Duke Energy is seeking permission to merge Duke Energy Carolinas and Duke Energy Progress. (Photo: Duke Energy)
On March 30, frustrated North Carolinians can make their voices heard at a public hearing of the state Utilities Commission in Raleigh. The hearing follows a petition calling for an independent audit of Duke Energy’s billing practices after customers reported sharp increases in their monthly electricity bills.
The concern is not isolated. State electricity bills have risen roughly 22% since 2020, straining household budgets before even considering the additional increases utilities currently seek. For residents managing higher costs for housing, food, gasoline and insurance, rising energy bills are hard to absorb.
Duke Energy says the higher bills largely result from increased winter usage and seasonal demand. Regulators will determine whether billing practices are functioning as intended, but the public backlash reveals a deeper challenge: many North Carolinians feel they have little control over rising electricity costs.
To address ratepayer frustration while building a larger, cleaner, and more reliable energy system, North Carolina policymakers should look to strengthen competitiveness.
Competitiveness in the power sector does not mean wide-ranging deregulation or dismantling utilities. Instead, it refers to institutional and market arrangements that can discipline utility costs and give customers more leverage over the services they receive. Where effective, it can improve transparency and lower costs.
Understanding why requires looking at how traditional utility regulation works. Most U.S. utilities operate a cost-of-service model whereby regulators allow companies to recover costs plus an approved return — often around 10% — on capital expenditures.
This approach can unlock infrastructure investment but also create perverse incentives. With profits fixed to capital outlays, utilities are incentivized to build new assets — power plants, transmission lines, etc. — even when lower-cost operational or demand-side alternatives might suffice. Last year North Carolina legislators overrode a Governor Stein veto to extend this dynamic to ongoing construction, allowing utilities to recover costs from customers before projects are completed. While this may reduce financing costs, it shifts risk to ratepayers — including for cost overruns — before customers receive services from the new infrastructure.
These regulatory systems can tilt decision-making toward larger and more expensive capital projects that drive up rates. By expanding service provider pools and widening customer access to more power options, competitiveness policies can help ensure lower-cost resources are selected and utilities remain accountable to ratepayers.
North Carolina has taken steps in this direction. House Bills 589 and 951 created pathways for large electricity users to directly procure renewable energy and lease solar resources. The state has begun incorporating elements of competitive, all-source procurement into its planning process, with the Competitive Procurement of Renewable Energy initiative requiring utilities to solicit bids from a range of energy providers rather than just utility-owned projects.
North Carolina regulators are also exploring performance-based regulation frameworks that tie utility earnings to outcomes such as affordability, emissions reductions, and reliability. Rather than rewarding utilities primarily for capital spending, these frameworks link financial incentives to results that matter to customers. Such approaches should be redoubled.
Then there are electricity markets. Much of the country participates in organized wholesale markets that coordinate electricity generation and transmission across multiple states. These markets allow power producers to compete to supply electricity at the lowest cost and can improve grid efficiency by sharing resources across a larger geographic area.
Today, about 1.4% of North Carolina customers — those served by Dominion Energy — are connected to such a market. Customers served by Duke Energy are not. Research on regional market integration suggests that participation in a large regional transmission organization could produce hundreds of millions of dollars in yearly savings for North Carolinians. The region’s existing coordination mechanism, the Southeast Energy Exchange Market, currently fails to meet this opportunity.
Joining a regional market would be a major policy decision and will not happen quickly. But the key point is that competitiveness is not a single policy but a range of options that can introduce useful checks and balances into the electricity system. Such reforms involve trade-offs and must be adapted to the state’s regulatory traditions and political realities, but they offer pathways toward a power sector that is more transparent, more accountable, and more responsive to customers.
As the Utilities Commission considers how to respond to public comments on March 30, strengthening competitiveness would be a good place to start.
Jackson Ewing is the director of energy and climate policy at the Duke University Nicholas Institute for Energy, Environment & Sustainability.
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