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
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
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
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.