Canary Media – If the war in the Middle East has proved anything over the last month, it’s that fossil fuel prices are extraordinarily unstable. But global conflict isn’t the only catalyst that can send the cost of oil and natural gas reeling. Factors such as extreme weather, policy changes, and pipeline outages can also set off a price roller coaster.
In North Carolina, all this volatility is prompting calls for change. Advocates want the state to join the handful of others that require electric utilities to absorb a fraction of fossil fuel prices — rather than saddling customers with all of them, as the companies do now.
The point of the policy, called fuel-cost sharing, is twofold. It can bring utility bills down for average consumers, who are increasingly angry about ballooning expenses. And it can aid the clean energy transition: If the state’s predominant utility, Duke Energy, knows that its shareholders will take a hit when fuel prices rise, the company may scale back its dependence on polluting gas plants and instead rely more on emissions-free, fuel-free forms of energy, like wind, solar, and batteries.
The notion of fuel-cost sharing is still very much in its nascence here, where Duke wields incredible power over the Republican-controlled legislature, and neither lawmakers nor regulators have pushed the company to invest in cheap, clean energy.
But proponents of the idea say the conversation is still worth having.
“Fuel dependence creates vulnerability — whether it’s gasoline for your car or natural gas for your power plants,” said Josh Brooks, chief of policy strategy and innovation for the North Carolina Sustainable Energy Association. “Tying costs to volatile commodities means a lot of risk exposure for ratepayers. That’s an issue both regulators and policymakers should take up.”
Utility bills shock and frustrate
North Carolina is far from unique. Most states with vertically integrated utilities allow them to pass 100% of fuel costs to their customers. Utility shareholders don’t earn a return on those outlays in the same way they profit from building new power plants, but they’re insulated from the wild price swings inherent in the global fossil fuel market. Consumers are not.
Ratepayers, for instance, bore the full brunt of spiking gas prices after Russia invaded Ukraine in 2022. Confusingly for customers, Duke doesn’t specify these fuel charges on their bills; instead, the charges are incorporated into a nondescript line item, leaving consumers to ferret out on their own what they’re paying for fossil fuels.
The lack of clarity around fuel costs adds to customers’ outrage about rising bills. One example of the widespread frustration: A Change.org petition calling for Duke to submit to an independent audit and refund its customers for any improper charges has drawn more than 73,000 signatures so far.
“Unexpected and unexplainable increases in Duke Energy bills have become a major concern for many families,” the petition begins. “When bills rise without reasonable justification or transparency, it impacts our ability to plan and manage our household finances effectively.”
The average household Duke Energy bill has risen by nearly 45% since 2020, according to an analysis from the Energy and Policy Institute, because of a confluence of factors. The cost of natural gas is a major one.
Research from the Environmental Defense Fund shows that fuel costs accounted for 67% of rate increases from 2017 to 2024 in Duke’s central North Carolina territory, and for 46% of the hikes in the rest of the state. While fuel costs did dip last year, they’re still about double what they were in 2017.
“Fuel costs have stayed high since the 2021-22 price spike,” Will Scott, the environmental group’s North Carolina policy director, said in a written response to Canary Media. “At the same time, Duke has become more natural gas reliant, with even more new gas plants on the way.”
Editor’s note: NC Newsline asked Duke Energy to respond to this story.
“The law is clear, customers must pay what we pay, no less and no more,” said Duke Energy spokesman Bill Norton. “Carbon-free nuclear efficiently provides about half of our energy in the Carolinas, and North Carolina is among the top 5 the nation for solar, so fuel expenses have not impacted customer bills as drastically here as in other regions of the country.”
This story is republished with permission from Canary Media. All rights reserved.
