{ "id": 4323320, "name": "STATE OF NORTH CAROLINA ex rel. UTILITIES COMMISSION, PUBLIC STAFF-NORTH CAROLINA UTILITIES COMMISSION, and DUKE ENERGY CAROLINAS, LLC v. ATTORNEY GENERAL ROY COOPER and NORTH CAROLINA WASTE AWARENESS AND REDUCTION NETWORK", "name_abbreviation": "State ex rel. Utilities Commission v. Cooper", "decision_date": "2015-01-23", "docket_number": "No. 12A14", "first_page": "741", "last_page": "752", "citations": [ { "type": "official", "cite": "367 N.C. 741" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "133 L. Ed. 2d 758", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 1996, "opinion_index": 0 }, { "cite": "116 S. Ct. 813", "category": "reporters:federal", "reporter": "S. Ct.", "year": 1996, "opinion_index": 0 }, { "cite": "516 U.S. 1092", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 325473, 328202, 323274, 322954, 328013, 328301, 325647, 325654, 328446 ], "year": 1996, "opinion_index": 0, "case_paths": [ "/us/516/1092-07", "/us/516/1092-01", "/us/516/1092-08", "/us/516/1092-02", "/us/516/1092-09", "/us/516/1092-05", "/us/516/1092-04", "/us/516/1092-03", "/us/516/1092-06" ] }, { "cite": "450 S.E.2d 896", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "901-02", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "338 N.C. 412", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2518416 ], "year": 1994, "pin_cites": [ { "page": "422", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/338/0412-01" ] }, { "cite": "385 S.E.2d 451", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1989, "opinion_index": 0 }, { "cite": "325 N.C. 463", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2491830 ], "year": 1989, "opinion_index": 0, "case_paths": [ "/nc/325/0463-01" ] }, { "cite": "488 S.E.2d 591", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1997, "pin_cites": [ { "page": "598", "parenthetical": "citations omitted" } ], "opinion_index": 0 }, { "cite": "346 N.C. 558", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 139511 ], "year": 1997, "pin_cites": [ { "page": "569", "parenthetical": "citations omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/346/0558-01" ] }, { "cite": "761 S.E.2d 640", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2014, "pin_cites": [ { "page": "644", "parenthetical": "citations omitted" } ], "opinion_index": 0 }, { "cite": "367 N.C. 444", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4315981 ], "year": 2014, "pin_cites": [ { "page": "450", "parenthetical": "citations omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/367/0444-01" ] }, { "cite": "500 S.E.2d 693", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 8, "year": 1998, "pin_cites": [ { "page": "700" }, { "page": "699", "parenthetical": "citation omitted" }, { "page": "700", "parenthetical": "alteration in original" }, { "parenthetical": "citation omitted" }, { "page": "704", "parenthetical": "citation omitted" }, { "page": "704", "parenthetical": "citation omitted" }, { "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "348 N.C. 452", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 1659837 ], "weight": 5, "year": 1998, "pin_cites": [ { "page": "461" }, { "page": "460" }, { "page": "460" }, { "page": "467" }, { "page": "468" } ], "opinion_index": 0, "case_paths": [ "/nc/348/0452-01" ] }, { "cite": "739 S.E.2d 541", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2013, "pin_cites": [ { "page": "547" }, { "page": "548" } ], "opinion_index": 0 }, { "cite": "366 N.C. 484", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4354335 ], "year": 2013, "pin_cites": [ { "page": "493" } ], "opinion_index": 0, "case_paths": [ "/nc/366/0484-01" ] }, { "cite": "758 S.E.2d 635", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2014, "pin_cites": [ { "page": "636", "parenthetical": "citations omitted" }, { "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "367 N.C. 430", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 4316610 ], "year": 2014, "pin_cites": [ { "page": "432", "parenthetical": "citations omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/367/0430-01" ] } ], "analysis": { "cardinality": 1035, "char_count": 27565, "ocr_confidence": 0.751, "pagerank": { "raw": 4.03580807328026e-08, "percentile": 0.14602762554882542 }, "sha256": "97817e5f8f2cfcc15656bdf647bc2fb3b287a349bad253ec7c0b4d154f6adf26", "simhash": "1:44236790ad896e5c", "word_count": 4188 }, "last_updated": "2023-07-14T22:06:46.212757+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Justice ERVIN did not participate in the consideration or decision of this case." ], "parties": [ "STATE OF NORTH CAROLINA ex rel. UTILITIES COMMISSION, PUBLIC STAFF\u2014NORTH CAROLINA UTILITIES COMMISSION, and DUKE ENERGY CAROLINAS, LLC v. ATTORNEY GENERAL ROY COOPER and NORTH CAROLINA WASTE AWARENESS AND REDUCTION NETWORK" ], "opinions": [ { "text": "JACKSON, Justice.