The North Carolina Utilities Commission (NCUC) on Sept. 24 authorized an increase in electric rates for Duke Energy Carolinas that in part covers new gas- and coal-fired capacity for this Duke Energy (NYSE: DUK) subsidiary.
The revenue increase was initially agreed upon in a settlement between Duke Energy Carolinas and the North Carolina Public Staff, which represents consumers.
Electric rates will increase by $205m, or an average of 4.5%, for the first two years of the increase. Rates will increase by an additional $30m, or 0.6% thereafter.
“We’re pleased the N.C. Utilities Commission has approved our revenue request,” said Paul Newton, Duke Energy state president–North Carolina, in a Sept. 24 statement. “The decision reflects a balance between the needs of our company and those of our customers.”
Newton added: “This increase is critical to the company’s modernization plan to address increasingly stringent environmental regulations, and also to retire and replace aging power plants. Today’s order allows us to keep the rate increase as low as we reasonably can while still recovering these investment costs.”
New capital investments include two state-of-the-art facilities that produce more electricity with fewer emissions:
- The new 620-MW natural gas-fired, Dan River plant in Eden, N.C., that uses cleaner, low-cost natural gas to replace older, less efficient coal-fired generation.
- Cliffside Unit 6, which went into operation at the end of 2012, with advanced technology for emission control and efficiency, located in Mooresboro, N.C. It burns less coal per megawatt-hour of electricity while removing 99% of the SO2, 90% of NOx and 90% of mercury.
The NCUC also approved the company’s proposed nuclear levelization accounting, as well as a new coal inventory rider allowing the company to recover carrying costs on coal inventory levels above those included in base rates. The rider terminates in 18 months or earlier if inventory levels return to a 40-day supply. The rider is needed due to bloated coal inventories lately due to low-priced natural gas helping to displace coal-fired generation and a mild winter of 2011-2012 that cut into coal burn.