Report: Duke Energy Policies Consistently Harm Low-Income Customers
WASHINGTON – Duke Energy, the nation’s largest investor-owned electric utility, claims to make affordability, efficiency and access to renewable energy for its low-income customers a priority. But an investigation by the Environmental Working Group shows that just the opposite is true.
Duke serves 6.1 million residential customers in its monopoly territories in the Carolinas, Florida, Ohio and Indiana. EWG’s investigation – “Tone Deaf: The Facts Behind Duke Energy’s Low-Income Programs” – documents how the company repeatedly tries to raise fixed charges, which hits low-income customers the most; attacks energy efficiency programs in general; underfunds its own low-income efficiency programs; underfunds programs meant to help low-income customers pay their bills; and makes it harder for them to go solar.
“The COVID-19 pandemic has made it harder for low-income families across the nation to make ends meet while they juggle utility and other bills,” said Grant Smith, EWG’s senior energy policy advisor and co-author of the report. “But the pandemic only exposes the underlying energy affordability burden that low-income customers live with monthly. We found this is particularly true for Duke Energy customers, and that the company’s claim that ‘affordabiity is really important’ is mostly lip service.”
“This report clearly shows that a substantial number of Duke's customers struggle to pay their electric bills, and when this happens, families end up sacrificing other needs, such as food and health care," added Rory McIlmoil, senior energy analyst for Appalachian Voices, in Duke’s home state of North Carolina. "Rather than spending billions on new gas plants and unnecessary grid upgrades, Duke should instead invest that money in low-income solar and energy efficiency programs that alleviate household energy burdens."
Fully 20 percent of Duke’s customers live in poverty, compared to the national rate of 12 percent, and that does not take into account the millions of newly unemployed Americans who have lost their jobs in the past several months. Yet Duke is asking Indiana regulators to force its customers to pay for electricity they have not used as the pandemic has shuttered businesses and kept people at home.
Duke has pursued big rate hikes for its customers in all of its service areas. These hikes are often couched as increases in the fixed monthly charge – the flat fee for hooking up to the company’s system, regardless of how much electricity the customer uses. Last year, when South Carolina utility commissioners slashed a Duke request to raise the flat monthly fee by more than $20, commissioners said Duke’s executives “were ‘tone deaf’ as to how a 238% increase . . . would have negatively and adversely impacted the elderly, the disabled, the low income and low use customers.”
In seeking to raise flat fees, Duke has repeatedly argued that because they use less energy, solar customers and customers who are more energy efficient are unfairly subsidized by other ratepayers. But in Duke’s most recent bid to raise the fixed monthly charge in North Carolina, utility commissioners cited an opinion from the state attorney general’s office that said the proposal “will shift costs to small users such as low-income and elderly consumers who live in small apartments, as they are charged the same unavoidable [flat rate] as other residential consumers who live in spacious high-consumption residences.”[i]
Each year, the research firm Fisher, Sheehan & Colton estimates the home energy “affordability gap” for every county in the nation. The difference between affordable household energy costs and what people actually pay is defined as the affordability gap.
FSC says that households should not spend more than 6 percent of their income on heating, cooling, lighting and appliances. Yet households in Duke’s service areas with earnings up to the federal poverty line paid an average of 17 percent of their income on energy.
Duke does little to close the affordability gap, consistently underfunding its own programs designed to help low-income customers pay their bills. And much of the low-income support comes not from the company but from ratepayers in the form of mandatory bill charges or voluntary donations. In Indiana, millions of dollars of Duke’s support for low-income programs were to settle regulators’ and public interest groups’ objections to overcharges for the ongoing Edwardsport coal gasification plant boondoggle.
EWG’s investigation found other examples of Duke’s disregard for low-income customers, including:
- In the most recent analysis of U.S. utilities’ low-income programs by the American Council for an Energy-Efficient Economy, or ACEEE, three of Duke’s subsidiaries – in Indiana, Ohio and North Carolina – scored zero points for percent of energy efficiency funding dedicated to low-income programs. Three other Duke subsidiaries scored either 1 point or half a point.
- Duke claims that prepay plans, which let customers contribute to an account that is drawn down monthly, result in a significant reduction in customer energy usage. But an ACEEE report found that Duke’s proposals for prepay plans in North and South Carolina would result in higher costs. What’s more, Duke’s claims that prepay plans result in lower usage are inflated by its preposterous position that disconnections for nonpayment are “energy efficiency” measures – as if customers who are shut off are choosing not to pay and not to use electricity.
“It is callous and cynical for Duke to use disingenuous concern for affordability to disguise its efforts to bolster profits and undermine customer opportunities to reduce their utility bills, particularly at the expense of low-income households,” said Smith. “If Duke wants to be seen as a compassionate corporation at the forefront of America’s clean-energy revolution, it must put its money where its mouth is.”
Photo credit: Appalachian Voices