\nIn this case we consider whether the order of the North Carolina Utilities Commission (\u201cthe Commission\u201d) authorizing a 10.2% return on equity (\u201cROE\u201d) for Duke Energy Carolinas (\u201cDuke\u201d) contained sufficient findings of fact to demonstrate that the order was supported by competent, material, and substantial evidence in view of the entire record. See N.C.G.S. \u00a7 62-94 (2013). In addition, we consider whether the Commission\u2019s use of the single coincident peak (\u201c1CP\u201d) cost-of-service methodology unreasonably discriminated against residential customers and whether the Commission inappropriately shifted certain expenses to ratepayers. Because we conclude that the Commission made sufficient findings of fact regarding the impact of changing economic conditions upon customers, that the use of 1CP was supported by substantial evidence, and that no improper costs were included in the Commission\u2019s order, we affirm.\nOn 4 February 2013, Duke filed an application with the Commission requesting authority to adjust and increase its North Carolina retail electric service rates to produce an additional $446,000,000, yielding a net increase of 9.7% in overall base revenues. The application requested that rates be established using an ROE of 11.25%. The ROE represents the return that a utility is allowed to earn on the equity-financed portion of its capital investment by charging rates to its customers. As a result, the ROE approved by the Commission affects profits for shareholders and costs to consumers. State ex rel. Utils. Comm\u2019n v. Cooper, 367 N.C. 430, 432, 758 S.E.2d 635, 636 (2014) (citations omitted). \u201cThe ROE is one of the components used in determining a company\u2019s overall rate of return.\u201d Id. (citation omitted).\nOn 4 March 2013, the Commission entered an order declaring this proceeding a general rate case and suspending the proposed new rates for up to 270 days. The Commission scheduled five hearings across the state to receive public witness testimony. The Commission also scheduled an evidentiary hearing for 8 July 2013 to receive expert witness testimony. The Attorney General of North Carolina and the Public Staff of the Commission intervened as allowed by law. See N.C.G.S. \u00a7\u00a7 62-15, -20 (2013). In addition, several parties filed petitions to intervene, including the North Carolina Waste Awareness and Reduction Network (\u201cNC WARN\u201d).\nOn 17 June 2013, Duke and the Public Staff filed an Agreement and Stipulation of Settlement with the Commission. The Stipulation produced a net increase of $234,480,000 in annual revenues and an ROE of 10.2%. The Stipulation provided for the use of the 1CP cost-of-service methodology. Among the parties contesting the Stipulation were the Attorney General and NC WARN.\nDuring the hearings, the Commission received testimony from 131 public witnesses, and the parties presented both expert testimony and documentary evidence. The evidence presented before the Commission will be discussed in greater detail as necessary throughout this opinion.\nOn 24 September 2013, the Commission entered an order granting a $234,480,000 annual retail revenue increase, approving an ROE of 10.2%, and authorizing the use of the 1CP cost-of-service methodology as agreed to in the Stipulation. The Commission reviewed the evidence before it and stated that it must consider whether the ROE is reasonable and fair to customers. See State ex rel. Utils. Comm\u2019n v. Cooper (\u201cCooper I\"), 366 N.C. 484, 493, 739 S.E.2d 541, 547 (2013). The Commission concluded that the rate increase, ROE, and cost-of-service methodology set forth in the Stipulation were \u201cjust and reasonable to the Company\u2019s customers and to all parties of record in light of all the evidence presented.\u201d The Attorney General and NC WARN appealed the Commission\u2019s order to this Court as of right pursuant to N.C.G.S. \u00a7\u00a7 7A-29(b) and 62-90.\nSubsection 62-79(a) of the North Carolina General Statutes \u201csets forth the standard for Commission orders against which they will be analyzed upon appeal.\u201d State ex rel. Utils. Comm\u2019n v. Carolina Util. Customers Ass\u2019n (\u201cCUCA I\u201d), 348 N.C. 452, 461, 500 S.E.2d 693, 700 (1998). Subsection 62-79(a) provides:\n(a) All final orders and decisions of the Commission shall be sufficient in detail to enable the court on appeal to determine the controverted questions presented in the proceedings and shall include:\n(1) Findings and conclusions and the reasons or bases therefor upon all the material issues of fact, law, or discretion presented in the record, and\n(2) The appropriate rul\u00e9, order, sanction, relief or statement of denial thereof.