AARP’s brief asked North Carolina’s top court to overturn a rate increase decision for failing to safeguard consumers. The Court agreed.
North Carolina’s Utilities Commission, the state’s regulatory agency overseeing the delivery of utility services, approved a rate increase on electrical power that included a 10.5 percent Return on Equity for Duke Energy Carolinas, a rate considerably out of step with the economic conditions that most North Carolina consumers are experiencing.
The state’s attorney general challenged the rate increase, and attorneys with AARP Foundation Litigation filed AARP’s friend-of-the-court brief in the matter supporting the AG. The brief argued that reasonable utility rates and services are essential for older people’s health and financial well being. High utility rates force those on fixed and low incomes to cut back on other basic needs – such as food, medicine, shelter, and health care – or to reduce heat and cooling below safe levels.
AARP argued the commission must explain and justify the award to show that the rates set are fair for consumers. The brief noted that state law requires the commission to consider the economic impact on consumers when approving rate increases. In order to meet this statutory requirement, the commission must make findings of fact and explain its decision, which it had not done according to AARP’s brief. Among other factors the commission must explain is how the rate increase is fair and reasonable for ratepayers in the current economic environment. Failure to explain these key factors, according to the brief, makes the commission’s decision not in accordance with law, as well as arbitrary and capricious, and unsupported by the evidence.
AARP’s brief urged the court to remand the matter to the commission for reconsideration and order that the commission must comply with the requirements of the statute when they reconsider the rates.
North Carolina’s highest court agreed and overturned the commission decision on these grounds—for the first time in fifteen years. The court pointed out that no witnesses during the rate hearing specifically recommended a 10.5 percent Return on Equity, and that the Commission had failed to evaluate the effects of the rates on consumers in the current economic environment. The court noted that hundreds of consumers complained to the commission as the economy stagnated and rates went up. “Consumer interests cannot be measured only indirectly or treated as mere afterthoughts,” wrote the court.
What’s at Stake
High utility costs threaten all people who live on low or fixed incomes, but particularly affect older people because many older people have higher sensitivity to heat or cold or suffer from health conditions (such as diabetes, lung disease, and heart disease) that make them particularly sensitive to temperature. When faced with unaffordable high utility rates, the situation is dire: choose among the basic necessities of life, or go without adequate heating or cooling.
North Carolina ex rel. Utilities Commission v. Cooper was decided by the Supreme Court of North Carolina.