A line item most customers scroll past without reading just became the center of a legal fight over who eats a cost nobody agreed to.
It sits a few rows below the kilowatt-hour total on millions of monthly bills.
Utility lawyers call it a true-up.
Appellate judges just called part of it unlawful.
And the people who paid it are being told, officially, that the money is not coming back.
So what actually happened, and why does a court ruling against a utility end with customers holding the bill anyway?
How a fuel charge meant to be neutral turned into a legal fight
Every month, power companies buy fuel like natural gas and coal to run generating plants, and state law in North Carolina lets them pass that raw fuel cost straight through to customers without profit. The case centers on a fuel rider, an annual adjustment that allows utilities to pass fuel costs directly to customers. Under North Carolina law, those fuel costs are treated as pass-through charges. Utilities do not earn a profit on fuel itself. If natural gas prices rise, customers’ bills rise. Shareholders do not absorb that volatility.
The catch is that fuel costs never land exactly where forecasters predict. So regulators built a true-up process, a once-a-year reconciliation where the utility compares what it actually spent on fuel against what it collected, then adjusts future rates to settle the difference either direction. The fuel rider is recalculated annually using data from a historical 12-month “test period.” If actual fuel costs differ from projections, the gap is reconciled through what regulators call an experience modification factor, or EMF.
That reconciliation is supposed to stay confined to a single defined test period. State law at the time permitted true-ups only for costs incurred during the most recent one-year test period. It is a narrow window, nothing more, and that narrowness is exactly what ended up in dispute.
Inside the bill, a modest surcharge hid a much larger argument
The disputed portion was not the whole fuel rider, just a slice of it. The portion challenged on appeal totaled about $19.1 million, according to Duke. A fact-check of the ruling put the number judges actually weighed at roughly $17.3 million in unrecovered fuel costs from ratepayers ; the exact source of the higher figure is unclear, but it is in the same range as the court’s number.
The company says that amount reflected weather-related shortfalls in fuel recovery carried into later years. Those shortfalls trace back to a far bigger number: the company had reported $998 million in unrecovered fuel costs from 2022 during its 2023 fuel-rider proceeding. Even after that rider was approved, Duke said it remained short by an additional $8 million and sought to roll that remainder into its 2024 charges. The Commission agreed, but the court said the statute did not allow it. Spread across North Carolina’s residential and commercial customer base, the disputed sum translates into a small amount per household, easy to miss on autopay.
It is exactly the sort of quiet recurring charge that adds to why electric costs in the state have climbed in recent years, even without a single headline rate hike: electricity rates in North Carolina have increased more than 23% on average over the past five years, according to state filings. The Public Staff, the state agency tasked with representing consumers before the commission, challenged that decision, arguing that the statute limits true-ups to costs incurred within the designated 12-month window.
They said a test-period limit exists specifically to stop utilities from reopening old losses years after the fact, and that the commission had ignored it.
The ruling, the law, and why a win still produced no check
The case moved through the North Carolina Court of Appeals, where judges released their opinions in unpublished decisions on Feb. 18 . A unanimous three-judge appellate panel agreed with the Public Staff and ruled against the Utilities Commission , finding regulators had erred in approving a 2024 rate adjustment for Duke Energy Carolinas and Duke Energy Progress that incorporated fuel under-recoveries from 2022 into their 2024 fuel-adjustment riders , according to a local news report. Judge John Arrowood wrote that the statute’s “plain language” limited true-ups to costs incurred during a designated test period and that the commission “erred as a matter of law” in allowing certain earlier under-recoveries to be included.
Normally that kind of finding opens the door to a refund. But while the appeal was still pending, lawmakers amended the statute in 2025 through Senate Bill 266, removing the test-period restriction cited by the court.
Because the new law lets utilities reach back and recover old under-collections in future filings anyway, the judges said refunds would offer “no meaningful relief” because Duke could simply charge customers again under a newer state law that expands the scope of allowable true-ups, a paperwork exercise rather than real relief. One commentary on the ruling made the same point about the court’s reasoning on why a refund order would have been pointless.
Where this gets complicated for ordinary ratepayers
None of this means the utility broke the rules as they stand today. The commission’s original error was real, but the legislature changed the underlying law before the court could fully act on it.
That is a timing quirk that leaves the finding mostly symbolic. Even so, the optics are rough.