\nN.C.G.S. \u00a7 62-79(a) (2013). When reviewing an order of the Commission, this Court may, inter alia,\nreverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission\u2019s findings, inferences, conclusions or decisions are:\n(1) In violation of constitutional provisions, or\n(2) In excess of statutory authority or jurisdiction of the Commission, or\n(3) Made upon unlawful proceedings, or\n(4) Affected by other errors of law, or\n(5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted, or\n(6) Arbitrary or capricious.\nId. \u00a7 62-94(b). Pursuant to subsection 62-94(b) this Court must determine whether the Commission\u2019s findings of fact are supported by competent, material, and substantial evidence in view of the entire record. Id.; CUCA 1, 348 N.C. at 460, 500 S.E.2d at 699 (citation omitted). \u201cSubstantial evidence [is] defined as more than a scintilla or a permissible inference. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.\u201d CUCA I, 348 N.C. at 460, 500 S.E.2d at 700 (alteration in original) (citations and quotation marks omitted). The Commission must include all necessary findings of fact, and failure to do so constitutes an error of law. Id. (citation omitted).\nThe Attorney General argues that the Commission\u2019s order is legally deficient because it is not supported by competent, material, and substantial evidence and does not include sufficient findings, reasoning, and conclusions. Specifically, the Attorney General contends that the Commission failed to make findings of fact showing in \u201cmeaningful detail\u201d how it \u201cquantified\u201d the impact of changing economic conditions upon customers when determining the proper ROE. We disagree.\nPursuant to subdivision 62-133(b)(4) of the North Carolina General Statutes, the Commission must fix a rate of return that\nwill enable the public utility by sound management to produce a fair return for its shareholders, considering changing economic conditions and other factors, ... to maintain its facilities and services in accordance with the reasonable requirements of its customers in the territory covered by its franchise, and to compete in the market for capital funds on terms that are reasonable and that are fair to its customers and to its existing investors.\nN.C.G.S. \u00a7 62-133(b)(4) (2013). In Cooper I we observed that this provision, along with Chapter 62 as a whole, requires the Commission to treat consumer interests fairly \u2014 not indirectly or as \u201cmere afterthoughts.\u201d 366 N.C. .at 495, 739 S.E.2d at 548. But although the Commission must make findings of fact with respect to the impact of changing economic conditions upon consumers, \u201cwe did not state in Cooper I that the Commission must \u2018quantify\u2019 the influence of this factor upon the final ROE determination.\u201d State ex rel. Utils. Comm\u2019n v. Cooper, 367 N.C. 444, 450, 761 S.E.2d 640, 644 (2014) (citations omitted).\nThe evidence before the Commission included expert testimony and documentary evidence concerning ROE. Duke presented the testimony of Robert B. Hevert, Managing Partner of Sussex Economic Advisers, LLC. Hevert testified in support of the 10.2% ROE agreed to in the Stipulation. Although Hevert originally had recommended an ROE of 11.25%, he testified that he respected Duke\u2019s determination that an ROE of 10.2% would be sufficient to raise necessary capital. Hevert also discussed the effect of capital market conditions upon Duke\u2019s North Carolina customers. He testified that although North Carolina\u2019s unemployment rate was higher than the national average, the State\u2019s GDP growth and expected household income growth exceeded the national average. Hevert noted that North Carolina\u2019s average residential electric rates were approximately 12.46% below the national average. Hevert testified that his ROE analysis reflected changing economic conditions.\nThe Public Staff presented the testimony of Ben Johnson, Consulting Economist and President of Ben Johnson Associates, Inc. Johnson also supported the 10.2% ROE agreed to in the Stipulation. He explained that he had computed an ROE range of 9.75% to 10.75% using the comparable earnings method and that an ROE of 10.2% would fall just below the midpoint of that range. Johnson testified that he took into consideration changing economic conditions and determined that the Stipulation is \u201cresponsive\u201d to those \u201cdifficult economic conditions.\u201d\nThe Commercial Group \u2014 representing some of Duke\u2019s commercial energy customers \u2014 presented the testimony of Steve Chriss, Senior Manager for Energy Regulatory Analysis for Wal-Mart Stores, Inc., and Wayne Rosa, Energy and Maintenance Manager for Food Lion, LLC. Chriss and Rosa did not recommend a specific ROE, but noted that Hevert\u2019s original recommendation of 11.25% exceeded the range of recently authorized ROEs across the country. They testified that the 10.2% ROE contained in the Stipulation \u201cprovides for significant movement on the Commercial Group\u2019s concerns regarding rate of return on equity.