Customers will see new storm recovery line item on bills starting in December, stemming from historic storm repairs in 2018-19.
Securitization, enabled by Senate Bill 559 and approved by N.C. Utilities Commission in 2019 rate cases, reduced storm recovery costs by 35%.
CHARLOTTE, N.C. – Duke Energy customers in North Carolina will save $300 million in repair costs from a series of historic storms in 2018 and 2019 thanks to innovative legislation allowing the company to securitize the costs.
Duke Energy Progress (DEP) residential customers using 1,000 kWh per month will save about 37% compared to traditional storm cost recovery, with bills increasing $2.44 per month. For Duke Energy Carolinas (DEC) residential customers using 1,000 kWh per month, the estimated bill increase will be 49 cents per month – a 35% savings. The line item will appear as a “storm recovery charge” beginning in December bills.
“Our first priority is to safely restore service to our customers, which we achieved quickly and efficiently, substantially limiting outage time,” said Stephen De May, Duke Energy’s North Carolina president. “We are also constantly mindful of customer bills, so we’re very pleased this new cost recovery tool enabled us to drastically reduce storm repair costs for our customers.”
The customer savings are a result of Senate Bill 559, passed in November 2019, allowing Duke Energy to securitize the costs – in other words, to get paid back for its storm repairs by issuing low-interest bonds. Issued on Nov. 24, the 20-year bonds include storm recovery costs for hurricanes Florence, Michael and Dorian and Winter Storm Diego in North Carolina – an unprecedented series of storms that caused extensive damage to homes and businesses.
The destruction required Duke Energy to completely rebuild parts of the electrical system to restore power to customers. For example, in the aftermath of Hurricane Florence alone, the company had 142 substations and 53 transmission lines out of service, as well as more than 220 miles of downed wire, approximately 5,700 downed poles and 2,200 damaged transformers across the Carolinas system. Duke Energy earned industry awards for the speed of its response.
In the DEP and DEC rate case orders issued earlier this year, the North Carolina Utilities Commission (NCUC) agreed the storm recovery costs were prudent and that securitization would result in lower overall costs for customers.
In close collaboration with the NCUC Public Staff, Duke Energy successfully completed $1 billion in storm recovery bond financings last month; the total cost to customers including principal and interest is $1.3 billion over the next 20 years. Duke Energy gained additional savings by securing 20-year bonds, increasing customer savings to 35% rather than the original 30% projected under 15-year bonds.
Securitization is a financing option used by utilities to recover unexpected costs for extraordinary circumstances while simultaneously saving customers money. Under traditional storm recovery methods, the cost to Duke Energy’s North Carolina customers for Florence, Michael, Dorian and Diego would have been about $1.6 billion.
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 7.9 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, and collectively own 51,000 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 27,500 people.
Duke Energy is executing an aggressive clean energy strategy to create a smarter energy future for its customers and communities – with goals of at least a 50% carbon reduction by 2030 and net-zero carbon emissions by 2050. The company is a top U.S. renewable energy provider, on track to own or purchase 16,000 megawatts of renewable energy capacity by 2025. The company also is investing in major electric grid upgrades and expanded battery storage, and exploring zero-emitting power generation technologies such as hydrogen and advanced nuclear.
Duke Energy was named to Fortune’s 2021 “World’s Most Admired Companies” list and Forbes’ “America’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.
Media contact: Bill Norton