Duke Energy Carolinas SC Rate Case

The energy sector, particularly in the Southeast, is in a period of transformation and profound change driven by technological
advancements, strong economic and population growth, transportation electrification, environmental and regulatory mandates, an aging generation fleet, fuel supply challenges and opportunities, energy security and resiliency efforts, as well as changing customer expectations.

At Duke Energy Carolinas, we are taking steps to anticipate and keep pace with the changes occurring in the Palmetto State to better serve our customers. 

Settlement Agreement Approved – July 3, 2024

The Public Service Commission of South Carolina (PSCSC) has approved new customer rates based on a settlement agreement with almost all parties in the Duke Energy Carolinas rate review request filed with the commission in January of this year.

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 South Carolina, was submitted in May. The agreement was reached with the South Carolina Office of Regulatory Staff, the South Carolina Energy Users Committee, Southern Alliance for Clean Energy, Coastal Conservation League, Vote Solar, and the South Carolina Small Business Chamber of Commerce. While not signatories to the agreement, both Walmart and CMC Recycling did not object to approval of the agreement. 

Beginning Aug. 1, 2024, a typical residential customer using 1,000 kilowatt-hours will see an increase of about 8.7%, or $12.06 per month. Beginning Aug. 1, 2026, residential rates will increase another 4.3%, resulting in an additional $6.42 per month for a typical residential customer using 1,000 kilowatt-hours.

Beginning Aug. 1, 2024, commercial and industrial customers will see an average increase of around 4.6% and 4.4%, respectively (actual rates vary by customer class and size).

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 9.94% and an equity component of the capital structure of 51.21%, as agreed to in the settlement. The final order revised recovery of certain environmental compliance costs, the only provision of the settlement agreement not fully approved by the PSCSC. 

Original Rate Review Request — Jan. 4, 2024

On Jan. 4, 2024, Duke Energy Carolinas filed the utility’s first base rate review request in five years in South Carolina. Recent investments made to increase system diversity and reliability, enhance the customer experience and meet tomorrow’s challenges today for more than 658,000 customers primarily in the Upstate region of South Carolina are the primary reasons behind the request.

The Public Service Commission of South Carolina (PSCSC) will ultimately determine what’s appropriate for customer rates based on a long-standing and very transparent public process for reviewing rate increase requests.

Why now?

We know electricity is a significant monthly expense for many customers and no one wants to see rising electric bills. This is particularly true now as a rising-cost environment across many sectors of our economy impacts consumers and businesses throughout South Carolina and the nation. That’s why we work every day to keep costs as low as possible for our customers and to avoid an increase to customer bills whenever possible, and we aggressively manage costs to delay the need to increase rates. We are committed to helping customers who struggle to pay for basic needs with programs and tools to reduce their energy costs and keep their power on.

However, the conditions under which we operate have continued to evolve since the company’s last base rate change request in 2018. This changing environment challenges our ability to continue to provide the level of electric service our customers expect. These challenges affect the energy industry as a whole and the investments we have made and must continue to make are designed to keep pace with evolving customer needs and expectations.

Recognizing these challenges, the company is committed to continue providing safe, reliable, affordable electricity from diverse sources to our customers with high quality customer service, both today and in the future.

To achieve this, we must continue to invest in improving our grid and protecting it from extreme weather; the orderly transition to a clean, secure energy future; ways to make the energy we produce more diverse, more resilient, and even more efficient for the benefit of our customers; and new technologies to enhance the customer experience.

We are taking steps to keep pace with and anticipate the changes occurring in our state, and these investments are the main reason for the proposed rate increase.

• We are taking on the extraordinary task of planning to orderly retire aging generation and replace it with new generation to meet rapidly increasing customer demand for electricity, all while maintaining or improving system reliability.
• The voices of our customers and our investors have become increasingly clear – they expect us to invest in cleaner resilient, reliable power and are making economic growth decisions based on those expectations. We have made investments in a diverse mix of generation resources like highly efficient natural gas plants, nuclear and solar, as well as supported cleaner emerging technologies like vehicle electrification.

Operational excellence

• The reliable and safe operation of our electric system in our communities continues to be foundational to serving our customers.
• We are seeing trends affecting our grid that indicate more must be done to improve the energy infrastructure required to meet the needs of our customers. We are making strategic investments to harden the grid and continuously improve our response to severe weather events.

Customer service and program enhancements

• Customers today want a new and improved experience with more streamlined options and versatility, driven by information about how they consume energy and by tools that help them manage their consumption.
• This includes investments taken to continuously improve the service our customers receive from us, and the interactions they have with us.

Positioning for the future and meeting the challenges of tomorrow

• Duke Energy continuously reviews all aspects of its business and simultaneously looks for opportunities to operate in the most efficient way possible – the ultimate goal being to benefit and better serve our customers.