Duke Energy Carolinas reaches agreement on request to increase rates in South Carolina
GREENVILLE, S.C., July 23, 2013 - Duke Energy Carolinas, a subsidiary of Duke Energy (NYSE: DUK), has reached an agreement with the Office of Regulatory Staff (ORS), Wal-Mart, the S.C. Energy Users Committee and the S.C. Small Business Chamber of Commerce concerning the utility's request to raise base rates in South Carolina.
The settlement includes a significant reduction in the rate increase to customers, while providing a fair return for the company's investors.
Duke Energy originally requested an average increase in retail revenues of 15.1 percent, or about $220 million. Under the terms of the settlement, the increase to the company's annualized revenue is reduced to about $80.4 million in the first year, with customer rates increasing an additional $38.2 million (for a cumulative increase of about $118.6 million) beginning in the second year.
During the first year, the average increase will be about 5.53 percent. After that, rates will increase by an additional 2.63 percent for a total average increase of about 8.16 percent.
Under the terms of the settlement, the company agrees it will not request to implement another base rate increase prior to September 2015, absent situations such as incurring costs for new generation or except where necessary due to unforeseen extraordinary economic or financial conditions.
Under the settlement, the monthly bill for a typical residential customer using 1,000 kilowatt-hours a month in the first year would be $107.97, or an increase of $7.52 (7.5 percent). In the second year, it would be $110.76, or an increase of $2.79 (2.6 percent).
To ease the impact of the rate increase, the company has agreed to one-time contributions from shareholders of $1 million to be used under the direction of the ORS to support public education initiatives and senior outreach.
Duke Energy will also provide $2.5 million to fund Share the Warmth and other public assistance programs for low-income customers, as well as manufacturing competitiveness grants, economic development and/or education/workforce training programs.
The settlement agreement is subject to review and approval by the Public Service Commission of South Carolina (PSCSC).
"We believe the settlement reflects an appropriate balance between the needs of our company and those of our customers," said Clark Gillespy, Duke Energy's South Carolina state president. "If approved, this agreement will allow us to keep the rate increase to customers as low as we reasonably can, and still recover the investments we've made to modernize our system and to ensure safe, reliable and increasingly clean electricity for the future."
"We also recognize the timing of the increase can be a challenge for some of our customers. Part of this settlement is a shareholder contribution to help our most vulnerable customers in our South Carolina service territory," Gillespy said. "These funds are in addition to assistance already provided by the company."
Major components of the settlement
-- A return on equity (ROE) of 10.2 percent
-- A capital structure of 53 percent equity and 47 percent debt
-- The company agrees it will not request to implement another base rate
increase prior to September 2015, absent situations such as incurring
costs for new generation or except where necessary due to unforeseen
extraordinary economic or financial conditions
The PSCSC is conducting hearings around the state to gain public input on the rate increase proposal. On July 31, the commission will hold an evidentiary hearing in Columbia to consider the settlement and other unresolved issues.
The company has requested that the new rates go into effect in September.
To see the settlement filing, go to the PSCSC website choose "Docket Search" from the menu on the left, then search "By Docket Number" using docket number 2013-59-E.
Duke Energy Carolinas
Duke Energy Carolinas owns nuclear, coal-fired, natural gas and hydroelectric generation. That diverse fuel mix provides approximately 20,000 megawatts of owned electric capacity to approximately 2.4 million customers in a 24,000-square-mile service area of North Carolina and South Carolina.
Duke Energy is the largest electric power holding company in the United States with more than $110 billion in total assets. Its regulated utility operations serve approximately 7.2 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.
Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at:
Media Contact: Ryan Mosier
Office: 864.370.5036 | 24-Hour: 800.559.3853
Analysts Contact: Bob Drennan
Analysts Contact: Bill Currens