CHARLOTTE, N.C. - Duke Energy Carolinas, a subsidiary of Duke Energy, has reached an agreement with the North Carolina Public Staff concerning the utility's request to raise base rates.
The settlement includes a significant reduction in the rate increase to customers, while providing a fair return for the company's investors.
Under the terms of the settlement, the increase to the company's revenue is reduced to approximately $205 million in the first two years, with customer rates increasing an additional $30 million (for a cumulative increase of approximately $235 million) beginning in year three.
Duke Energy originally requested an average increase in retail revenues of 9.7 percent or approximately $446 million.
To further reduce the impact to its customers, the company has agreed to implement the rate increase over time.
During the first two years, the average increase will be approximately 4.5 percent. After that, rates will increase by an additional 0.6 percent for a total average increase of approximately 5.1 percent.
To ease the impact of the rate increase, the company has agreed to donate $10 million from its shareholders to assist low-income customers.
The settlement agreement is subject to review and approval by the North Carolina Utilities Commission (NCUC).
"The agreement represents an effective balance between reducing the rate impact to customers and allowing the company to begin recovering the cost of investments made for the benefit of customers. We have made significant investments to replace older, less efficient facilities with new state-of-the art power plants that are more environmentally friendly, said Paul Newton, Duke Energy's North Carolina state president. These new facilities will serve our customers for decades to come.
"At the same time, we recognize the timing of the increase is particularly challenging for some of our customers. Part of today's settlement is a shareholder donation of $10 million to help provide energy assistance to low-income customers in our North Carolina service territory," said Newton. "These funds are in addition to assistance already provided through programs like Share the Warmth."
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 seek new base rates until 2015 or beyond, absent situations such as incurring costs for new generation or complying with new governmental regulations.
The NCUC is conducting hearings around the state to gain public input on the rate increase proposal. On July 8, the commission will hold an evidentiary hearing in Raleigh 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 Docket No. E-7, Sub 1026 on the North Carolina Utilities Commission website.
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: www.duke-energy.com.