Duke Energy subsidiary rate request to help fund power plants

Duke Energy (NYSE: DUK) subsidiary Carolina Power & Light (CPL) filed a rate request with the North Carolina Utilities Commission (NCUC) Oct. 12 seeking an average 11% increase in retail revenue to help pay for new power generation.

The rate request equaling $359m in rate increases was also outlined in a filing with the U.S. Securities &Exchange Commission (SEC).

CPL d/b/a Progress Energy Carolinas request is premised upon a North Carolina retail rate base of $6.9 bn and an 11.25% return on equity on a 55.4% equity component of the capital structure. The rate increase request is primarily driven by capital investments for plant modernization and recovery of costs. A procedural schedule has not yet been established, but if approved by the NCUC, rates are expected to go in effect in mid-2013.

The company is involved in $2.3bn for plant modernization and other capital additions. This includes post in-service deferrals associated with the Smith Energy Complex and the Lee Energy Complex, CWIP (construction work in progress fees) associated with the Sutton combined-cycle plant and accelerated depreciation on un-scrubbed coal plants that have been retired or will be retired.

The 625-MW Sutton natural gas plant is expected in service in the fourth quarter of 2013, around the same time that some coal units will be retired. The new Lee combined-cycle natural gas plant is scheduled to enter operation in 2013 to help replace coal-fired units that were retired this fall.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.