\u201d\nFinally, the Attorney General introduced documentary evidence intended to show that setting a lower ROE results in lower rates and a report comparing average utility bills and average disposable income on a state-by-state basis.\nThe Commission stated that it gave \u201csubstantial weight\u201d to Hevert\u2019s testimony that, although North Carolina\u2019s unemployment rate was higher than the national average, the State enjoyed lower average electric rates, higher expected household income growth, and superior GDP growth as compared with the nation as a whole. Similarly, the Commission stated that it gave \u201csubstantial weight\u201d to Johnson\u2019s testimony that the recent financial crisis had resulted in a period of \u201cprolonged weakness.\u201d The Commission noted that both Hevert and Johnson testified that economic conditions facing customers have improved since the financial crisis. Furthermore, the Commission found that sixty-eight of the public witnesses who testified at the hearings stated that \u201cthe rate increase was not affordable to many customers,\u201d including the elderly, the unemployed and underemployed, the poor, and persons with disabilities. Nevertheless, the Commission explained that\nnine public witnesses testified that they understood [Duke\u2019s] need to increase rates in an effort to retire older coal plants and replace them with natural gas generation. In addition, 22 public witnesses expressed the view that the Company should be required to discontinue its fossil fuel and nuclear generation in favor of energy efficiency and renewable resources.\nThe Commission found that the Stipulation \u201cresulted] in lower rates to consumers in the existing economic environment and provides consumers with greater rate stability.\u201d The Commission noted that the Stipulation provided for a phase-in of the rate increase in which $30 million of the total annual revenue increase would be deferred for two years. The Commission acknowledged that this provision only mitigated the rate increase temporarily, but found that it would \u201chelp ratepayers at a time when the impact of economic conditions is relatively severe.\u201d In addition, the Commission noted that in the Stipulation, Duke agreed not to seek another increase in base rates for two years. The Commission found that this provision has \u201cparticular value to customers\u201d because it would provide rate stability during a period in which Duke is planning to make large capital investments. Finally, the Commission explained that the Stipulation requires Duke to contribute $10 million for energy assistance for low-income customers.\nUltimately, the Commission found:\n16. Changing economic conditions in North Carolina during the last several years have caused high levels of unemployment, home foreclosures and other economic stress on [Duke\u2019s] customers.\n17. The rate increase approved in this case, which includes the approved return on equity and capital structure, will be difficult for some of [Duke\u2019s] customers to pay, in particular [Duke\u2019s] low-income customers.\n18. Continuous safe, adequate and reliable electric service by [Duke] is essential to the support of businesses, jobs, hospitals, government services, and the maintenance of a healthy environment.\n19. The return on equity and capital structure approved by the Commission appropriately balances the benefits received by [Duke\u2019s] customers from [Duke\u2019s] provision of safe, adequate and reliable electric service in support of businesses, jobs, hospitals, government services, and the maintenance of a healthy environment with the difficulties that some of [Duke\u2019s] customers will experience in paying [Duke\u2019s] increased rates.\n20. The 10.2% return on equity and the 53% equity financing approved by the Commission in this case result in a cost of capital that is as low as reasonably possible. They appropriately balance [Duke\u2019s] need to obtain equity financing and maintain a strong credit rating with its customers\u2019 need to pay the lowest possible rates.\n21. The difficulties that [Duke\u2019s] low-income customers will experience in paying [Duke\u2019s] increased rates will be mitigated to some extent by the $10 million of shareholder funds that [Duke] will contribute to assist low-income customers.\nThese findings of fact not only demonstrate that the Commission considered the impact of changing economic conditions upon customers, but also specify how this factor influenced the Commission\u2019s decision to authorize a 10.2% ROE as agreed to in the Stipulation. These findings are supported by the evidence before the Commission, including public witness testimony, expert testimony, and the Stipulation itself. Therefore, we hold that the Commission made sufficient findings regarding the impact of changing economic conditions upon customers and that these findings are supported by competent, material, and substantial evidence in view of the entire record.