Investments in new generation and expanded customer energy needs have led Duke Energy Progress to seek its first base rate increase in 28 years for its 168,000 South Carolina customers, the utility announced on July 5.
Duke has filed a request (Docket No. 2016-227-E) with the Public Service Commission of South Carolina (PSCSC) to increase revenues by about $79 million, for an overall increase of 14.5 percent.
The average rate increase from the proposed changes for residential customers would be 15.4 percent, while commercial and industrial customers would see an increase of 14.3 percent. If the proposal is approved, the typical residential customer who uses 1,000 kilowatt-hours (kWh) of electricity monthly would pay about $121.37 per month – an increase of $16.60 — beginning next January 1.
The impact of the requested increase would be reduced by the $16 million decrease in fuel charges that took effect July 1. The decrease reflects the benefit of the new, highly efficient natural gas generation plants that represent the largest portion of this request. This effectively reduces the overall impact on customer bills from 14.5 percent to 11.6 percent.
Why raise rates? The company has retired older, less-efficient coal plants that do not have state-of-the-art emissions controls, and replaced them with cleaner, natural gas-fueled plants. In recent years, Duke Energy Progress has invested about $1.7 billion to complete natural gas-fueled units at the Smith Energy Complex in Richmond County, N.C., the H.F. Lee Complex in Wayne County, N.C., and at its Sutton facility near Wilmington, N.C.
The rate proposal also reflects:
- An investment of $176 million in four solar sites;
- A portion of the Duke Energy Progress acquisition of the North Carolina Eastern Municipal Power Agency’s (NCEMPA) share of jointly owned generating assets in 2015 for $1.3 billion;
- Investment in cleaner operations through the installation of pollution control equipment; and
- Detailed plans to safely close coal ash basins.
The purchase of the NCEMPA assets includes a portion of the Brunswick Nuclear Plant (both units), Harris Nuclear Plant, Roxboro Plant (unit 4) and the Mayo Plant (unit 1) – or about 700 megawatts of generating capacity. These facilities also provide energy to customers in South Carolina.
“We work every day to keep costs as low as possible for our customers,” said Duke Energy State President– South Carolina Clark Gillespy. “We have made significant investments in recent years to build a smarter energy infrastructure to meet the needs of a growing customer base; and to comply with rigid environmental requirements at the state and federal level. These investments are the main reason for the proposed increase.”
Even with the proposed bill increase, Duke Energy Progress claims that customers will pay lower rates than they did in 1988, when adjusted for inflation. To put this in perspective, the average cost of a gallon of gas 28 years ago was $1.08, and a loaf of bread cost about $1.25.
Indeed, the utility asserts that, under its proposed new rate structure, the typical monthly bill the average residential customer pays will be $12 less than the national average.
Duke Energy Progress will demonstrate to the PSCSC why the proposed increase is needed through a very public regulatory review process that traditionally includes an opportunity for public hearings, as well as a final evidentiary hearing in Columbia, where the commission will consider written and oral testimony. The company expects this process to be complete by the end of the year.