RALEIGH, N.C. - Progress 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.
Under the terms of the settlement, the net increase to customers would be $151.4 million the first year and $183 million the second year, or an average increase of 5.7 percent for all customers by the second year.
The increase in year two accounts for $31.4 million in costs associated with the ongoing construction of new natural gas combined-cycle generation at the Sutton Plant in Wilmington, N.C.
Progress Energy originally requested an average increase in retail revenues of 11 percent, or $359 million.
- The settlement includes a return on equity (ROE) of 10.2 percent. Progress Energy Carolinas had originally requested 11.25 percent.
- The settlement includes a capital structure of 53 percent equity and 47 percent debt. The company had requested a 55.4 percent equity component.
- PEC will contribute an additional $20 million to help low income customers in North Carolina pay their energy bills and to provide training that improves worker access to jobs and increases the quality of the workforce. The company will be allowed to reduce its cost of removal liability by $20 million.
- The settlement also includes support for the company's proposed nuclear levelization accounting and for a new coal inventory rider allowing the company to recover carrying costs on coal inventory levels above those included in base rates.
All issues were not settled with the Public Staff. These unresolved issues will be decided by the North Carolina Utilities Commission (NCUC). Key matters left open for commission decision include:
- The allocation of the overall rate increase among customer classes (i.e. residential, commercial and industrial)
- The company's change to a single coincident peak cost allocation factor
- The industrial economic recovery rider proposed by the company
- Resolution of the deferral request for combined cycle units at the Smith Complex in Richmond County, N.C. (currently pending in another docket)
The NCUC is conducting hearings around the state to gain public input on the rate increase proposal. On March 18, the commission will hold a hearing in Raleigh to consider the settlement and the other unresolved issues.
The company has requested that new rates go into effect June 1, 2013, for Progress Energy Carolinas customers.
"This agreement with the Public Staff is an important and positive step in this proceeding," said Paul Newton, Duke Energy's North Carolina state president. "The proposed settlement balances the needs of our customers and our investors. We understand there is never a good time to increase rates. However, we believe this settlement allows 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."
Duke Energy Carolinas, which also serves North Carolina, has a separate rate increase pending before the commission.
Public hearings on that case are set for May and June.
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 about the company is available at: www.duke-energy.com.