Cape Fear Power Costs Going Up

Files with NCUC seeking $477 Million/Year

First Rate Request in 5 Years
The utility delivering electricity to eastern North Carolina has asked state regulators for  a 14.9 percent increase in those sales revenues, effective January 1 2018. 
Duke Energy Progress filed with the NC Utilities Commission for a $477 million revenue increase saying about half reflects investments in a cleaner power mix -- closing older, less-efficient coal-fired plants, and expanding natural gas and solar generation. Also covered, the cost of managing coal ash and responding to major storms. 
The proposed changes would raise residential costs an average of 16.7 percent, while commercial and industrial customers would see an increase of 13.5 percent. 
If the proposal is approved, a residential customer who uses 1,000 kilowatt-hours (kWh) of electricity monthly would pay about $122.48 per month before taxes, subject to further adjustment for the utilitiy's annual fuel filing to be made later this month. 
After state sales tax, that's 13.11 cents/kWh, up from the 11.2 cents now being paid by Duke Energy Progress' Tar Heel customers -- down 4.8 percent from last year's 11.77 reflecting the lower fuel costs reported in the 2016 fuel filing. 
In southeastern North Carolina, the utility's customers include all New Hanover County power users and many in the surrounding counties, which are also served by Brunswick EMC to the west and Four County EMC to the north.  
The Energy Information Administration reports a national March average of 12.9 cents/kWh. For North Carolina, the statewide average was 11 cents in March, including Duke Energy Carolina, the state's many co-ops (EMCs) and municipal systems along with Duke Energy Progress. 

Seeks 10.75% ROE, able to earn 3.85%

The utility's last base rate request was made in 2012, and approved by the Commission in 2013. The 5.5 percent revenue increase was phased in over two years, starting with 4.5 percent increase in 2013 
This was reduced by declining fuel costs and residential customers ended up with a 7.2 percent increase from 11.13 cents /kWh in January 2013 to 11.93 cents two years later. 
The filing seeks an allowed return on equity of 10.75 percent, spokeswoman Meredith Archie said. 
That compares to the current 10.2 percent set in 2013 when Duke Energy Progress filed for 10.6 percent, she said, adding the adjusted return for 2016 was 3.85 percent -- "well below the allowable limit." 
The retail sales revenues the utility is seeking to increase by $477 million a year starting next year accounted for nearly 40 percent of 2016 revenues of $5.277 billion, which also included retail sales in South Carolina and wholesale sales to co-ops and municipals in both Carolinas.  
Duke Energy Progress generated less than a quarter of Duke Energy Corporation's 2016 revenues of $22.743 billion. 
The NC Utilities Commission filing requestoptions to spread recovery of coal ash costs over multiple years to reduce the immediate impact on customer bills, the utility's news release said. 

Recovering Coal Ash, Storm Costs

A total of $195 million a year is sought to responsibly manage coal ash and safely closash basins at eight Duke Energy Progress coal sites in the Carolinas, Archie said. 
Of that, $66 million reflects costs incurred over the two years ending this August and will be collected each year for five years, she said. The $129 million in ongoing costs is for costs the utility will occur in the years ahead and will continue to be collected on an ongoing basis.  
The news release pointed out customers will never be asked to pay for costs associated with the company’s response to the Dan River coal ash release from a Duke Energy Carolinas ash basin in 2014, or for any fines or penalties the utility has incurred from the Dan River release. 
In 2016, the utility continued, North Carolina faced significant devastation from multiple storms that required the company to completely rebuild parts of the state’s energy system. 
This request includes costs to repair significant damage caused by Hurricane Matthew (Oct. 8) and Tropical Storm Hermine (Sept. 2), winter storms Jonas (Jan. 21) and Petros (Feb. 24), and an unnamed February ice storm (Feb. 15) 
Duke Energy Progress explained it will seek to demonstrate to the NC Commission why the proposed increase is appropriate through a public review process that includes an opportunity for public comment. There will also be a final evidentiary hearing in Raleigh, where the commission will consider written and oral testimony. 
--Jim Brumm 

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