Duke Energy Carolinas Reaches Settlement Agreement on Rate Increase and Incentive for Energy Efficiency Efforts in South Carolina November 24, 2009
CHARLOTTE, N.C. -
- Agreement would raise general rates in South Carolina for the first time since 1991; average bottom line impact to customers would be 1.7 percent.
- Proposed settlement includes the Office of Regulatory Staff, which represents and balances interests of consumers, the financial integrity of public utilities and the economic development of South Carolina.
- Compromise balances the company’s need to maintain its strong financial position with challenges facing customers during the economic downturn.
Duke Energy Carolinas today filed a proposed settlement with the Office of Regulatory Staff (ORS) and the South Carolina Energy Users Committee (SCEUC) in the company’s request to raise general rates in South Carolina.
In addition, ORS, SCEUC and Southern Environmental Law Center, Southern Alliance for Clean Energy, Environmental Defense Fund, Natural Resources Defense Council, and the South Carolina Coastal Conservation League have agreed to the appropriate financial incentive for utility efforts to help customers save energy and money.
The proposed settlement must be reviewed by the Public Service Commission of South Carolina in a hearing scheduled to begin on Nov. 30, 2009. If approved, changes to rates are expected to be implemented by Feb. 1, 2010.
“Since our last general rate increase in 1991, the company has invested more than $12 billion in the energy infrastructure that serves our Carolinas customers. We recover that investment by adjusting the rates we charge,” said Jim Turner, Duke Energy’s group executive, president and chief operating officer of U.S. Franchised Electric and Gas. “We believe this agreement represents a reasonable and constructive compromise that balances today’s unique economic challenges with our obligation to ensure a reliable, affordable and clean energy supply for the future.”
If approve, the terms of the agreement outline a general rate increase of $74.1 million, or an average of 5.2 percent, to be implemented by Feb. 1, 2010. However, additional steps outlined in the proposal reduce the near-term net increase to $24 million, creating a bottom-line average impact to customer bills in 2010 of 1.7 percent.
Highlights of the proposed settlement include:
- 11 percent Return on Equity, with rates set at 10.7 percent and a capital structure of 53 percent equity.
- Riders relating to demand-side management over-collections and insurance distributions, when netted against the proposed general rate increase, significantly reduce the total impact to customer bills.
- New riders to recover costs associated with higher coal inventories and actual pension cost amounts.
- Contributions into a storm reserve of $5 million per year up to $50 million.
- The company will not file another rate case in South Carolina before 2011, with any changes to rates taking effect no earlier than 2012.
Agreement on Energy Efficiency Plan
The proposed agreement also identifies the appropriate compensation to Duke Energy Carolinas for its energy efficiency efforts in South Carolina and proposes a new rider to be added to customer bills. Environmental intervenors join the ORS and SCEUC in supporting the company’s modified save-a-watt model.
“Since proposing our original save-a-watt model a few years ago, we’ve received feedback from key stakeholders and modified our approach to improve transparency and set even more aggressive energy-saving targets,” said Brett Carter, president of Duke Energy Carolinas.
Additional highlights of the save-a-watt agreement include earnings caps on the company, and third-party verification to measure energy savings. Under the proposal, the ORS will also hire an evaluator to monitor the results calculated by the company’s outside experts. “What makes our approach to energy efficiency so unique is that we’re only rewarded if we’re successful,” said Carter.
Money Saving Opportunities for Customers
Duke Energy Carolinas actually began offering its new portfolio of energy efficiency programs to customers back in June 2009. The average residential customer can save about $5 a month by participating in the appropriate programs. For more information, go to http://www.duke-energy.com/south-carolina/savings.asp.
Duke Energy Carolinas
Duke Energy Carolinas owns nuclear, coal-fired, natural gas and hydroelectric generation. That diverse fuel mix provides approximately 19,000 megawatts of electricity capacity to approximately 2.4 million customers in a 22,000-square-mile service area of North Carolina and South Carolina.
Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.
|Contact:||Duke Energy: Jason Walls|