Electric utility Duke Energy Corp. (DUK) said Thursday that the North Carolina Utilities Commission or NCUC has approved the company's subsidiary Duke Energy Progress' proposed settlement in its request to increase electric rates for its North Carolina customers.
Under the terms of approval, the total rate increase of $178.7 million, representing an average increase of 5.5 percent for all customers, will be implemented over a period of two years.
The NCUC is an agency of the State of North Carolina created to regulate the rates and services of all public utilities in North Carolina. It is the oldest regulatory body in state government.
The approved settlement was agreed upon by Duke Energy Progress and the North Carolina Public Staff, which represents the public interest in a rate proceeding. Duke Energy Progress had originally requested an average increase in retail revenues of 11 percent, or $359 million.
Paul Newton, Duke Energy state president of North Carolina said, "We are pleased the N.C. Utilities Commission has approved our settlement in this case. We believe that the settlement reflects a balance between the needs of our company and those of our customers."
Duke Energy Progress provides electricity and related services to nearly 1.5 million customers in North Carolina and South Carolina. The Raleigh, North Carolina-based company serves a territory encompassing more than 34,000 square miles including the cities of Raleigh, Wilmington and Asheville in North Carolina as well as Florence and Sumter in South Carolina.
Duke Energy noted that the electric rates will increase by $147.4 million, or an average of 4.5 percent, beginning June 1, 2013. Rates will increase by an additional $31.3 million, or 1 percent, beginning June 1, 2014. The second-year increase accounts for $31.3 million in costs associated with the construction of new natural gas combined-cycle generation at the Sutton Plant in Wilmington, N.C.
Duke Energy said that the approved rates include a return on equity or ROE of 10.2 percent and a capital structure of 53 percent equity and 47 percent debt.
According to Duke Energy, the bill for an average residential customer using 1,000 kilowatt-hours or kWh of electricity per month would increase to $111.39 from the current $104.06. This includes an increase in the basic customer charge to $11.50 per month from the current $6.75.
As part of the approved settlement, Duke Energy Progress will contribute an additional $20 million to help low-income customers in North Carolina pay their energy bills and to provide training that will improve worker access to jobs as well as increase the quality of the workforce. Additionally, the company will be allowed to reduce its cost of removal liability by $20 million.
The NCUC has also approved Duke Energy Progress' proposed nuclear levelization accounting as well as a new coal inventory rider that allows the company to recover carrying costs on coal inventory levels above those included in base rates.
Meanwhile, Duke Energy Carolinas, which also serves customers in North Carolina, has a separate rate increase pending before the commission. Public hearings on that case are being held in May and June, with an evidentiary hearing before the NCUC scheduled for July 8.
DUK closed Thursday's regular trading session at $67.31, up $0.16 or 0.24 percent on a volume of 3.95 million shares.
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