Jessica M. Karmasek Apr. 15, 2013, 2:00pm

CHARLOTTE, N.C. (Legal Newsline) -- The North Carolina Supreme Court late Friday overturned a utilities commission's decision approving a Duke Energy rate hike.

In its 18-page opinion, the court ruled that the North Carolina Utilities Commission did not properly analyze the issue before approving a roughly 7 percent rate hike -- or 10.5 percent return on equity, or ROE -- last year.

In particular, the court agreed with Attorney General Roy Cooper that the commission must consider the impact of "changing economic conditions" on customers.

"It is clear that the commission must take customer interests into account when making an ROE determination," Justice Barbara Jackson wrote for the court.

Read the court's full decision here.

The state's high court reversed the commission's order and remanded the case back to the commission with instructions to make an "independent" determination regarding the proper ROE.

"This is great news for consumers who spoke loudly and clearly on how hard this rate increase would hit their wallets," Cooper said in a statement Friday. "In a time of economic hardship, the effect on customers must be taken into consideration, not just profits. We're glad the court agreed and hope rates will be set fairly."

Duke Energy had initially applied to the commission to request that it be allowed to increase its revenues by about $646 million.

That increase would have raised the average Duke customer's monthly bill by about 17 percent, or, in many cases, an extra $20 a month.

At that point, Cooper's office intervened.

Eventually, Duke and the commission agreed to the 7 percent hike.

Cooper, who argued the increase was wrong for consumers and businesses, filed an appeal with the state Supreme Court.

His appeal focused not on whether Duke should be allowed to recover its investments, but on if it should be allowed to raise customers' rates to make a 10.5 percent shareholder profit.

He also argued that the commission's decision to grant the rate hike was not supported by evidence.

Paul Newton, president of Duke Energy North Carolina, said Friday the company's legal teams are reviewing the court's decision.

"It is important to note that the order is limited to the commission's consideration of the 'proper' return on equity. It does not require any changes to the current rates and rate structure approved by the commission last year," he said in a statement.

"We will continue to monitor the situation and provide any information required by the commission or others."

He continued, "We continue to believe that the settlement agreement approved by the commission authorizing a 10.5 percent ROE is fair and well-reasoned. We have no reason to believe that it will not ultimately be upheld."

Duke Energy Carolinas, headquartered in Charlotte, owns nuclear, coal-fired, natural gas and hydroelectric generation. The fuel mix provides about 20,000 megawatts of owned electric capacity to about 2.4 million customers in a 24,000-square-mile service area of North Carolina and South Carolina.

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