\nIn the second issue before us, NC WARN argues that the Commission\u2019s order authorized preferential treatment of the industrial class to the detriment of the residential class. NC WARN observes that the Commission approved use of the 1CP cost-of-service methodology for allocating costs and contends that this methodology results in a greater rate increase for the residential class. NC WARN asserts that this use of 1CP is unjustified and constitutes unreasonable discrimination. We disagree.\nSection 62-140 prohibits unreasonable or unjust discrimination among customer classes. CUCA I, 348 N.C. at 467, 500 S.E.2d at 704 (citation omitted). The statute states in pertinent part:\nNo public utility shall, as to rates or services, make or grant any unreasonable preference or advantage to any person or subject any person to any unreasonable prejudice or disadvantage. No public utility shall establish or maintain any unreasonable difference as to rates or services either as between localities or as between classes of service..\nN.C.G.S. \u00a7 62-140(a) (2013). \u201cThe charging of different rates for services rendered does not per se violate this statute.\u201d CUCA I, 348 N.C. at 468, 500 S.E.2d at 704 (citation omitted). But any differences in rates between customer classes \u201cmust be based on reasonable differences in conditions,\u201d including such factors as quantity of use, time of use, manner of service, and costs of rendering the various services. Id. (citation omitted).\nThe witnesses who testified before the Commission disagreed whether 1CP is a fair cost-of-service methodology. Phillip O. Stillman, Director of Regulatory Strategy and Research for Duke Energy Business Services, LLC, supported the use of 1CP. Stillman explained that 1CP allocates costs based upon how much demand each customer class placed upon the system during the single hour in the test year when total demand peaked. Stillman testified that Duke\u2019s historical load profile reflects a predominant summer peak and that using 1CP would allocate costs correctly in light of the actual load characteristics of Duke\u2019s system. Similarly, Kroger presented the testimony of Kevin C. Higgins, Principal of Energy Strategies, LLC, who explained that a utility\u2019s resource planning is driven by its need to meet its summer peak. In addition, Nicholas Phillips, Jr., Managing Principal of Brubaker & Associates, Inc., testified that use of the 1CP methodology would allocate cost responsibility to customer classes properly and would minimize Duke\u2019s need for new generating capacity.\nIn contrast, NC WARN presented the testimony of William B. Marcus, Principal Economist for JBS Energy, Inc., who opposed the use of 1CP in this case. Marcus testified that costs arise not only from Duke\u2019s need to meet its peak demand, but from factors that are related to the amount of energy produced over the entire year, such as expenses for fuel handling, ash disposal, fuel transport, and water and consumable chemicals. Based upon these other costs, Marcus stated that 1CP may allocate costs unfairly and allow industrial customers to pay less than other customer classes. Michael R. Johnson, Senior Analyst in Greenpeace\u2019s Climate and Energy Campaign, also opposed using 1CP and asserted that this methodology contributes to environmental harm by encouraging the use of high emissions energy sources. Both witnesses recommended including a component in the cost-of-service methodology that accounts for the total energy consumed by each customer class.\nThe Commission stated that it gave \u201csubstantial weight\u201d to Stillman\u2019s \u201cundisputed testimony\u201d that having sufficient generation and transmission resources to meet its summer peak load requirements \u201cis an essential planning criterion of [Duke\u2019s] system.\u201d The Commission found that the use of 1CP would allow all customer classes to share equitably in fixed costs relative to the demands they place on the system during the summer peak. But the Commission explained that the alternative methodologies recommended by NC WARN and Greenpeace were not supported by substantial evidence and had not been \u201cadequately applied and analyzed with regard to the operating characteristics of the Company\u2019s system.\u201d As a result, the Commission concluded that their experts\u2019 testimony was entitled to \u201clittle weight.