2/24/2018 7:35:00 AM Utilities Commission Approves DEP Rate Increase
The announcement Friday (Feb. 23rd) means that the average homeowner's electric bill in the DEP (Duke Energy Progress) service area will increase by about $14 a month. A hearing on a similar request by Duke Energy Carolinas (DEC) which serves most of western North Carolina is scheduled to begin on March 5th.
Wayne Howard Staff Writer
Duke Energy got a rate increase--but not as much as requested. The North Carolina Utilities Commission issued an order Friday (Feb. 23rd) granting a partial rate increase for Duke Energy Progress, LLC, which serves eastern North Carolina and around Asheville in the North Carolina mountains. The order allows DEP to increase rates by less than half of that requested by the Company in its application filed last year. With respect to DEP’s handling of coal ash, the Commission imposed a $30 million management penalty against the Company.
The Commission based the penalty on its determination that DEP’s handling of coal ash “placed consumers at risk of inadequate or unreasonably expensive service.” In addition, the Commission found that, “DEP admits to pervasive, system-wide shortcomings such as improper communication among those responsible for oversight of coal ash management.”
The penalty will be paid for by the Company and not by the Company’s customers. The Commission further found that DEP paid too much for coal ash removal at the Company’s Asheville coal-burning plant and, therefore, denied recovery from customers of an additional $9.5 million.
The Commission’s order also denies DEP’s request for the recovery in this rate case of the Company’s ongoing coal ash remediation costs. Instead, DEP is authorized to record these coal ash remediation costs in a deferral account until its next general rate case, at which point these costs will be carefully scrutinized to determine the extent to which recovery is appropriate.
DEP initially sought to charge customers an additional $477.5 million annually (an increase of 14.9%), including a rate of return on common equity of 10.75%. In September, DEP revised its request, reducing it to $419.5 million. DEP proposed that the basic monthly customer charge for residential customers be increased from $11.13 to $19.50.
On November 20, 2017, DEP and the Public Staff of the North Carolina Utilities Commission jointly filed a settlement that resolved some, but not all, of the issues in the case. In the settlement, DEP agreed to an overall rate of return of 7.09%, which included a rate of return on common equity of 9.9% applied to a capital structure with 52% members’ equity. Parties to that settlement agreement also agreed that the basic monthly customer charge for residential customers should be increased only to $14.00.
The Commission’s decision Friday approves the November agreement, finding it to be “just and reasonable.” Consistent with the settlement, the Commission also approved an increase in the basic customer charge to $14.00. The Commission’s order cuts DEP’s revised $419.5 million revenue request by more than 50%.
As a part of the settlement approved by the Commission, DEP will make a $2.5 million contribution from shareholder funds to the Helping Home Fund to be used for low-income energy assistance in DEP’s North Carolina service territory.
A rate case involving a proposed increase by Duke Energy Carolinas, the Duke subsidiary that serves our area, is now scheduled to begin March 5th. DEC has also asked to charge ratepayers for hundreds of millions in coal ash cleanup costs.
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