Duke Energy South Carolina Rate Review Request
How we're building a smarter, more reliable energy future for the Palmetto State.
The energy sector, particularly in the Southeast, is in a period of transformation and profound change driven by technological
advancements, strong economic and population growth, transportation electrification, environmental and regulatory mandates, an aging generation fleet, fuel supply challenges and opportunities, energy security and resiliency efforts, as well as changing customer expectations.
At Duke Energy Carolinas, we are taking steps to anticipate and keep pace with the changes occurring in the Palmetto State to better serve our customers.
On Jan. 4, 2024, Duke Energy Carolinas filed the utility’s first base rate review request in five years in South Carolina. Recent investments made to increase system diversity and reliability, enhance the customer experience and meet tomorrow’s challenges today for more than 658,000 customers primarily in the Upstate region of South Carolina are the primary reasons behind the request.
The Public Service Commission of South Carolina (PSCSC) will ultimately determine what’s appropriate for customer rates based on a long-standing and very transparent public process for reviewing rate increase requests.
Why now?We know electricity is a significant monthly expense for many customers and no one wants to see rising electric bills. This is particularly true now as a rising-cost environment across many sectors of our economy impacts consumers and businesses throughout South Carolina and the nation.
That’s why we work every day to keep costs as low as possible for our customers and to avoid an increase to customer bills whenever possible, and we aggressively manage costs to delay the need to increase rates. We are committed to helping customers who struggle to pay for basic needs with programs and tools to reduce their energy costs and keep their power on.
However, the conditions under which we operate have continued to evolve since the company’s last base rate change request in 2018. This changing environment challenges our ability to continue to provide the level of electric service our customers expect. These challenges affect the energy industry as a whole and the investments we have made and must continue to make are designed to keep pace with evolving customer needs and expectations.
Recognizing these challenges, the company is committed to continue providing safe, reliable, affordable electricity from diverse sources to our customers with high quality customer service, both today and in the future.
To achieve this, we must continue to invest in improving our grid and protecting it from extreme weather; the orderly transition to a clean, secure energy future; ways to make the energy we produce more diverse, more resilient, and even more efficient for the benefit of our customers; and new technologies to enhance the customer experience.
We are taking steps to keep pace with and anticipate the changes occurring in our state, and these investments are the main reason for the proposed rate increase.
Diversification and enhancement of the system
- We are taking on the extraordinary task of planning to orderly retire aging generation and replace it with new generation to meet rapidly increasing customer demand for electricity, all while maintaining or improving system reliability.
- The voices of our customers and our investors have become increasingly clear – they expect us to invest in cleaner resilient, reliable power and are making economic growth decisions based on those expectations. We have made investments in a diverse mix of generation resources like highly efficient natural gas plants, nuclear and solar, as well as supported cleaner emerging technologies like vehicle electrification.
- The reliable and safe operation of our electric system in our communities continues to be foundational to serving our customers.
- We are seeing trends affecting our grid that indicate more must be done to improve the energy infrastructure required to meet the needs of our customers. We are making strategic investments to harden the grid and continuously improve our response to severe weather events.
Customer service and program enhancements
- Customers today want a new and improved experience with more streamlined options and versatility, driven by information about how they consume energy and by tools that help them manage their consumption.
- This includes investments taken to continuously improve the service our customers receive from us, and the interactions they have with us.
Positioning for the future and meeting the challenges of tomorrow
- Duke Energy continuously reviews all aspects of its business and simultaneously looks for opportunities to operate in the most efficient way possible – the ultimate goal being to benefit and better serve our customers.
A base rate review request – or rate case – is a very public regulatory review process, overseen by the Public Service Commission of South Carolina (PSCSC), in which a utility must demonstrate why a proposed increase in rates is needed. The process considers volumes of data and thousands of pages of testimony – including input from the public. Over a number of months, this independent, public process helps ensure transparency and fair rates based on the costs the utility incurs to serve its customers.
First, we have to demonstrate to the PSCSC exactly why the increase in rates is needed. The commission thoroughly reviews our request and holds public hearings to allow customers to comment. Within the next few months, the commission will conduct an evidentiary hearing and consider our written and oral testimony, along with differing viewpoints representing customer groups and other stakeholders. We expect a decision by summer 2024. If approved, new rates will go into effect Aug. 1, 2024, and again on Aug. 1, 2026.
A customer’s electric bill is made up of two primary components:
The base rate covers our cost to operate and maintain the electric system, including the opportunity to earn a fair return for investors. Base rates are adjusted periodically to more closely align the rates paid by customers with the costs to serve them.
The fuel component, which increases or decreases annually on Nov. 1, covers our costs for coal, natural gas, uranium and other fuel-related items to keep our power plants running. The prices reflect the actual costs we incur to fuel our power plants. The fuel rate is a pass-through to customers and doesn’t include any profit.
Yes. As part of the evaluation process, the PSCSC will hold public hearings to hear directly from customers on the request to increase their bills. Public hearings are an important part of this process. Customers can also provide written comments to the PSCSC.
- To mitigate the requested rate increase filed with the Public Service Commission of South Carolina (PSCSC), the company proposes to accelerate the return of excess deferred income tax benefits resulting from the Federal Tax Cuts and Jobs Act of 2017 (“Tax Act”). This proposal more quickly returns the outstanding tax benefits due to customers, making the requested increase in annual retail revenues about 11.4%, or a $239 million increase, over the first two years that the new rates would be effective.
- An additional overall increase of about 4.1% would occur after the first two years once the reduction for excess deferred income taxes expires. If the proposal to mitigate the requested increase is not approved, it would result in a requested annual revenue increase of $323 million, or overall increase of about 15.5%, starting in year one of newly effective rates.
- If approved by the PSCSC, a typical residential customer using 1,000 kWh will see an increase of about $17.83 per month, beginning Aug. 1, 2024. Beginning Aug. 1, 2026, residential rates would increase an additional $10.25 per month.
Duke Energy has numerous current and proposed energy efficiency programs available to customers who would like to exercise more control over their usage to lower their bills, which could help minimize the impact of the requested increase. Customers struggling to pay their energy bills might qualify for assistance from various government and nonprofit programs for utility bills and other household expenses. Duke Energy Carolinas also offers programs and resources to help customers manage their usage to mitigate the impact of rate changes, as well as flexible payment arrangements to help customers experiencing uncertainty, to include flexible payment options including the Share the Light Fund®, a Duke Energy Carolinas program that provides energy assistance.
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