Duke Energy Carolinas requests rate review by Public Service Commission of South Carolina

Rhea-AI Summary

Duke Energy Carolinas (DUK) requests rate increase from South Carolina regulators for the first time since 2018, aiming to enhance system diversity, reliability, and customer experience while meeting future energy demands. The company proposes to accelerate the return of excess deferred income tax benefits to mitigate the rate increase, prioritizing customer bill affordability and responsible investments for system reliability and resiliency.

Positive

• First rate increase request since 2018
• Commitment to keeping customer bills as low as possible
• Focus on increasing system diversity and reliability
• Proposal to accelerate return of excess deferred income tax benefits

Negative

• Potential negative impact on customer bills
• Increased regulatory scrutiny due to rate increase request

Energy Market Analyst

The request by Duke Energy Carolinas to increase retail base rates, after a period of stability since 2018, indicates a strategic move to align with evolving energy infrastructure demands and customer expectations. The company's focus on system diversity and reliability is reflective of the broader industry's shift towards sustainable energy solutions and resilience against climate-related disruptions. Investments in infrastructure to reduce outages and protect against extreme weather are essential, given the increasing frequency of such events.

From a market perspective, the rate review by South Carolina regulators will be a critical determinant of the company's revenue stream and profitability. Investors will need to monitor the Public Service Commission of South Carolina's (PSCSC) response to this proposal, as it will affect the company's financials and possibly its stock performance. The acceleration of the return of excess deferred income tax benefits is a strategic financial decision that could mitigate the impact of the rate increase on customers, potentially alleviating public and regulatory pushback.

It is crucial for stakeholders to consider the long-term benefits of these investments against the short-term financial implications. Enhanced infrastructure resilience can lead to reduced operational costs and improved customer satisfaction over time, which may translate into a stronger market position for Duke Energy Carolinas.

Financial Analyst

Analyzing the financial implications of Duke Energy Carolinas' proposed rate increase, it's important to note that such a move could lead to an uptick in operating income, assuming the increase is approved by the PSCSC. However, the company's decision to accelerate the return of excess deferred income tax benefits may offset some of the additional revenue, suggesting a balanced approach to financial management and customer impact.

The proposal's acceptance is not guaranteed and the rate review process could be lengthy and contentious. Investors should be aware of the potential volatility in the company's stock as the market reacts to news of the regulatory review and its outcome. The financial health of Duke Energy Carolinas, as well as its ability to maintain and potentially increase dividends, could be influenced by the efficiency and effectiveness of the proposed investments.

It is also essential to consider the competitive landscape. If Duke Energy Carolinas successfully implements its infrastructure improvements, it could gain a competitive advantage. Conversely, if the rate increase is perceived as excessive or if the improvements do not meet customer expectations, there could be reputational risks that impact the company's market share and investor confidence.

• Request reflects steps to keep pace with changes and better serve customers in the Palmetto State  
• Proposal is the company's first requested increase in retail base rates since 2018

GREENVILLE, S.C., Jan. 4, 2024 /PRNewswire/ -- Duke Energy Carolinas today asked South Carolina regulators to review its current rates – the first such review since 2018 – as the company continues working to increase system diversity and reliability, enhance the customer experience and meet future energy demands for more than 658,000 customers primarily in the Upstate region of South Carolina.

"We realize many of our customers are facing challenging times and we are committed to working to keep customer bills as low as possible," said Mike Callahan, Duke Energy's South Carolina president.

"We also know that our customers expect us to responsibly invest for the future to increase the reliability and resiliency of our system, help reduce outages, protect against damage from extreme weather and provide them with the level of service they expect. These investments are the main reason for the proposed rate increase," Callahan said.

To mitigate the requested rate increase filed with the Public Service Commission of South Carolina (PSCSC), the company proposes to accelerate the return of excess deferred income tax benefits resulting from the Federal Tax Cuts and Jobs Act of 2017 ("Tax Act"). This proposal more quickly returns the outstanding tax benefits due to customers, making the requested increase in annual retail revenues about 11.4%, or a $239 million increase, over the first two years that the new rates would be effective.

An additional overall increase of about 4.1% would occur after the first two years once the reduction for excess deferred income taxes expires. If the proposal to mitigate the requested increase is not approved, it would result in a requested annual revenue increase of $323 million, or overall increase of about 15.5%, starting in year one of newly effective rates.

If approved by the PSCSC, a typical residential customer using 1,000 kilowatt hours will see an increase of about 14.6% or $17.83 per month beginning Aug. 1, 2024. Beginning Aug. 1, 2026, residential rates would increase another 4.8%, resulting in an additional $10.25 per month.

Duke Energy has numerous current and proposed energy efficiency programs available to customers who would like to exercise more control over their usage to lower their bills, which could help minimize the impact of the requested increase. Customers struggling to pay their energy bills might also qualify for assistance from various government and nonprofit programs for utility bills and other household expenses. Duke Energy also offers programs and resources to help customers manage their usage to lessen the impact of rate changes, as well as flexible payment arrangements to help customers experiencing uncertainty. Additional customer support is available through the Share the Light Fund, a Duke Energy program that provides energy assistance.

To learn more about these programs, details of the company's proposal and the rate review process, visit duke-energy.com/SCCarolinasRates.

Duke Energy Carolinas

Duke Energy Carolinas owns 19,500 megawatts of energy capacity, supplying electricity to 2.8 million residential, commercial and industrial customers across a 24,000-square-mile service area in North Carolina and South Carolina.

Duke Energy (NYSE: DUK), a Fortune 150 company headquartered in Charlotte, N.C., is one of America's largest energy holding companies. Its electric utilities serve 8.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, and collectively own 50,000 megawatts of energy capacity. Its natural gas unit serves 1.6 million customers in North Carolina, South Carolina, Tennessee, Ohio and Kentucky. The company employs 27,600 people.

Duke Energy was named to Fortune's 2023 "World's Most Admired Companies" list and Forbes' "World's Best Employers" list. More information is available at duke-energy.com. The Duke Energy News Center contains news releases, fact sheets, photos and videos. Duke Energy's illumination features stories about people, innovations, community topics and environmental issues. Follow Duke Energy on Twitter, LinkedIn, Instagram and Facebook.

Contact: Ryan Mosier
24-Hour: 800.559.3853

 

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SOURCE Duke Energy Carolinas

FAQ

What is Duke Energy Carolinas' ticker symbol?

The ticker symbol for Duke Energy Carolinas is DUK.

Why is Duke Energy Carolinas requesting a rate increase?

Duke Energy Carolinas is requesting a rate increase to enhance system diversity, reliability, and customer experience while meeting future energy demands.

How does Duke Energy Carolinas plan to mitigate the rate increase?

Duke Energy Carolinas proposes to accelerate the return of excess deferred income tax benefits to mitigate the rate increase, prioritizing customer bill affordability and responsible investments for system reliability and resiliency.