good thing! In the battle between Progress and Duke over “native-load rates” ElectriCities is taking the position that Duke should be allowed to sell cheaper power.

Progress Energy tells federal regulators they should not hear Orangeburg, S.C.’s, appeal of a state ruling that scuttled a proposed $500 million power purchase agreement with Duke Energy.

Progress contends in a filing with the Federal Energy Regulatory Commission the ruling involved “issues of … retail ratemaking that fall under the jurisdiction of the (N.C. Utilities Commission).” The federal commission has no role to play in the decision, Progress argues.

Orangeburg says the state commission overstepped its authority into issues FERC properly controls.

‘Native-load rates’

At issue is a 10-year contract Orangeburg had signed to buy power from Duke at what are called “native-load rates.” Those are the rates Duke charges traditional wholesale customers in its service area.

Allowing sales at these rates outside Duke’s service area and to customers who traditionally bought from other power companies could give Duke a regional advantage. Its average rates are lower than most Southeastern competitors.

The commission did not say Duke could not agree to sell power to Orangeburg at those rates. But it said it would require Duke to account for sales at higher marginal rates. That would lower Duke’s rate of return on the sales if it sold the power at the lower rates and affect its profits. In the end, Duke and Orangeburg killed the deal because of the ruling.

Lining up

The state commission has said it needs to have that authority over Duke’s rates to make sure the utility’s retail customers don’t pay extra to subsidize the wholesale contracts.

The various sides of the dispute are now lining up much as they did when the commission ruled on the issue in March.

Progress, which could face low-priced competition from Duke, opposes the Orangeburg deal.

ElectriCities of N.C. wants FERC to overturn the ruling because the municipal co-ops it represents could benefit from competitive prices. N.C. Waste Awareness and Reduction Network wants the ruling to stand It fears Duke will be encouraged to build additional power plants to supply wholesale customers at the expense of regular customers.

The state commission will make a filing with FERC by early next week defending its decision.

Duke itself has not entered the case. It is pursuing a parallel appeal it has filed to the N.C. Court of Appeals along with Orangeburg.

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About George Fisher

George is a freelance writer, an author and a Democratic political consultant. He has worked as Deputy Communications Director for a Senatorial campaign and Campaign Manager for several NC House races and one congressional race. He previously worked as a news producer for a local television station.
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