Piedmont Natural Gas reaches rate case agreement with key consumer and industrial groups in North Carolina

Rhea-AI Summary

Piedmont Natural Gas, a Duke Energy (NYSE: DUK) subsidiary, has reached an agreement with consumer and industrial groups in North Carolina regarding its rate review request. The agreement, subject to approval by the North Carolina Utilities Commission, will result in a net annual revenue increase of $88 million, about 40% less than initially requested. Key points include:

- Average residential customers will pay about $7.50 more per month
- The agreement allows a 9.80% return on equity
- Implementation is planned for November 2024
- Concurrent rate reductions for natural gas costs and income tax credits will help mitigate overall impact
- The agreement supports investments in safety, reliability, and customer growth

Piedmont Natural Gas serves over 810,000 customers in North Carolina and offers assistance programs for those in need.

Positive

• Agreement reached with key consumer and industrial groups, potentially expediting regulatory approval
• Net annual revenue increase of $88 million, supporting investments in safety, reliability, and customer growth
• Concurrent rate reductions for natural gas costs and income tax credits to mitigate overall impact on customers
• Return on equity set at 9.80%, providing a stable return for investors
• Piedmont ranked No. 1 in customer satisfaction with residential natural gas service in the South among large utilities

Negative

• Average residential customers will face a bill increase of $7.50 per month or $90 per year
• The rate increase comes during challenging economic times, potentially affecting customer affordability
• The approved revenue increase is 40% less than originally requested, potentially impacting future investment plans

Insights

Financial Analyst

This rate case agreement is a significant development for Piedmont Natural Gas, a subsidiary of Duke Energy. The negotiated $88 million annual revenue increase, while 40% less than initially requested, still represents a substantial boost to the company's bottom line. The approved 9.80% return on equity is within industry norms, providing a stable foundation for future investments.

For investors, this agreement offers a balanced outcome. While the reduced rate increase might slightly dampen short-term profit expectations, it demonstrates regulatory goodwill and potentially smoother future rate cases. The focus on infrastructure investments for safety and reliability aligns with long-term value creation, potentially reducing future operational risks and associated costs.

However, the $7.50 monthly increase for average residential customers amid economic challenges could lead to increased bad debt expenses or conservation efforts, potentially impacting future revenue growth. Investors should monitor customer retention and usage patterns in the coming quarters to gauge the full impact of this rate adjustment.

Utility Sector Specialist

This agreement showcases Piedmont's strategic approach to balancing stakeholder interests. By negotiating with consumer and industrial groups, the company has likely mitigated potential regulatory and public relations risks. The inclusion of rate reductions for natural gas costs and tax credit pass-throughs demonstrates a proactive stance on customer affordability, which could enhance regulatory relationships.

The focus on infrastructure investment is crucial. As the natural gas industry faces increasing scrutiny over environmental concerns, robust safety and reliability measures are essential for long-term viability. This agreement supports Piedmont's ability to modernize its network, potentially positioning it better for future energy transition scenarios.

Investors should note the company's emphasis on customer assistance programs and energy-saving initiatives. These efforts could help maintain demand stability and customer satisfaction, which are vital metrics in the utility sector. The recent J.D. Power recognition for customer satisfaction further underscores Piedmont's strong market position.

Consumer Advocacy Expert

From a consumer perspective, this rate case presents a mixed outcome. While the 40% reduction from the initial request is significant, the average $90 annual increase for residential customers is substantial, especially during economic uncertainties. The company's efforts to mitigate impacts through natural gas cost reductions and tax credit pass-throughs are positive, but may not fully offset the burden for all customers.

The emphasis on assistance programs like Share the Warmth and LIEAP is crucial. However, their effectiveness will depend on outreach and accessibility. The Equal Payment Plan could help some customers manage budgets, but it doesn't address the underlying cost increase. Piedmont's energy-saving initiatives will be critical in helping customers control their bills.

Long-term, the infrastructure investments should benefit consumers through improved safety and reliability. However, regulators and consumer advocates should closely monitor the actual implementation and effectiveness of these investments to ensure they deliver the promised value to ratepayers.

• Agreement supports significant investments for safety, reliability, customer growth
• Request included rate reductions for natural gas costs and income tax payment credits passed to customers

CHARLOTTE, N.C., Sept. 16, 2024 /PRNewswire/ -- Piedmont Natural Gas has reached a comprehensive agreement with consumer and industrial groups in North Carolina related to its rate review request, filed in April of this year.

