Keeping energy affordable
As a regulated utility, Duke Energy works to balance the company’s obligation to provide safe, reliable and increasingly clean energy with the need to keep rates affordable for our customers.
Affordable rates for homes, small businesses and large industry are key to economic growth in the communities we serve. Our competitive rates help make our service territories attractive for domestic and international businesses looking to relocate.
Over the past several years, Duke Energy has been making significant investments to install advanced energy technologies and replace aging infrastructure. These changes include replacing older, less efficient coal plants with new, more efficient advanced-coal and natural gas-fired facilities. We have also modernized our transmission and distribution systems with digital technology. Those investments will reduce emissions and ensure a reliable and efficient supply of energy for future generations.
But those improvements cost money. Periodically, through state-by-state rate cases and other mechanisms, we recover the costs we incur to provide cleaner, more efficient and more reliable energy to our customers.
In October 2012, Progress Energy Carolinas (now Duke Energy Progress) filed for its first base-rate increase in North Carolina in 25 years. We have since reached a settlement with the N.C. Public Staff to increase rates by an average of 5.7 percent for all customers over two years. A decision by the N.C. Utilities Commission (NCUC) on the settlement is pending. We have requested that the new rates go into effect June 1, 2013, for Duke Energy Progress customers.
Duke Energy Carolinas implemented a 7 percent increase in February 2012, and filed in February 2013 for another 9.7 percent average increase, to take effect later in 2013. This rate increase and its timing are also subject to the approval of the NCUC.
In January 2012, the S.C. Public Service Commission (SCPSC) approved an increase in electric rates for Duke Energy’s South Carolina customers. The average rate increase was 5.98 percent and went into effect Feb. 6. Duke Energy Carolinas filed for an approximate 15 percent rate increase with the SCPSC on March 18. If approved, the rates would go into effect in September. Duke Energy Progress plans to file for a S.C. rate increase later in the year.
The Florida Public Service Commission (FPSC) approved the company’s request to lower customers’ bills by about 6 percent in 2013. The change will result in annual savings of more than $85 annually for a typical residential customer using 1,000 kilowatt-hours per month. The reduction includes a $129 million refund to customers related to the outage at the Crystal River Nuclear Plant. The FPSC also approved provisions for rate certainty related to the company’s proposed Levy County nuclear project and base rates.
In June 2012, Duke Energy Ohio filed notice with the Public Utilities Commission of Ohio (PUCO) requesting an increase in electric distribution and natural gas service rates. An April 2013 agreement with intervening parties, including the Staff of the PUCO, would increase electric distribution rates by $49 million, an average annual increase of 2.9 percent. If approved by the PUCO, we would expect the new rates to take effect by mid-2013. Issues related to the natural gas distribution case are still pending.
As a Fixed Resource Requirement (FRR) entity in our Ohio transmission area, we are required to maintain and provide the necessary capacity to meet load requirements within a specific geography. In July 2012, the PUCO approved a new state compensation mechanism that allows utilities with FRR capacity obligations to recover their embedded costs for capacity. As a result, Duke Energy Ohio has filed a request seeking an additional $728 million to recover past investments to modernize our power system and the rising cost of providing service to our customers. PUCO proceedings related to this request and the rate cases are under way.
In December 2012, the Indiana Utility Regulatory Commission approved a settlement agreement, with some modifications, between Duke Energy Indiana and some of the state’s key consumer groups regarding the company’s Edwardsport coal gasification plant. The decision caps the construction costs customers will pay for the advanced-technology plant at approximately $2.6 billion, plus additional financing charges after June 2012. The project will have a 14 to 16 percent overall average rate impact, but about 9 percent is already part of customer bills. The remaining increase is expected to be reflected in bills by early 2014.
Environmental requirements, new nuclear regulations and the need to replace aging infrastructure all add up to a rising cost environment. Duke Energy customers, like utility customers across the U.S., will continue to see higher prices in the near term.
We know there is never a good time to raise rates. Duke Energy is committed to minimizing the financial impact on our customers through aggressive cost management, efficient operations, customer programs and innovative thinking about our business.
The company’s energy efficiency programs help customers control their energy use and cut costs. Duke Energy also provides payment options and other assistance to customers who have trouble paying their bills.