Duke Energy Corp.
) has 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. A return on equity of 10.2%
and a capital structure of 53% equity and 47% debt were also
In March this year, the company had requested an average annual
increase in retail revenues of 15.1% or $220 million. Except for
any extraordinary circumstances, the company will now not be
allowed to implement another base rate increase prior to Sep
2015, per the agreement.
Beginning Sep 18, 2013, electric rates will increase by $80.4
million or 5.53% on an average. For the second year, beginning
Sep 18, 2014, rates will increase by an additional $38.2 million
Particularly for a residential customer, using 1,000
kilowatt-hours of electricity in a month, the monthly bill in the
first year would be $107.97, up 6.9%. For the second year, the
average net rate increase will be 3.3%, which would bring the
monthly bill to $110.76.
For a general customer, average net rate increase for the first
year and second year would be 4.3% and 2.1%, respectively, while
for industrial customers these rate increases would be 5% and
2.7% in 2013 and 2014, respectively. In case of lighting
customers, the increase would be 2.9% in the first year and 1.4%
in the second year.
Duke Energy indicated that this approved agreement would keep
the rate increase as low as possible. In order to mitigate the
effect of the increase, the company would also fulfill Corporate
Social Responsibility. The company would contribute to support
public education initiatives and also fund public assistance
programs for low income customers, as well as manufacturing
competitiveness grants, economic development and education
workforce training programs.
The settlement would also help the company in meeting its target
of recovering the investment costs that are being incurred to
modernize its system to ensure safe and clean electricity for the
future. Of late, the company has been investing in new plants,
retiring older plants as well as working on modernization and
upgrade of plants to reduce emissions across its service area.
Since 2007, the company has invested approximately $6 billion in
new plants and has retired up to 6,800 MW of older coal
capacity. All the more, it has invested another $7.5
billion for plant upgrades.
Indeed, other energy providers are also working convincingly
to reach their renewable energy goal that calls for these
companies to modernize their system, thereby increasing rates.
TECO Energy Inc.
) unit Tampa Electric Company has received approvals from the
Florida Public Service Commission to increase the monthly rates
of residential electricity customers for which it had made a
rate-hike request in April this year. The revised rates are
expected to be applicable from Nov 2013.
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Duke Energy presently retains a short-term Zacks Rank #3 (Hold)
based on the present unfavorable macro backdrop, predominantly
fossil-fuel based generation assets, tepid demand for electricity
and pending regulatory cases. Stocks worth considering in the
Brookfield Infrastructure Partners L.P.
), both with a Zacks Rank #2 (Buy).