RALEIGH, N.C. - Reflecting the cost of building state-of-the-art, low-emission power generation, as well as higher operating expenses, Progress Energy Carolinas, a subsidiary of Duke Energy, today filed a request to increase North Carolina retail rates – the company's first general rate increase request since 1987.
In a filing with the N.C. Utilities Commission (NCUC), Progress Energy Carolinas seeks to increase annual base revenues by approximately $387 million, or an average of 12 percent.
A corresponding change in the portion of retail rates that pays for energy-efficiency and demand-side management programs would reduce the revenue request to $359 million per year, or an average of approximately 11 percent.
The proposed increase would raise residential rates more than commercial and industrial rates, more accurately reflecting the cost of serving residential customers.
The total net residential increase, as proposed, would average 14.2 percent. The bill for an average residential customer using 1,000 kilowatt-hours (kWh) per month would increase to $119.94 from the current $105.15. That includes an increase in the standard customer charge to $13.50 per month from the current $6.75.
The average net increase for commercial and industrial customers would be about 9 percent.
The largest portion of the request is for investments made to modernize the power system.
Progress Energy Carolinas is retiring 12 coal-fired units at five sites in the Carolinas, representing more than 1,660 megawatts of generating capacity, and replacing them with low-emission, natural gas-fueled combined-cycle plants.
The company has invested more than $1.3 billion in bringing two gas-fueled plants online in the last 16 months in Richmond and Wayne counties (N.C.). A third combined-cycle plant is under construction near Wilmington, N.C., and is scheduled for completion in late 2013.
Since the last general rate case in North Carolina filed after the Harris Nuclear Plant came online in Wake County in 1987 Progress Energy and its predecessor, Carolina Power & Light, have invested nearly $11 billion in the power systems that serve 1.3 million households and businesses in North Carolina. Since 1987, the utility's customer base has grown by 86 percent, adding more than 600,000 households and businesses.
The company has invested in a number of additional gas-fueled power plants over the last two decades, and has made significant investments in the transmission and distribution systems that span more than half of North Carolina's 100 counties all without raising general rates.
Those investments have helped Progress Energy Carolinas achieve a reliability rating of 99.97 percent, ranking among the top-performing utilities in the Southeast, while maintaining rates below the national average.
The company's filing requests that new rates take effect in mid-2013. The schedule for additional filings, public hearings and other elements of the rate request will be determined by the NCUC.
"We know there's never a good time to seek a rate increase, and we have worked hard to maintain rate stability while providing excellent service to our customers," said Brett Carter, Duke Energy state president - North Carolina.
"The investments we have made and continue to make in the system will ensure electricity remains reliable and affordable, even as we continue to make it increasingly clean for the future. We are committed to minimizing the impact of increased costs through energy-efficiency programs tailored to our customers' needs and assistance for low-income consumers," he added.
The recently merged companies include two N.C. utilities, Progress Energy Carolinas and Duke Energy Carolinas. The rate request filed today affects Progress Energy Carolinas customers only.
Progress Energy Carolinas expects to file a base rate request in South Carolina in 2013. As previously announced, Duke Energy Carolinas expects to file general rate cases in both Carolinas in the coming months.
The increased revenue request has been planned for some time and is not triggered by the recent merger of Progress Energy and Duke Energy. The request does not seek recovery of employee severance costs associated with the merger.
The merger will provide $650 million in guaranteed savings over five years for Carolinas customers (through fuel purchasing and jointly dispatching Carolinas power plants) and will help to mitigate the impact of future rate increases by making the utilities more efficient in day-to-day operations.
The base rate represents the largest portion of retail customer rates. Other components, including the cost of fuel, energy-efficiency programs and renewable energy investments, are adjusted annually by the NCUC to reflect changes in costs. Those costs, on which the company makes no profit, have risen and fallen several times in the last 25 years.
The company's request proposes an allowed return on common equity (ROE) of 11.25 percent (current allowed ROE in North Carolina is 12.75 percent) with a 55.4 percent common equity component. The allocation of North Carolina retail rate base is expected to be approximately $6.9 billion through the date of the hearings.
Mitigating the effects
Progress Energy Carolinas is committed to helping customers mitigate the effects of increased electricity costs through energy-efficiency programs and assistance for low-income customers.
The company has developed more than a dozen new energy-efficiency programs over the last three years, helping customers save more than 357 million kWh since 2009 (the equivalent annual energy consumption of 25,000 households).
The company also helps customers with payment plan options and has provided more than $21 million since 1982 to help families in crisis through the Energy Neighbor Fund.
Progress Energy Carolinas
Progress Energy Carolinas, a subsidiary of Duke Energy (NYSE: DUK), provides electricity and related services to nearly 1.5 million customers in North Carolina and South Carolina. The company is headquartered in Raleigh, N.C., and serves a territory encompassing more than 34,000 square miles, including the cities of Raleigh, Wilmington and Asheville in North Carolina and Florence and Sumter in South Carolina. More information is available at www.progress-energy.com.
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 is available at: www.duke-energy.com.