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Duke Energy Seeks Rate Hike for All Customers
Added 02-05-13
 

Duke Energy Carolinas asked the North Carolina Utilities Commission Feb. 4, 2013 to approve rate increases ranging from 11.8 for residential customers to 5.3 percent for industrial customers. If approved the new rates would become effective in September.

The request that Duke made to the Utilities Commission calls for an average increase of 11.8 percent for residential customers, 9.6 percent for commercial customers and 5.3 percent for industrial customers.

Duke said 90 percent of the increase in rates will go to cover capital investments the company has already made, including a new natural gas plant at Dan River and upgrades to a plant in Mooresboro.

Both the Duke and Progress subsidiaries have been retiring coal plants, largely in favor of new and expanded natural gas plants that have lower emissions and take advantage of steep declines in gas prices. Duke said last week that it will retire the Buck plant in Rowan County and the Riverbend plant in Gaston County in April, about two years sooner than initially scheduled.

Duke’s North Carolina request is subject to negotiation with customer groups and the N.C. Utilities Commission’s Public Staff, which advocates for customers. Duke cut its last rate request, for a 15 percent hike, by more than half in agreeing to a 7.2 percent increase in January 2012.

“We’re going to try to make sure they get only absolutely what they need,” as many Duke customers struggle in the tepid economy, said Robert Gruber, the Public Staff’s executive director.

The Public Staff is likely to challenge Duke on two key issues. The first is the return on common equity, or profit margin based on the value of its power plants and other assets, that the commission allows.

Duke has asked for a return of 11.25 percent, up from the 10.5 percent now. The Public Staff is likely to recommend a return of about 9.7 percent, Gruber said.

The Staff also disagrees with Duke on how costs are allocated to different customer classes in setting rates. Duke bases them on the hottest hour of summer, when demand for electricity peaks. The Public Staff advocates using both summer and the lower winter peaks with an annual average.

Savings from its merger last year with Progress Energy shaved $25 million off the revenue request, Duke said. Those savings don’t include reduced fuel costs, which are passed separately to customers.

 

 

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