Piedmont plans to implement the increase in November 2024. Piedmont also requested concurrent rate reductions for pass-through natural gas costs and to accelerate the flowback to customers of the remaining eligible balance of excess deferred income taxes, which will help mitigate the overall impact to customer bills. The average residential customer in North Carolina will pay about $7.50 more per month, or $90 more per year.

"We appreciate the consideration the Public Staff and all other parties have shown toward our customers and Piedmont's business needs," said Brian Weisker, senior vice president and president of Piedmont Natural Gas. "Raising rates is never a decision we take lightly, particularly during challenging economic times. These investments in strengthening and enhancing our natural gas delivery system will help ensure we continue to provide safe, reliable service to our customers while meeting the rising demand for natural gas throughout our North Carolina footprint."

The agreement is subject to the review and approval of the North Carolina Utilities Commission. If the agreement is approved, the net annual increase in revenues for Piedmont will be approximately $88 million, about 40% less than the $149 million Piedmont originally requested to recover its prudently incurred costs to comply with federal safety regulations, enhance the customer experience, build needed infrastructure and provide safe, reliable natural gas service to meet the energy demands of more than 810,000 customers in North Carolina. 

The agreement was developed in collaboration with the Public Staff of the North Carolina Utilities Commission, which represents the interests of consumers, the Carolina Utility Customers Association, and the Carolina Industrial Group for Fair Utility Rates IV.

The agreement allows Piedmont Natural Gas a return on equity of 9.80%.

The stipulated rates also impact commercial and industrial customers. To learn more about Piedmont's proposed rate increase, visit piedmontng.com/rates.

Level out your bill with the Equal Payment Plan (EPP) program

Piedmont's free EPP program helps customers manage their budgets by leveling out a customer's natural gas bills, allowing them to pay a predictable, equal monthly amount to help avoid billing surprises. Piedmont determines this payment by adding up a customer's annual natural gas usage and then dividing it into the same payment amount each month. Learn more here.

Energy-saving tips and tools

Piedmont Natural Gas also offers a variety of energy-saving tips and tools to help customers and our communities identify ways to save money and energy all year long. These programs and tools help customers understand what factors are impacting their natural gas bills and emphasize specific actions they can take to prepare and reduce the impacts of higher usage.­­­­­­­­

Assistance for customers in need

Share the Warmth provides funds to local agencies to assist families with their utility bills, no matter the source of energy they use. Contact information for approved assistance agencies across Piedmont's service area is available at piedmontng.com/ShareTheWarmth.

The Low Income Energy Assistance Program (LIEAP) provides assistance to pay for natural gas, electric and other energy sources customers use in their homes.

Piedmont says anyone in need should apply for this and other newly available programs to see if they qualify. For more information, go to piedmontng.com/AssistancePrograms.

Piedmont Natural Gas
Piedmont Natural Gas, a subsidiary of Duke Energy (NYSE: DUK), distributes natural gas to more than 1.2 million residential, commercial, industrial and power generation customers in North Carolina, South Carolina and Tennessee. Piedmont Natural Gas earned the No. 1 spot in customer satisfaction with residential natural gas service in the South among large utilities, according to the J.D. Power 2023 U.S. Gas Utility Residential Customer Satisfaction Study. More information: piedmontng.com. Follow Piedmont Natural Gas: X, Facebook.

Media contact: Jason Wheatley
Media line: 877.348.3612
jason.wheatley@duke-energy.com
X: @PNG_JasonW

 

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SOURCE Piedmont Natural Gas

FAQ

When will Piedmont Natural Gas implement the new rates in North Carolina?

Piedmont Natural Gas plans to implement the new rates in November 2024, subject to approval by the North Carolina Utilities Commission.

How much will the average residential customer's bill increase under the new Piedmont Natural Gas rates?

The average residential customer in North Carolina will see an increase of about $7.50 per month, or $90 per year, on their Piedmont Natural Gas bill.

What is the approved return on equity for Piedmont Natural Gas in the North Carolina rate case agreement?

The agreement allows Piedmont Natural Gas a return on equity of 9.80%.

How many customers does Piedmont Natural Gas serve in North Carolina (DUK)?

Piedmont Natural Gas serves more than 810,000 customers in North Carolina.

What assistance programs does Piedmont Natural Gas offer for customers struggling with bills?

Piedmont Natural Gas offers programs such as Share the Warmth and the Low Income Energy Assistance Program (LIEAP) to help customers in need with their utility bills.