RALEIGH, N.C. (AP) -- North Carolina's highest court has overturned a substantial rate hike sought by Duke Energy and approved by state utilities regulators.
The North Carolina Supreme Court ruled Friday that the state Utilities Commission did not adequately consider the negative impact on consumers by allowing Duke to raise electricity rates for 1.8 million households and businesses by 7.2 percent. The commission voted in January 2012 to allow the rate increase, which would generate an extra $309 million in annual revenue for Duke.
The rate package Duke proposed included a 10.5 percent profit for the company's subsidiary operating in the western half of the state, pushing the typical residential bill up by $84 a year to almost $1,236. While hundreds of consumers objected that the requested increase would pile misery atop high unemployment and home foreclosures, the utilities commission's order approving the lower rate increase didn't indicate what, if any, weight the oversight board gave those concerns.
Attorney General Roy Cooper's office argued in court last year that the commission failed to balance the interests of both customers and investors in overseeing the Charlotte company, now the nation's largest electricity provider following its 2012 takeover of rival Progress Energy. The court agreed, sending the case back to the utilities commission for further consideration.
"The commission must take customer interests into account when making" a return on equity determination, the justices wrote.
Cooper praised the ruling.
"This is great news for consumers who spoke loudly and clearly on how hard this rate increase would hit their wallets," Cooper said. "In a time of economic hardship, the effect on customers must be taken into consideration, not just profits. We're glad the court agreed and hope rates will be set fairly."
Paul Newton, president of Duke Energy North Carolina, said the company is still reviewing the Supreme Court's decision. But he expressed confidence that the company will still get its rate increase approved.
"It is important to note that the order is limited to the commission's consideration of the 'proper' return on equity," Newton said. "We continue to believe that the settlement agreement approved by the commission authorizing a 10.5 percent ROE is fair and well-reasoned. We have no reason to believe that it will not ultimately be upheld."
Duke Energy has more than 7.1 million residential and business customers in North Carolina, South Carolina, Ohio, Kentucky, Indiana and Florida. The North Carolina commission has been widely criticized for being too ready to accommodate the company's merger timetable and rushing through its duty to ensure the deal was in the state's best interest.
The electricity giant and its regulator are expected to have multiple rate cases in the coming years as Duke Energy seeks to update and expand its portfolio of power plants.
Follow AP writer Michael Biesecker at twitter.com/mbieseck