Duke Energy Corporation
) subsidiary Duke Energy Carolinas has received approval from the
North Carolina Utilities Commission (NCUC) to increase the
monthly electricity rates of the residential North Carolina
customers. The revised rate will be applicable from Sep 2013.
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Currently, the residential customers, consuming electricity of
1,000 kilowatt-hours (kwh) per month, pay a monthly bill of
$102.72. As per the commission's approval, the new rate will be
$110.32 after Sep 2015, up 7.4% from the current rate. This
includes a 23.1% increase in monthly basic customer charge of
$12.19 from the current charge of $9.90. In addition, Duke Energy
Carolinas is currently in the process of fixing new rates for
both industrial and commercial customers.
Per the agreement, Duke Energy Carolinas will not be allowed to
ask for another base rate increase prior to 2015, except for any
specific reasons. The NCUC have granted a total rate increase of
$235 million or an average of 5.1%. For the first two years, the
electricity rates will increase by $205 million or an average of
4.5%. The rates will increase by an additional $30 million or
0.6% thereafter. A return on equity of 10.2% and a capital
structure of 53% equity and 47% debt were also approved.
The purpose of the current rate hike is to recover the funds that
Duke Energy invested for several projects, including Dan River
Combined Cycle Station, Cliffside Steam Station Unit 6 and
McGuire Nuclear Station, Mecklenburg County in N.C., and Oconee
Nuclear Station in S.C.
Initially, Duke Energy Carolinas has filed for a rate hike
request to the commission on Feb 4. The company had requested to
increase the bill of the residential customers, using electricity
of 1,000 kwh per month, by $14.27.
Duke Energy aims to provide uninterrupted utility services to its
customers at lesser prices than its peers. Despite an increase in
electricity rates, it will remain lower than the national
The regulated utility providers recoup their investments from the
customers through the filing of rate hike to the commission.
Recently, Duke Energy received approval from the Public Service
Commission of South Carolina (PSCSC) and all other parties for a
rate hike for its South Carolina customers. The parties have
granted a rate increase of $118.6 million or an average of 8.2%
which will be implemented over a two-year period. The revised
rate came into effect from Sep 18, 2013.
Since 2007, Duke Energy has invested approximately $6 billion to
expand and modernize its utility generation and transmission
infrastructure. We appreciate the initiatives taken by the
company to provide uninterrupted reliable utility services to its
customers at a lower price.
Duke Energy currently has a Zacks Rank #3 (Hold). However, other
stocks that are worth considering include
Huaneng Power International, Inc.
) with a Zacks Rank #1 (Strong Buy) and
Brookfield Infrastructure Partners L.P.
), each carrying a Zacks Rank #2 (Buy).