Parties Reach Proposed Agreement in Duke Energy Carolinas Rate Review Request In South Carolina

Parties Reach Proposed Agreement in Duke Energy Carolinas Rate Review Request In South Carolina

May 17, 2024 10:51AM
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By David Dykes

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, Duke
Energy officials said.

If the agreement is approved by the Public Service
Commission of South Carolina (PSCSC), the total increase will be
approximately $240 million, about 26 percent 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. 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 percent and an equity component of the
capital structure of 51.21 percent.

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 don't 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."

Callahan added, "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, 2024, to review the agreement and other issues in the rate
review request.

Duke Energy Carolinas, a subsidiary of Duke Energy, owns
20,700 megawatts of energy capacity, supplying electricity to 2.9 million
residential, commercial and industrial customers across a 24,000-square-mile
service area in North Carolina and South Carolina.