Legislative Updates

Legislative Updates ,

Duke Energy's Connect Fees and Revert-to-Owner Program | 2/2015

  • Barbara G. Yarbrough, Regulatory Affairs Manager, with Duke Energy Corporation, responded to AANC's request "How did Duke Energy arrive at/calibrate the $15 fee, which is a charge for each time service for an apartment goes from a given resident's account into an apartment community account?" The connect fees began in late 2013. Her response:
    • Until our recent rate case, during our history, we have not charged a connection fee meaning customers who rarely move were bearing the cost of connections for those who move frequently and rental property that has a frequent turnover (including service to the apartment owner).
    • We determined that we could mitigate some of the impacts of the rate increase for the general body of ratepayers by charging the customers who cause the new connection to be more responsible for the costs. The connection fee implemented was a step toward moving the recovery of those costs to cost causation. Like virtually all rates and charges, we did not attempt to take a precise cost of service approach, but rather developed an average cost.
    • In the process of development a connection fee, we determined that the average cost for processing a new account was determined to be between $16 and $17 even though there is a variation based on the specific circumstances. Even for locations no participating in RTO, sometimes we can simply read the meter and other times a physical connection is required.
    • We recognized that there may have a difference in cost for Revert to Owner (RTO) accounts but at the time we proposed the fee, we did not have sufficient data to determine what, if any, the differential should be. This is one reason we did not propose the full cost, but rather reduced the amount proposed from over $16 to $15.
    • Recognizing that more than 2/3 of the cost if the field trip which is still required, and absent other cost support, we chose to implement a single fee at this time. Additionally, IT systems and processes are required to submit orders and set up a new account, irrespective of whether the situation involves RTO or not.
    • It should be noted that there are still situations where we cannot automatically set up an account in the name of the property owner/manager (ie: if the service has been disconnected for nonpayment) so there may be no cost savings in those circumstances. These not only require additional contact, but require a physical connection as opposed to a meter reading. Secondly, there is "back office" support, and the associated cost, required to manage the RTO program, support which is not needed for individual customer applications. Property managers may need to add or remove accounts; properties are sold requiring new RTO set ups. In addition, we would point out that property managers in the RTO program are provided additional services via a web tool that provides additional valuable information to RTO participants on the status of service at the properties.
    • Duke Energy Carolinas indicated to the Public Staff of the NCUC, that Duke Energy Carolinas is open to looking into a fee differential, in the future when we have more data to support a differential, and the amount of a different. Further, we do not believe the fee could be reduced for some customers without raising it for others. The appropriate time to evaluate this would be in our next general rate case because the Commission has already approved the revenue requirements and the current fee.