Majority of parties reach proposed agreement in Duke Energy Carolinas rate review request in South Carolina

Rhea-AI Summary

Duke Energy Carolinas has reached an agreement with multiple stakeholders on its rate review request in South Carolina, which was filed in January 2024. The settlement proposes a rate increase of $240 million, about 26% less than the initial $323 million requested. The net increase will be around $156 million after accounting for $84 million in deferred tax benefits, effective until July 31, 2026.

If approved, residential customers using 1,000 kilowatt hours will see a monthly increase of $12.53 starting August 1, 2024, with an additional increase of $6.42 from August 1, 2026. The agreement includes recovery of investments in various energy units and grid improvements, with a return on equity of 9.94%. Furthermore, Duke Energy will invest $2 million in low-income assistance and weatherization programs. The Public Service Commission of South Carolina will review the agreement starting May 20, 2024.

Positive

• Agreement reached with multiple parties including consumer, environmental, and industrial groups.
• Rate increase of $240 million is 26% less than the initially requested $323 million.
• Net increase reduced to $156 million after accounting for deferred tax benefits.
• Investments in natural gas, nuclear, solar, and hydroelectric units included in the agreement.
• Agreement covers grid improvements and a new corporate headquarters.
• Return on equity set at 9.94%.
• Investments in low-income assistance and weatherization programs amount to $2 million.

Negative

• If approved, residential customers will see a significant rate increase of $12.53 per month starting August 1, 2024.
• Further rate increase of $6.42 per month from August 1, 2026.
• Total rate increase of $240 million could impact customer affordability.

News Market Reaction – DUK

+1.02%

1 alert

+1.02% News Effect

On the day this news was published, DUK gained 1.02%, reflecting a mild positive market reaction.

Data tracked by StockTitan Argus on the day of publication.

• Agreement supports company's efforts to increase system diversity, reliability and enhance the customer experience

GREENVILLE, S.C., May 17, 2024 /PRNewswire/ -- Duke Energy Carolinas has reached a settlement agreement with almost all parties, including certain consumer, environmental and industrial groups in South Carolina, for its rate review request filed in January of this year – the first such request by the company since 2018.

If the agreement is approved by the Public Service Commission of South Carolina (PSCSC), the total increase will be approximately $240 million, which is about 26% less than the $323 million Duke Energy Carolinas requested to recover investments made to increase system diversity and reliability, enhance the customer experience and meet future energy demands for nearly 660,000 customers primarily in the Upstate region of South Carolina.  

The increase will be reduced by approximately $84 million through July 31, 2026, to result in a net increase of approximately $156 million. The net increase reflects the company's proposal to mitigate the requested rate increase by accelerating over two years the return of excess deferred income tax benefits resulting from the Federal Tax Cuts and Jobs Act of 2017 ("Tax Act"). This reduction would expire after two years.

If approved by the PSCSC, a typical residential customer using 1,000 kilowatt hours will see an increase of $12.53 per month beginning Aug. 1, 2024. Beginning Aug. 1, 2026, residential rates would increase an additional $6.42 per month for a typical residential customer using 1,000 kilowatt hours.

Among other provisions, the agreement resolves recovery of new investments in highly efficient natural gas, nuclear, solar and hydroelectric units. The agreement also resolves recovery of the company's continued investments in the grid, its new corporate headquarters and environmental compliance costs in this case as well as allows Duke Energy Carolinas a return on equity of 9.94% and an equity component of the capital structure of 51.21%.

It also provides – at shareholder expense – $2 million to fund a collaborative of stakeholders focused on enhancing assistance for low-income customers as well as investments in weatherization programs.

The agreement was reached with the South Carolina Office of Regulatory Staff, the South Carolina Energy Users Committee, Southern Alliance for Clean Energy, Coastal Conservation League, Vote Solar, and the South Carolina Small Business Chamber of Commerce. While not signatories to the agreement, both Walmart and CMC Recycling do not object to approval of the agreement.

"We are taking steps to keep pace with and anticipate the changes occurring in our state," said Mike Callahan, Duke Energy's South Carolina president. "If approved, this agreement will support our efforts to diversify and enhance our system and continue our track record of operational excellence while keeping costs to customers as low as possible. We appreciate the parties involved thoughtfully considering the needs of our customers and our ability to continue investing in our state's booming economy."

The PSCSC will conduct an evidentiary hearing beginning May 20 to review the agreement and other issues in the rate review request.

Duke Energy Carolinas
Duke Energy Carolinas, a subsidiary of Duke Energy, owns 20,700 megawatts of energy capacity, supplying electricity to 2.9 million residential, commercial and industrial customers across a 24,000-square-mile service area in North Carolina and South Carolina.

Duke Energy
Duke Energy (NYSE: DUK), a Fortune 150 company headquartered in Charlotte, N.C., is one of America's largest energy holding companies. The company's electric utilities serve 8.4 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, and collectively own 54,800 megawatts of energy capacity. Its natural gas unit serves 1.7 million customers in North Carolina, South Carolina, Tennessee, Ohio and Kentucky.

Duke Energy is executing an ambitious clean energy transition, keeping reliability, affordability and accessibility at the forefront as the company works toward net-zero methane emissions from its natural gas business by 2030 and net-zero carbon emissions from electricity generation by 2050. The company is investing in major electric grid upgrades and cleaner generation, including expanded energy storage, renewables, natural gas and advanced nuclear.

More information is available at duke-energy.com and the Duke Energy News Center. Follow Duke Energy on Twitter, LinkedIn, Instagram and Facebook, and visit illumination for stories about the people and innovations powering our energy transition.

Forward-Looking Information
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "outlook," "guidance," and similar expressions. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These risks and uncertainties are identified and discussed in Duke Energy's Form 10-K for the year ended December 31, 2023, and subsequent quarterly reports filed with the Securities and Exchange Commission ("SEC") and available at the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy expressly disclaims an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

24-Hour media line: 800.559.3853

View original content to download multimedia:https://www.prnewswire.com/news-releases/majority-of-parties-reach-proposed-agreement-in-duke-energy-carolinas-rate-review-request-in-south-carolina-302148979.html

SOURCE Duke Energy

FAQ

What is the proposed rate increase for Duke Energy Carolinas in South Carolina?

The proposed rate increase is $240 million, which is 26% less than the initial request of $323 million.

When will the rate increase for Duke Energy Carolinas take effect?

If approved, the rate increase will begin on August 1, 2024.

How much will residential customers' bills increase with Duke Energy Carolinas' new rates?

Residential customers using 1,000 kilowatt hours will see an increase of $12.53 per month starting August 1, 2024, and an additional $6.42 per month from August 1, 2026.

What investments are included in Duke Energy Carolinas' rate review agreement?

The agreement includes investments in natural gas, nuclear, solar, hydroelectric units, and grid improvements.

What is the return on equity agreed upon for Duke Energy Carolinas?

The return on equity is set at 9.94%.

What additional support is Duke Energy Carolinas providing under the new agreement?

Duke Energy Carolinas is providing $2 million for low-income assistance and weatherization programs.