Majority of parties reach proposed agreement in Duke Energy Carolinas rate review request

Source: 5/17/2024, Location: North America

Agreement supports company's efforts to increase system diversity, reliability and enhance the customer experience

Duke Energy Carolinas has reached a settlement agreement with almost all parties, including certain consumer, environmental and industrial groups in South Carolina, for its rate review request filed in January of this year – the first such request by the company since 2018.

If the agreement is approved by the Public Service Commission of South Carolina (PSCSC), the total increase will be approximately $240 million, which is about 26% less than the $323 million Duke Energy Carolinas requested to recover investments made to increase system diversity and reliability, enhance the customer experience and meet future energy demands for nearly 660,000 customers primarily in the Upstate region of South Carolina.

The increase will be reduced by approximately $84 million through July 31, 2026, to result in a net increase of approximately $156 million. The net increase reflects the company's proposal to mitigate the requested rate increase by accelerating over two years the return of excess deferred income tax benefits resulting from the Federal Tax Cuts and Jobs Act of 2017 ("Tax Act"). This reduction would expire after two years.

If approved by the PSCSC, a typical residential customer using 1,000 kilowatt hours will see an increase of $12.53 per month beginning Aug. 1, 2024. Beginning Aug. 1, 2026, residential rates would increase an additional $6.42 per month for a typical residential customer using 1,000 kilowatt hours.

Among other provisions, the agreement resolves recovery of new investments in highly efficient natural gas, nuclear, solar and hydroelectric units. The agreement also resolves recovery of the company's continued investments in the grid, its new corporate headquarters and environmental compliance costs in this case as well as allows Duke Energy Carolinas a return on equity of 9.94% and an equity component of the capital structure of 51.21%.

It also provides – at shareholder expense – $2 million to fund a collaborative of stakeholders focused on enhancing assistance for low-income customers as well as investments in weatherization programs.

The agreement was reached with the South Carolina Office of Regulatory Staff, the South Carolina Energy Users Committee, Southern Alliance for Clean Energy, Coastal Conservation League, Vote Solar, and the South Carolina Small Business Chamber of Commerce. While not signatories to the agreement, both Walmart and CMC Recycling do not object to approval of the agreement.

"We are taking steps to keep pace with and anticipate the changes occurring in our state," said Mike Callahan, Duke Energy's South Carolina president. "If approved, this agreement will support our efforts to diversify and enhance our system and continue our track record of operational excellence while keeping costs to customers as low as possible. We appreciate the parties involved thoughtfully considering the needs of our customers and our ability to continue investing in our state's booming economy."

The PSCSC will conduct an evidentiary hearing beginning May 20 to review the agreement and other issues in the rate review request.

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