Duke Energy Carolinas reaches agreement to raise base rates in North Carolina; if approved, base rates increase US$310M -- or 7.2% -- for each customer class, effective February 2012

CHARLOTTE, North Carolina , November 23, 2011 (press release) –

  • If approved, the average rate increase for each customer class is 7.2 percent, effective February 2012
  • Base rate increase of approximately $310 million after cash mitigation
  • Based upon 10.5 percent return on equity and 53 percent equity component of the capital structure
  • Includes commitment to donate $11 million to Share the Warmth in North Carolina, a program to help low income residents pay their energy bills
  • Settlement is subject to review and approval by the North Carolina Utilities Commission
Duke Energy Carolinas has reached an agreement with the North Carolina Public Staff in the utility's request to raise base rates in North Carolina.

The settlement increases customer base rates by approximately $310 million. The rate increase is based upon a 10.5 percent return on equity (ROE) and a 53 percent equity component of the capital structure. In order to mitigate the customer rate impact due to the challenging economic environment, Duke Energy Carolinas is agreeing to defer approximately $51 million in 2012 related to construction work in progress (CWIP) cash recovery. Another adjustment will reduce the bottom line impact to customers by an additional $8 million.

The company also agrees to contribute $11 million of shareholder money to its Share the Warmth program to help low income residents in North Carolina with their energy-related costs.

The agreement must be reviewed and approved by the North Carolina Utilities Commission (NCUC). A hearing before the NCUC on the proposed rate increase is scheduled to commence on Nov. 28. If approved, beginning in February 2012, electric rates will increase by an average of 7.2 percent for each customer class.

"This proposed agreement strikes a balance between today's challenging economic times and the need to recover the investments made in the electric system to ensure reliable, affordable and clean energy for the Carolinas today and for tomorrow," said Brett Carter, president, Duke Energy North Carolina.

"At the same time we recognize the timing of the increase is challenging. We believe the additional contribution to Share the Warmth helps address the concerns we're hearing from customers," he said.

The settlement agreement will be filed with the NCUC in the coming days.

Duke Energy Carolinas owns nuclear, coal-fired, natural gas and hydroelectric generation. That diverse fuel mix provides approximately 19,000 megawatts of owned electric capacity to approximately 2.4 million customers in a 24,000-square-mile service area of North Carolina and South Carolina.

Duke Energy (NYSE: DUK) is one of the largest electric power holding companies in the United States. Its regulated utility operations serve approximately 4 million customers located in five states in the Southeast and Midwest, representing a population of approximately 12 million people. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK.

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