UNC ready for Duke Energy rate increase

The Duke Energy rate increase approved Friday could spike the University’s electric bill by as much as $1.5 million this year.

The North Carolina Utilities Commission approved an average rate hike of 7.2 percent for most customers. University officials said they might not know UNC’s rate change for weeks.

“Basically, costs are going up just like they are everywhere,” said Phil Barner, interim director of the Energy Services department, which provides electricity to the rest of campus.

Energy Services bought $23 million in electricity from Duke Energy last year. Barner said the figure was typical. UNC gets about 80 percent of its electricity from Duke and generates the rest through its cogeneration plant on Cameron Avenue.

The rate increase, scheduled to go into effect early this month, could increase February’s electricity bill — which was $1.3 million last year — by $90,000, Barner said.

He said UNC knew the increase was coming. Energy Services planned for a 7 percent increase, betting against the 15 percent increase Duke Power had initially requested.

“It wasn’t unexpected,” Barner said.

The higher electricity costs will be passed on to the department’s various campus clients. The one-third of Energy Services’ customers that are receipt-based, or funded through selling goods and services, could especially feel the cost hike.

Utilities like electricity and water make up more than a fifth of the housing department’s $48 million annual budget, said Larry Hicks, the department’s director. Last year’s budget was $10.4 million, a number that could jump to $11 million when the department’s budget is finalized.

Hicks said the department includes rate increases in its long-term budgeting.

“It is a huge deal, but it’s one that we plan for,” he said, adding that he doesn’t expect student housing prices to increase more than 2 percent next year.

UNC Hospitals, however, is less worried about higher electricity costs. The company combines its utilities and communications budgets, and the two were only a $33 million slice of its $1.9 billion operating expenses, UNC Hospitals spokeswoman Jennifer James said.

The impact of the rate increase will be relatively small during the winter months, when the University saves money by using self-generated steam to heat buildings.

But when temperatures begin climbing in the late spring, air conditioning costs will make the rate increase felt.

Duke Energy, which generated $1.3 billion in profits in 2010, requested a rate increase to help pay for updating and replacing its power plants.

The company originally sought a 15 percent increase, but settled with regulators for the lower rate when faced with public outrage. The rate was settled at 6 percent in South Carolina.

“We believe the settlement balances the company’s need to recover investments made in the electric system with the reality that many of our customers face continued economic challenges,” said Duke Energy North Carolina President Brett Carter in a statement.

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