Duke Energy Florida, consumer groups reach comprehensive agreement focused on increasing reliability, providing resources for vulnerable customers and advancing Florida's clean energy future

Rhea-AI Summary

Duke Energy Florida has reached a comprehensive agreement with consumer groups to increase reliability and advance clean energy in Florida. The agreement, subject to approval by the Florida Public Service Commission, includes base rate increases but is expected to result in an overall decrease in customer bills by January 2025. Key points include:

- Average annual 2% bill increase over three years
- Building 12 new solar plants (900 MW) between 2025-2027
- Grid modernization for improved reliability
- Support for vulnerable customers during extreme weather
- Projected 5% decrease in typical residential bills by January 2025

The agreement aims to balance investments in clean energy and grid improvements with customer affordability and support.

Positive

• Expected overall decrease in customer bills by January 2025
• Addition of 900 MW of clean energy through 12 new solar plants
• Investments in grid modernization to improve reliability
• Projected 5% decrease in typical residential bills by January 2025
• Increased support for vulnerable customers during extreme weather events

Negative

• Base rate increases of $203 million in 2025 and $59 million in 2026
• Average annual 2% bill increase over the three-year period 2025-2027

Insights

Financial Analyst

The agreement between Duke Energy Florida and various consumer and business groups primarily focuses on increasing reliability and advancing clean energy in the state. While the agreement includes provisions for base rate increases, the company projects an overall decrease in customer bills by January 2025.

The decrease in customer bills is tied to the expiration of the 2022 fuel under-recovery, storm restoration cost recovery and legacy purchased power contracts. These reductions are expected to mitigate the impact of the base rate increases, resulting in a projected $8.26 decrease in the average bill for a typical residential customer in January 2025.

For investors, the planned grid modernization and infrastructure investments are noteworthy. Duke Energy Florida plans to build 12 new solar plants, adding 900 MW of clean energy between 2025 and 2027. While these investments will initially drive up base rates, they are aligned with long-term goals for sustainable energy and cost savings from enhanced efficiency and reliability.

The impact on stock performance will hinge on the Florida Public Service Commission's approval and the successful execution of these projects. In the short term, the market may react positively to the potential for reduced customer bills and the company's commitment to clean energy. However, the long-term benefits will depend on the efficiency and effectiveness of the planned investments and technological innovations.

Energy Market Analyst

This agreement highlights Duke Energy Florida's strategic shift towards a clean energy future and an upgraded energy grid. The planned investments in solar energy and utility-scale battery storage are critical for meeting the growing energy demands and improving grid reliability. The agreement includes the construction of 12 new solar plants, which will significantly enhance Florida's renewable energy capacity.

In addition, the company's focus on innovative technologies and the 10% to 40% increase in smart thermostat installations for income-qualified customers showcases a commitment to energy efficiency and customer-centric solutions. These initiatives are expected to reduce energy consumption and costs for vulnerable customers, which could improve customer satisfaction and loyalty.

Investors should consider the long-term benefits of these investments against the backdrop of ongoing regulatory approval processes. If approved, the investments may provide substantial returns through increased operational efficiency and reduced outage rates. Moreover, the strategic emphasis on renewable energy aligns with broader market trends and regulatory pressures aimed at reducing carbon emissions.

Market Research Analyst

The collaboration between Duke Energy Florida and various consumer groups to reach this agreement indicates a proactive approach in addressing the needs of its customer base and regulatory requirements. The comprehensive nature of this agreement, which includes provisions for increased reliability, clean energy advancements and customer assistance, is indicative of a well-rounded strategy aimed at balancing customer satisfaction with operational efficiency.

The planned 2% average annual bill increase over the three-year period is moderate and should be weighed against the projected 5% bill decrease in January 2025. The market's perception of this agreement will depend on its successful implementation and the tangible benefits realized by customers. A reduction in energy bills, coupled with enhanced reliability and cleaner energy solutions, could strengthen Duke Energy Florida's market position and customer trust.

From a market perspective, the ongoing focus on renewable energy and grid modernization is in line with global energy trends. This positions Duke Energy Florida favorably in terms of sustainability and future growth potential, making it a potentially attractive option for investors focused on environmentally responsible companies.

• Company continues to expect customer bills to decrease in 2025 from 2024

ST. PETERSBURG, Fla., July 15, 2024 /PRNewswire/ -- Duke Energy Florida, consumer representatives and business groups reached a comprehensive agreement that increases reliability and advances the clean energy vision for the state, while focusing on ways to assist and pass on savings to customers.

If approved by the Florida Public Service Commission (FPSC), the agreement will allow for an increase in base rates, among other provisions, yet the company still expects overall customer bills to decrease in January 2025, compared to January 2024. The 2022 fuel under-recovery, storm restoration cost recovery and some legacy purchased power contracts will expire by year-end 2024. The removal of these costs will lower customer bills.

Duke Energy Florida has already reduced rates twice this year with reductions in January and June. Residential customers are paying approximately $17 per 1,000 kWh less today, compared to one year ago.

