en.Wedoany.com Reported - Duke Energy earlier this year unveiled a $103 billion capital expenditure plan, which company executives called the largest spending plan among regulated U.S. utilities. Now, as Duke Energy seeks to raise residential electricity rates, it faces pressure from customers and regulators to justify the spending.

Duke Energy has lowered its requested return on equity (ROE) from 10.95% to 10.48% to acknowledge affordability concerns. Duke Energy executive Heath stated that this is the minimum the company can accept while maintaining the utility's long-term financial health.

Heath argued that if the ROE drops too low, it could lead to a credit rating downgrade for the utility, which would not only impact the company but also affect customers through higher borrowing costs, ultimately requiring a higher ROE to attract equity investors for future investments. The proposed rate increase benefits customers in the long run, as the costs of a downgrade could be higher. The issue is whether the ROE has reached a level that prompts rating agencies to reassess their evaluation of the regulatory jurisdiction, which must be corrected in the long term to restore a more reasonable equity return and attract continued equity investment.

Heath also noted that Duke Energy can sometimes raise substantial capital, including after Hurricane Helene in 2024, efficiently and effectively funding restoration efforts due to the utility's credit strength.

Duke Energy initially applied for an 18% increase in residential electricity rates but reduced the request to 11.6% following opposition from customers and state Attorney General Jeff Jackson. In a statement on June 22, Jackson said Duke Energy could afford a lower rate while still meeting demand, but the new rate remains too high, with the goal of reducing the rate hike and ensuring that rate treatment for data centers and other large users is fair to households.

Jackson's office argued that Duke Energy mishandled the balance between data centers and residential customers. Justin Brant, an energy expert witness from Jackson's office and regulatory consultant at Current Energy Group, testified before the commission in June that the utility's approach shifts significant costs and risks to other users.

David Neal, a senior attorney at the Southern Environmental Law Center representing the North Carolina Justice Center during the hearings, questioned Brent Guyton, Duke Energy's director of distribution asset management, about whether grid improvements included in the utility's over $100 billion capital plan would benefit residential customers equally as large-load customers. Pointing to a chart in a confidential appendix, Neal said about 98% of the identified financial benefits flowed to non-residential customers, then asked which customer category drove these grid improvement projects. Guyton responded that they do these projects for all customers.

Hearings continued on Thursday. The commission must decide on the case by September 20.