\u201d\nUltimately, the record contained conflicting evidence regarding whether the use of 1CP was reasonable and fair to Duke\u2019s different customers. The Commission considered all the evidence presented by the parties, explained the weight given to the evidence, and concluded that the use of 1CP methodology here was \u201cjust and reasonable\u201d in light of the specific characteristics of Duke\u2019s system. We are mindful that \u201c[i]t is not the function of this Court to determine whether there is evidence to support a position the Commission did not adopt. . . . The credibility of the testimony and the weight to be accorded it are for the Commission,\u201d rather than the reviewing court, \u201cto decide.\u201d State ex rel. Utils. Comm\u2019n v. Piedmont Natural Gas Co., 346 N.C. 558, 569, 488 S.E.2d 591, 598 (1997) (citations omitted). We hold that there is substantial evidence in the record to support the Commission\u2019s finding that the use of 1CP allocates costs \u201cequitably.\u201d NC WARN has not shown that the use of 1CP here results in unreasonable or unjust discrimination.\nFinally, NC WARN argues that certain costs included in the Stipulation are not reasonable operating expenses and should not be recovered from ratepayers. We disagree.\nIn fixing rates the Commission must ascertain a utility\u2019s reasonable operating expenses. N.C.G.S. \u00a7 62-133(b)(3), (5) (2013). The Commission must fix rates that will allow the utility to recover its reasonable operating expenses and receive a fair rate of return on the cost of the property used and useful in providing the service rendered to the public. Id. \u00a7 62-133(b)(5); see also State ex rel. Utils. Comm\u2019n v. Thornburg, 325 N.C. 463, 467 n.2, 385 S.E.2d 451, 453 n.2 (1989). \u201cThe findings of the Commission, when supported by competent evidence, are conclusive.\u201d State ex rel. Utils. Comm\u2019n v. N.C. Power, 338 N.C. 412, 422, 450 S.E.2d 896, 901-02 (1994) (citation omitted), cert. denied, 516 U.S. 1092, 116 S. Ct. 813, 133 L. Ed. 2d 758 (1996).\nBefore the Commission Marcus testified that Duke should not be allowed to recover costs associated with stock-based compensation, advertising, dues, donations, political contributions, sponsorships, survey research, and liability insurance for directors and officers. In response to his concerns, Duke presented witnesses Carol E. Shrum, Director of Rates and Regulatory Strategy for Duke; Paul R. Newton, State President for Duke; and J. Danny Wiles, Director for Regulated Accounting for Duke Energy Corporation. Shrum disagreed with Marcus about advertising, some of the disputed dues, survey research, and liability insurance for directors and officers, and testified that these costs constitute reasonable operating expenses. Similarly, Newton testified that stock-based compensation is a proper and reasonable expense that is allowable in setting rates.\nNevertheless, Shrum testified that the sponsorships, political contributions, donations, and some additional dues challenged by Marcus had been removed from Duke\u2019s cost of service in the Stipulation and would not be recovered from Duke\u2019s North Carolina customers. Both Newton and Wiles acknowledged that some of these expenses were not reasonable operating expenses and had been included because of errors by Duke. Wiles explained that \u201cover 95%\u201d of these errors already had been identified by the Public Staff and removed from the Stipulation. With respect to the remaining errors, Newton testified that they subsequently were corrected. Similarly, Katherine A. Fernald, Assistant Director in the Accounting Division of the Public Staff, testified that no unlawful expenses remained in the Stipulation.\nIn its order the Commission summarized the evidence concerning each expense that Marcus alleged was improper. The Commission concluded that some of these expenses were reasonable and could be recovered from ratepayers. But the Commission was \u201cquite disturbed\u201d to find that political contributions, which may not be recovered from ratepayers, were included in Duke\u2019s original application. The Commission ordered Duke \u201cto conduct an internal root cause analysis\u201d of this error and to file a report by 31 December 2013. Nevertheless, based upon the evidence in the record, the Commission concluded that \u201call inappropriately coded charges\u201d had been removed from the cost of service during the course of the proceeding. The Commission found that \u201cany charges remaining outside of those reconciled in the Stipulation were subsequently addressed by the Company through additional adjustments, or appropriately accounted for by the Company\u2019s accounting system.\u201d We conclude that the Commission\u2019s findings are supported by substantial evidence in the record, including the testimony of witnesses for both Duke and the Public Staff acknowledging that errors occurred and explaining that corrective steps were taken to resolve the errors. NC WARN has not shown that the Commission allowed Duke to recover any improper costs from ratepayers.