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Duke Energy Carolinas files S.C. rate increase request

2013-03-18 11:38 ET - News Release

CHARLOTTE, N.C., March 18, 2013 /PRNewswire/ -- Duke Energy Carolinas today filed a request with the Public Service Commission of South Carolina (PSCSC) to increase electric rates by about $220 million, for an overall increase of 15.1 percent.

(Logo: http://photos.prnewswire.com/prnh/20040414/DUKEENERGYLOGO )

More than half of the request is driven by capital investments that Duke Energy Carolinas has made in the electric system that serves 540,000 households and businesses in South Carolina.

"As part of our ongoing fleet-modernization plan, we have recently built and put into service two new, state-of-the art power plants that will provide cleaner electricity and serve our customers reliably for decades to come," said Clark Gillespy, Duke Energy's South Carolina state president.

"Our new Dan River natural gas plant does twice the job of the retired Dan River coal plant, and it does so with significantly lower emissions," Gillespy said. "Meanwhile, new advanced technology at the Cliffside Steam Station, completed at the end of 2012, removes 99 percent of sulfur dioxide emissions and 90 percent of nitrogen and mercury emissions."

The following chart illustrates the proposed average rate increase by customer class:

Customer Class

Average Rate Increase Percentage

Residential

16.3%

Commercial

14.0%

Industrial

14.4%

Lighting

15.9%

This table shows the average impact of the proposed changes for each customer class.  The specific increase or decrease to individual customers will vary depending upon the rates they pay and other factors.

Today, a residential customer who uses 1,000 kilowatt-hours (kWh) of electricity per month pays $100.45. If the company's rate increase is approved as filed, that bill will increase by $17.83.

"Electric service for our customers is an excellent value. For our typical customers, the daily cost of powering their homes is somewhere between the price of a gallon of gas and a premium cup of coffee," Gillespy said. "Even with the proposed increase, Duke Energy Carolinas' rates would remain below the national average. When adjusted for inflation, our customers are still paying less for electricity than they did in 1991."

Why Raise Rates?
The proposed rate increase is needed to begin paying the company back for money it has already invested in new, cleaner and more efficientpower plants and equipment, and to comply with increasing state and federal regulations.

Examples of Duke Energy's electric system investments include:

  • Dan River Combined Cycle Station in Eden, N.C. — This 620-megawatt plant uses cleaner, lower-cost natural gas to replace a similar amount of older, less efficient coal-fired generation. The capital cost included in this rate case is $673 million.
  • Cliffside Steam Station Unit 6 in Mooresboro, N.C. — This 825-megawatt coal plant employs state-of-the-art emission controls to remove 99 percent of sulfur dioxide, 90 percent of nitrogen oxides and 90 percent of mercury. The high-efficiency technology burns less coal per megawatt-hour of electricity generated than most other coal units in the nation. The capital cost included in this rate case is $236 million.
  • Oconee Nuclear Station, Oconee County, S.C. — New safety and security measures have been installed to continue to protect the plant from extreme conditions or a natural disaster. The Oconee plant is a safe and efficient source of carbon-free electricity generation. The capital cost included in this rate case is $141 million.
  • McGuire Nuclear Station, Mecklenburg County, N.C. — Upgrades have been made to the facility to make it more efficient, and to increase the amount of carbon-free electricity it produces. The capital cost included in this rate case is $135 million.

In addition to the investments in new generation, the rate request also seeks to cover:

  • Improvements to the vegetation management program that will enhance overall reliability to customers by reducing the likelihood of tree-related outages.
  • Federally mandated, industry-wide nuclear power plant safety upgrades and cyber security enhancements.

The impact of these new costs, as well as the company's existing costs, is magnified because these costs have been spread across lower sales volumes experienced since the last rate case.

"We're committed to minimizing the impact of increased costs on our customers," Gillespy said. "We offer a number of energy-efficiency programs and assistance for low-income customers. Since 1985, our Share the Warmth Program has given more than $33 million to low-income customers for heating bills during the winter season."

Since the company's 2011 rate case, Duke Energy Carolinas and its customers, employees and shareholders have provided about $1 million to these programs in South Carolina communities.

Duke Energy made a $4 million donation to AdvanceSC, stemming from the company's last rate case. Duke Energy created AdvanceSC in 2004 to support communities in the company's South Carolina service territory through grants for public assistance and economic development programs. Since its creation, AdvanceSC has given more than $67 million to these programs.

Customers can help control their energy costs with efficiency programs. Learn more at http://www.duke-energy.com/youtility/.

The company's request proposes an allowed return on common equity (ROE) of 11.25 percent (the current allowed ROE in South Carolina is 10.5 percent) with a 53 percent common equity component. The South Carolina retail rate base is expected to be approximately $4.3 billion through the date of the hearings.

For more details on the company's request to increase rates, visit http://www.duke-energy.com/scratecase

Additional Information
The testimony filed in support of the company's request can be viewed at the PSCSC website (search using Docket No. 2013-59-E).

Photos of some of the capital investments made in the Carolinas electric system can be downloaded from Flickr.

Duke Energy Carolinas
Duke Energy Carolinas generates, transmits, distributes and sells electricity in central and western North Carolina and western South Carolina. Duke Energy Carolinas' service area covers 24,000 square miles and supplies electric service to 2.4 million residential, commercial and industrial customers.

Headquartered in Charlotte, N.C., Duke Energy (NYSE: DUK) is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at: www.duke-energy.com

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