New rates approved for Duke Energy Carolinas customers in South Carolina
The Public Service Commission of South Carolina (PSCSC) has approved new customer rates for Duke Energy Carolinas, effective August 1, 2024. Residential customers can expect an 8.7% increase ($12.06/month), with further 4.3% hike ($6.42/month) in August 2026. Commercial and industrial rates will also rise by 4.6% and 4.4%, respectively. The rate changes reflect investments in system reliability and diversity, and the return of tax benefits due to the Federal Tax Cuts and Jobs Act of 2017. The settlement, agreed upon with various consumer and environmental groups, includes a $2 million shareholder-funded study to explore low-income customer support programs. The PSCSC approved recovery of investments in natural gas, nuclear, solar, and hydroelectric units. The agreement sets the return on equity at 9.94% and an equity component of 51.21%. The only unapproved provision was for environmental compliance costs.
- PSCSC approved rate increases to enhance system reliability and diversify energy sources.
- Residential rates remain below the national average despite an 8.7% rise in August 2024 and an additional 4.3% in August 2026.
- Commercial and industrial rates will increase by 4.6% and 4.4% respectively.
- Settlement includes a $2 million study to support low-income customers.
- Return on equity set at 9.94%, equity component at 51.21%.
- Residential customers face an 8.7% rate hike in August 2024, followed by a 4.3% increase in August 2026.
- Commercial and industrial customers will see rate increases of 4.6% and 4.4% respectively.
- Only partial recovery of environmental compliance costs approved by the PSCSC.
Insights
The recent rate approval for Duke Energy Carolinas has both immediate and long-term financial implications. From a short-term perspective, the <8.7%> rate increase starting August 2024 for residential customers will boost the company's revenue. This is important given the significant investments Duke Energy has made in enhancing system reliability and integrating diversified energy sources. The higher return on equity (ROE) rate of <9.94%> is also notable, as it indicates the approved profitability level for shareholders, which is relatively robust compared to the industry average.
In the long-term, the additional rate hike of <4.3%> in August 2026 aligns with the company's ongoing investment in cleaner and more efficient energy sources. This mitigates regulatory risk and aligns with the global shift towards sustainable energy. However, the expiration of the tax benefit return after two years will need careful management to avoid a sudden spike in rates, which could affect customer satisfaction.
Investors might view these changes favorably due to the predictable increase in revenue, but they should also monitor operational efficiency and cost management, especially in the face of fixed investments and future regulatory changes.
From a market perspective, the approval of new rates reflects Duke Energy's successful negotiation and alignment with regulatory bodies and various stakeholders. This cooperative approach, involving consumer and environmental groups, underscores the company's strong stakeholder management and public relations skills, potentially enhancing its market position and brand reputation.
The approved increases for commercial and industrial customers, though lower than residential, indicate a strategic balance, ensuring that business operations continue without significant cost pressures. The average increases of <4.6%> and <4.4%> respectively are modest enough to maintain business confidence while providing Duke Energy with needed revenue boosts.
Additionally, the emphasis on maintaining rates below the national average could appeal to new commercial ventures considering South Carolina, driving economic development in the region. However, the company's ability to sustain this competitive advantage in the face of rising operational costs will be crucial.
The settlement's support for investments in natural gas, nuclear and renewable energy sources like solar and hydroelectric units aligns with broader energy policy trends towards diversification and sustainability. The balanced energy mix not only mitigates risks associated with over-reliance on any single energy source but also enhances grid reliability and environmental compliance.
Moreover, the proactive approach to studying and enhancing assistance programs for low-income customers reflects a commitment to equitable energy accessibility, which is increasingly critical in regulatory reviews. This could set a precedent for similar utilities, showcasing how regulatory and customer-centric strategies can coexist.
Nonetheless, it's essential to monitor how effectively Duke Energy implements these policies and whether the expected benefits in reliability and customer support materialize. Investors should be aware of potential regulatory changes and shifts in policy that could impact long-term operations.
- Public Service Commission of
South Carolina approves nearly all components of a settlement agreement - Outcome supports company's efforts to increase system reliability, diversityand enhance the customer experience while keeping rates below national average
The changes in customer rates – which remain below the national average – come after a lengthy and very public process evaluating a request 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 agreement with almost all parties, including certain consumer, environmental and industrial groups in
Rate impacts
Beginning Aug. 1, 2024, a typical residential customer using 1,000 kilowatt hours will see an increase of about
Beginning Aug. 1, 2024, commercial and industrial customers will see an average increase of around
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 ("Tax Act"). This reduction would expire after two years.
Provisions of the settlement agreement approved by the PSCSC include recovery of new investments in highly efficient natural gas, nuclear, solar and hydroelectric units, as well as recovery of the company's significant investments in the grid and its new corporate headquarters. The order also allows the company to establish rates based upon a return on equity of
Providing support for customers
The PSCSC also approved – at shareholder expense –
Duke Energy has numerous current and proposed energy efficiency programs available to customers who would like to exercise more control over their usage to lower their bills, which could help minimize the impact of the requested increase. Customers struggling to pay their energy bills might also qualify for assistance from various government and nonprofit programs for utility bills and other household expenses. Duke Energy also offers programs and resources to help customers manage their usage to lessen the impact of rate changes, as well as flexible payment arrangements to help customers experiencing uncertainty. Additional customer support is available through the Share the Light Fund, a Duke Energy program that provides energy assistance.
To learn more about these programs, visit duke-energy.com/summersavings.
Duke Energy Carolinas
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
Duke Energy
Duke Energy (NYSE: DUK), a Fortune 150 company headquartered in
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 advanced 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.
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SOURCE Duke Energy
FAQ
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