Duke continues push for rate hike

Greenville NewsJuly 3, 2013 

— Duke Energy has taken a step toward compromise in its third rate hike request in South Carolina since 2010, but it’s too early to how much regulators will allow power bills to go up.

The Charlotte-based power company has agreed to reduce one of the drivers in its request to raise rates an average of more than 15 percent for 540,000 customers in South Carolina.

It initially asked state regulators for a return on common equity of 11.25 percent instead of the 10.5 percent it is currently allowed to collect.

But now Duke says it’s willing to settle for a 10.2 percent return on equity, provided that’s part of a wider agreement with other parties in its rate-hike case before the state Public Service Commission.

The concession suggests Duke is following a familiar pattern, with its initial request to raise rates higher than what it ends up settling for.

The final decision will be made by the PSC, which hasn’t ruled yet.

Duke and the other parties to the rate case, including the Office of Regulatory Staff, the state agency charged with protecting the public interest in utility matters, remain at odds on other issues.

Duke asked for permission to collect more than $220 million a year more from its customers, but ORS thinks the power company should get only $80 million more the first year, a little more than 5 percent extra, and $38 million more the second year, or 2.6 percent.

Under Duke’s original proposal, a residential power bill for 1,000 kilowatt-hours of electricity would rise $17.83 a month for a total of $118.28 — a yearly increase of nearly $214.

Under the ORS proposal, the same bill would rise $7.52 in the first year, for a total of $107.97, and another $2.79 in the second year.

Duke spokesman Ryan Mosier said the company has taken an “important step” toward settling the rate case in accepting the lower rate of return and hopes to strike a comprehensive deal “over the next few weeks.”

Dukes Scott, executive director of the ORS, said any settlement agreement will have to be completed by July 24, since the PSC requires a week to review the terms.

Scott said other parties to the case, including the South Carolina Small Business Chamber of Commerce and Wal-Mart Stores, have accepted a 10.2 percent return on equity for Duke.

But a group of manufacturers known as the South Carolina Energy Users has not.

The Energy Users, which hired its own expert to submit testimony to the PSC, thinks Duke is entitled to no more than a 9 percent return on equity, according to Scott Elliott, a Columbia lawyer representing the group.

The Energy Users Committee also says Duke shouldn’t be allowed to base its request on lower-than-normal sales volume in the test year of 2012 and shouldn’t charge ratepayers for the cost of its defined-benefit pension plan.

Duke says it has spent $3.3 billion for capital improvements to its electricity system in the Carolinas since its last rate hike in 2012 and needs to raise rates in part to recoup those costs.

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