DEC NC Rate Case 2022

A base rate review request – or rate case – is a very public regulatory review process, overseen by the NCUC, in which a utility must demonstrate why a proposed increase in rates is needed. The process considers volumes of data and thousands of pages of testimony – including input from the public. This independent, public process helps ensure transparency and fair rates based on the costs the utility incurs to serve its customers. 

First, we have to demonstrate to the NCUC exactly why the increase in rates is needed. The commission thoroughly reviews our request and holds public hearings to allow customers to comment. The commission will conduct an evidentiary hearing and consider our written and oral testimony, along with differing viewpoints representing customer groups and other stakeholders. We expect a decision by the end of 2023. Interim or temporary rates, subject to refund, would go into effect Sept. 1, 2023, followed by permanent rates on Jan. 1, 2024.

Yes. As part of the evaluation process, the NCUC will hold public hearings to hear directly from customers on the request to increase their bills. Public hearings are an important part of this process. Customers can also provide written comments to the NCUC.

A customer’s electric bill is made up of two primary components: the base rate and the fuel rate.  

Base rate 

The base rate covers the company’s cost to operate and maintain the electric system, including the opportunity to earn a fair return for investors. Base rates are adjusted periodically to more closely align the rates paid by customers with the company’s costs to serve them. The rate case described on this webpage is for the Duke Energy Carolinas base rate in North Carolina.  

Fuel rate 

The fuel component, which increases or decreases annually on Sept. 1, covers the company’s costs for coal, natural gas, uranium and other fuel-related items to keep our power plants running. The prices reflect the actual costs the company incurs to fuel its power plants – customers pay what we pay. We continue to accelerate our transition to generation that is less reliant on fossil fuels to reduce price swings. Learn more at Fuel Costs & Your Bill. 

The company is proposing a gradual increase over three years in a Multiyear Rate Plan (MYRP).

• If approved by the NCUC, electric rates will increase about 10.5% for residential customers in the first year, followed by an additional 3.8% in year 2 and 3.6% in year 3.
• Beginning Jan. 1, 2024, the monthly impact for a typical residential customer using 1,000 kilowatt-hours (kWh) per month would be an increase of $12.54 – from $115.01 to $127.55 per month.
• Beginning Jan. 1, 2025, the added monthly impact for a typical residential customer using 1,000 kWh per month would be an increase of $3.90 – from $127.55 to $131.45 per month.
• Beginning Jan. 1, 2026, the added monthly impact for a typical residential customer using 1,000 kWh per month would be an increase of $3.18 – from $131.45 to $134.63 per month. 

It’s important to give our customers more options and tools to help them save energy and money, like usage updates, free home energy audits and a menu of energy-saving tips, incentives and resources. We offer income-qualified programs for both homeowners and renters, including replacement of inefficient appliances and weatherization services through either our company or the state weatherization program. And for those most in need, we offer the Share the Light Fund^®. Learn more at duke-energy.com/bill-help. In addition, we have proposed a variety of new offerings, such as low-income customer assistance; new energy efficiency programs for all customers, with potential savings that could significantly offset the proposed rate increase; and new time-of-use rates to help customers take more control over their energy bill. 

Performance-based regulations (PBR) better align utility investments to customer and state needs and give customers more cost certainty in the coming years. These include:  

• Multiyear rate plans (MYRP). This rate case will first determine a rate increase based on traditional ratemaking. Then the MYRP mechanism will add “step ups” to recover the costs for a specific set of capital investments projected to go in service over the course of the three-year period. Year 2 and 3 increases are capped at 4% each for all customer classes combined.
• Performance incentive mechanisms (PIMs). These involve metrics and accountability for the utility to achieve outcomes that benefit customers and/or achieve North Carolina policy goals, such as renewables adoption and continued reliable service. Details about the proposed PIMs, which are based on stakeholder input and are subject to NCUC approval, are in our Jan. 19 filing.
• Residential decoupling. This ties revenues to customer growth rather than usage growth, removing the utility’s incentive to incur more energy use per customer – it supports greater residential energy efficiency and removes revenue increases due to weather. 

These new regulatory tools align North Carolina with much of the rest of the country and provide more effective oversight of utilities by the commission.

We recognize that any increase is challenging in this environment. So, this is not a business-as-usual rate case – in response to goals prioritized by lawmakers and stakeholders, in parallel filings with the NCUC or within the rate case, we’re proposing innovative programs to help our customers manage their electric bills.

• Low-income customer assistance – a short-term bill credit (CAP) to immediately ease their energy burden, combined with energy efficiency programs to help break the cycle of need.
• New energy efficiency programs available to all customers – offering financial incentives to promote early replacement of inefficient HVAC systems or water heaters, with potential savings that could significantly offset the proposed rate increase.
• An On-Tariff Financing program to remove upfront capital and credit barriers – allowing customers to participate in energy efficiency projects that leverage the company’s program incentives (in other words, the ability to pay for energy efficiency upgrades on their Duke Energy bill).
• Performance incentives to strengthen reliability and encourage renewables – including residential rooftop solar and large-scale programs for municipalities and large industrial users.

We are listening to our customers and responding to their needs. And each of these programs would reduce costs across the entire system, benefiting all customers.

As developed by the Low-Income Affordability Collaborative, CAP is a short-term (12-month) bill credit of $42 per month to ease the energy burden of our most vulnerable customers. If approved by the NCUC, we expect the program to be implemented soon after the new rates become effective.

Customers who are supported by the federally funded Low-Income Energy Assistance Program (“LIEAP”) and Crisis Intervention Program (“CIP”) will automatically receive the credit – no additional paperwork is required for the customer. 

We are projecting that 64,000 LIEAP/CIP customers in DEC North Carolina would be eligible for CAP. This amounts to approximately 3.6% of residential customers.

When appropriate, Duke Energy would also refer CAP customers to income-qualified weatherization and energy efficiency services designed to reduce energy usage, which lowers customer electric bills over time.

The goal is to provide short-term support to help customers out of their immediate crisis, combined with long-term energy efficiency programs to help break the cycle of need. And improving efficiency benefits all customers by reducing costs for the entire system.