Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Duke Energy CORP | a13-15127_18k.htm |
Exhibit 99.1
Duke Energy Carolinas
Summary of Settlement Agreement with North Carolina Public Staff
Docket E-7, Sub 1026
Background
· On February 4, 2013, Duke Energy Carolinas (DEC) filed a rate case with the North Carolina Utilities Commission (NCUC) to request an average 9.7 percent increase in retail revenues, or approximately $446 million annually
· The filing was based on an 11.25% return on equity and a 53% equity component of the capital structure
· The filing is based on a North Carolina retail rate base of ~$12.0 billion as of June 30, 2012 and adjusted for known and measurable changes
· On June 17, 2013, DEC finalized an agreement with the North Carolina Public Staff, who represents consumers (see details below)
Major Components of Settlement
· $235 million annual customer rate increase (an average increase of 5.1 percent) will be implemented over time
· Annual electric rates will increase by $205 million, or an average of 4.5 percent, for first two years
· Annual rates will increase by an additional $30 million thereafter
· DEC will be allowed to reduce its cost of removal liability by $30 million annually for the first two years
· Customer rate increase based upon ROE of 10.2% and a 53% equity component of the capital structure
· Settlement reduces North Carolina retail rate base for the test year ended June 30, 2012 to ~$11.5 billion from ~$12 billion primarily due to updates as of March 31, 2013
· DEC will make a one-time $10 million contribution to assist low-income customers in North Carolina in paying their energy bills
· The company agrees it will not seek new base rates until 2015 or beyond, absent situations such as incurring costs for new generation or complying with new governmental regulations
· Settlement includes support for (1) the Company’s proposed nuclear levelization accounting and (2) a new coal inventory rider allowing the Company to recover carrying costs on coal inventory levels in excess of a 40-day supply (note — this rider is proposed to terminate at the earlier of 18 months past the effective date of new rates, or when inventory levels return to a 40-day supply)
· Settlement is subject to the review and approval by the NCUC
· If approved by the NCUC, rates would likely go in effect in September 2013
· Evidentiary hearings are scheduled to commence July 8, 2013
June 17, 2013
Estimated Annual Rate Increase Impacts to Customer Bills
|
($ in millions) |
|
Year 1 |
|
Year 2 |
|
Thereafter |
| |||
|
Annualized base rates |
|
$ |
235 |
|
$ |
235 |
|
$ |
235 |
|
|
Temporary customer rate reduction (offset by cost of removal liability amortization - no earnings impact) |
|
(30 |
) |
(30 |
) |
— |
| |||
|
Cumulative Net Annualized Customer Increase ($) |
|
$ |
205 |
|
$ |
205 |
|
$ |
235 |
|
|
Cumulative Net Annualized Customer Increase (%) |
|
4.5 |
% |
4.5 |
% |
5.1 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
One time contribution expense |
|
$ |
10 |
|
— |
|
— |
| ||
|
|
|
|
|
|
|
|
|
| ||
|
Note: Customer bill impacts exclude any recovery under the new coal inventory rider |
| |||||||||
Reconciliation of Request
|
($ in millions) |
|
Year 1 |
|
Year 2 |
|
Thereafter |
| |||
|
Original request |
|
$ |
446 |
|
$ |
446 |
|
$ |
446 |
|
|
Temporary customer rate reduction (offset by cost of removal liability amortization - no earnings impact) |
|
(30 |
) |
(30 |
) |
— |
| |||
|
Reduced ROE |
|
(112 |
) |
(112 |
) |
(112 |
) | |||
|
Supplemental filing by Company adjusting cost of service |
|
(22 |
) |
(22 |
) |
(22 |
) | |||
|
Lower nuclear decommissioning expense (no earnings impact) |
|
(20 |
) |
(20 |
) |
(20 |
) | |||
|
Agreement to not pursue storm cost reserve (no earnings impact) |
|
(16 |
) |
(16 |
) |
(16 |
) | |||
|
Other |
|
(41 |
) |
(41 |
) |
(41 |
) | |||
|
Per Settlement Agreement |
|
$ |
205 |
|
$ |
205 |
|
$ |
235 |
|