\nAccordingly, the order of the Commission is affirmed.\nAFFIRMED.\nJustice ERVIN did not participate in the consideration or decision of this case.", "type": "majority", "author": "JACKSON, Justice." } ], "attorneys": [ "Troutman Sanders LLP, by Kiran H. Mehta; Heather Shirley Smith, Deputy General Counsel, and Charles A. Castle, Associate General Counsel, Duke Energy Carolinas, LLC; and Williams Mullen, by Christopher G. Browning, Jr., for applicant-appellee Duke Energy Carolinas, LLC.", "Antoinette R. Wike, Chief Counsel, and William E. Grantmyre, David T. Drooz, and Robert S. Gillam, Staff Attorneys, for intervenor-appellee\u2022 Public Staff - North Carolina Utilities Commission.", "Kevin Anderson, Senior Deputy Attorney General; Phillip K. Woods, Special Deputy Attorney General; Michael T. Henry, Assistant Attorney General; and John F. Maddrey, Solicitor General, for intervenor-appellant Roy Cooper, Attorney General.", "Law Offices of F. Bryan Brice, Jr., by Matthew D. Quinn; and John D. Runkle for NC WARN, intervenor-appellant." ], "corrections": "", "head_matter": "STATE OF NORTH CAROLINA ex rel. UTILITIES COMMISSION, PUBLIC STAFF\u2014NORTH CAROLINA UTILITIES COMMISSION, and DUKE ENERGY CAROLINAS, LLC v. ATTORNEY GENERAL ROY COOPER and NORTH CAROLINA WASTE AWARENESS AND REDUCTION NETWORK\nNo. 12A14\n(Filed 23 January 2015)\n1. Utilities \u2014 general rate case \u2014 changing economic conditions \u2014 impact on customers \u2014 findings\nThe Utilities Commission made sufficient findings regarding the impact of changing economic conditions upon customers in a general rate case and those findings were supported by competent, material, and substantial evidence in view of the entire record. The Commission\u2019s findings not only demonstrated that the Commission considered the impact of changing economic conditions upon customers, but also specified about how that factor influenced the Commission\u2019s decision to authorize a 10.2% return on equity. These findings were supported by the evidence before the Commission, including public witness testimony, expert testimony, and a Stipulation of Agreement between Duke Energy and the Public Staff.\n2. Utilities \u2014 general rate case \u2014 single coincident peak cost-of-service methodology \u2014 just and reasonable \u2014 substantial evidence supporting finding\nAlthough an intervenor in a general rate case argued that the Utilities Commission\u2019s order authorized preferential treatment of the industrial class to the detriment of the residential class, there was substantial evidence in the record to support the Commission\u2019s finding that the use of single coincident peak (1CP) cost-of-service methodology allocated costs equitably. The Commission considered all the evidence presented by the parties, explained the weight given to the evidence, and concluded that the use of 1CP methodology was \u201cjust and reasonable\u201d in light of the specific characteristics of Duke\u2019s system. It is not the function of the Supreme Court to determine whether there is evidence to support a position the Commission did not adopt.\n3. Utilities \u2014 general rate case \u2014 errors\u2014improper costs submitted \u2014 corrective steps taken\nThe Utilities Commission\u2019s findings in a general rate case were supported by substantial evidence in the record, including the testimony of witnesses for both Duke and the Public Staff acknowledging that errors occurred and that corrective steps were taken to resolve the errors. An intervenor did not show that the Commission allowed Duke to recover any improper costs from ratepayers.\nJustice ERVIN did not participate in the consideration or decision of this case.\nOn direct appeal as of right pursuant to N.C.G.S. \u00a7\u00a7 7A-29(b) and 62-90(d) from a final order of the North Carolina Utilities Commission entered on 24 September 2013 in Docket No. E-7, Sub 1026. Heard in the Supreme Court on 8 September 2014.\nTroutman Sanders LLP, by Kiran H. Mehta; Heather Shirley Smith, Deputy General Counsel, and Charles A. Castle, Associate General Counsel, Duke Energy Carolinas, LLC; and Williams Mullen, by Christopher G. Browning, Jr., for applicant-appellee Duke Energy Carolinas, LLC.\nAntoinette R. Wike, Chief Counsel, and William E. Grantmyre, David T. Drooz, and Robert S. Gillam, Staff Attorneys, for intervenor-appellee\u2022 Public Staff - North Carolina Utilities Commission.\nKevin Anderson, Senior Deputy Attorney General; Phillip K. Woods, Special Deputy Attorney General; Michael T. Henry, Assistant Attorney General; and John F. Maddrey, Solicitor General, for intervenor-appellant Roy Cooper, Attorney General.\nLaw Offices of F. Bryan Brice, Jr., by Matthew D. Quinn; and John D. Runkle for NC WARN, intervenor-appellant." }, "file_name": "0741-01", "first_page_order": 781, "last_page_order": 792 }