"Duke Energy Florida works hard to meet the unique needs of the diverse customers we serve. We remain committed to delivering on what customers want from us, their local utility," said Melissa Seixas, Duke Energy Florida state president. "This agreement delivers the smarter, cleaner energy future customers deserve while prioritizing reliability and price stability."

If approved, the base rate changes are estimated to result in an average annual 2% bill increase over the three-year period. This is composed of $203 million and $59 million in base rate increases in January of 2025 and 2026, respectively, as well as increases associated with 12 new solar facilities as they come on-line, estimated at $12 million, $71 million and $58 million in 2025, 2026 and 2027, respectively.  

Based on current projections, Duke Energy Florida expects a typical residential customer using 1,000 kilowatt hours to see a decrease in their January 2025 bill of $8.26, a 5% decrease when compared to December 2024.

This collaborative agreement will allow Duke Energy Florida to continue making investments to reduce outages, shorten response times, meet future energy demands, increase clean, solar generation and explore innovative technologies to generate cost savings for its 2 million customers in Florida. 

Some of the key takeaways from the proposed 2025-2027 agreement include:

• Continued grid modernization to serve increased population growth through improved reliability, resulting in fewer outages and shorter restoration times.
• Ongoing power plant enhancements and efficiencies to allow them to produce more power with the same amount of fuel – generating savings for customers.
• Building 12 new solar plants between 2025 and 2027, adding another 900 megawatts (MW) of clean energy to Florida's grid.
• Continued investments in innovative renewable energy technologies such as utility-scale battery storage to meet growing energy needs, improve reliability and build a stronger, smarter energy grid.

Among other provisions, the agreement provides flexibility for Florida's most vulnerable customers during times of need and extreme weather events, including suspending disconnects for nonpayment of Duke Energy Florida bills when actual temperatures reach 95 degrees or greater. The company will also work to increase participation in its Neighborhood Energy Saver program by 10% and to increase the installation of smart thermostats from 10% to 40% for income-qualified customers.

Duke Energy Florida developed the agreement collaboratively with customer representatives of several consumer groups, including the state's Office of Public Counsel, Florida Industrial Power Users Group, PCS Phosphate Company, Inc., Nucor Corporation and Florida Retail Federation.

The agreement, filed on July 15, 2024, is subject to approval by the FPSC.

Duke Energy Florida

Duke Energy Florida, a subsidiary of Duke Energy, owns 12,300 megawatts of energy capacity, supplying electricity to 2 million residential, commercial and industrial customers across a 13,000-square-mile service area in Florida.

Duke Energy

Duke Energy (NYSE: DUK), a Fortune 150 company headquartered in Charlotte, N.C., is one of America's largest energy holding companies. The company's electric utilities serve 8.4 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, and collectively own 54,800 megawatts of energy capacity. Its natural gas utilities serve 1.7 million customers in North Carolina, South Carolina, Tennessee, Ohio and Kentucky.

Duke Energy is executing an ambitious clean energy transition, keeping reliability, affordability and accessibility at the forefront as the company works toward net-zero methane emissions from its natural gas business by 2030 and net-zero carbon emissions from electricity generation by 2050. The company is investing in major electric grid upgrades and cleaner generation, including expanded energy storage, renewables, natural gas and nuclear.

More information is available at duke-energy.com and the Duke Energy News Center. Follow Duke Energy on Twitter, LinkedIn, Instagram and Facebook, and visit illumination for stories about the people and innovations powering our energy transition.

Cautionary Statement Regarding Forward-Looking Statements

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "outlook," "guidance," and similar expressions. Various factors may cause actual results to be materially different than the suggested outcomes within forward-looking statements; accordingly, there is no assurance that such results will be realized. These risks and uncertainties are identified and discussed in Duke Energy's Form 10-K for the year ended December 31, 2023, and subsequent quarterly reports filed with the Securities and Exchange Commission ("SEC") and available at the SEC's website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy expressly disclaims an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact: Ana Gibbs
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SOURCE Duke Energy

FAQ

What is the expected impact on Duke Energy Florida (DUK) customer bills in January 2025?

Duke Energy Florida expects a typical residential customer using 1,000 kilowatt hours to see a decrease of $8.26 in their January 2025 bill, a 5% decrease compared to December 2024.

How many new solar plants does Duke Energy Florida (DUK) plan to build between 2025 and 2027?

Duke Energy Florida plans to build 12 new solar plants between 2025 and 2027, adding 900 megawatts of clean energy to Florida's grid.

What provisions does the agreement include for vulnerable Duke Energy Florida (DUK) customers?

The agreement includes suspending disconnects for nonpayment when temperatures reach 95 degrees or greater, increasing Neighborhood Energy Saver program participation by 10%, and increasing smart thermostat installations for income-qualified customers from 10% to 40%.

When will the base rate changes for Duke Energy Florida (DUK) take effect if approved?

If approved, the base rate changes will take effect in January 2025 and January 2026, with additional increases associated with new solar facilities coming online in 2025, 2026, and 2027.