Duke Energy Corp. DUK recently announced that its subsidiary, Duke Energy Florida, has requested Florida Public Service Commission (“FPSC”) to lower rates and decrease customer bills in January 2025. This would be part of an annual adjustment for the cost of fuel used to generate electricity at the company’s power plants.
The approval for the company’s 2025 rate cut is anticipated later this year.
Advantages for DUK's Customers
The company plans to decrease Florida residential rates by approximately 6%, while making grid improvements to enhance reliability, security and resilience in 2025 and beyond.
An average residential customer who consumes 1,000 kilowatt hours (kWh) will enjoy a $9.77, or around 6%, reduction on their January 2025 utility bill compared to December 2024 if approved by FPSC. Bill reductions for commercial and industrial clients will range between 5.1% and 11.1%. The precise impact of the bill may change based on the number of variables.
DUK’s Focus on Rate Decline
Duke Energy Florida customers are accustomed to the rate declines. The company motivates its customers to make the most of various flexible billing and energy-saving initiatives. These initiatives include free home assessments, budget billing and usage alerts, which aim to assist customers in conserving energy and reducing costs.
The rates for 2025 are based on investments that have led to reduced outages and faster restoration times, as well as solar investments. It also includes Duke Energy Florida’s storm protection plan and environmental compliance clause costs.
Duke Energy Florida has lowered rates twice this year, once in January and another during June. Residential customers are currently paying around $17 less per 1,000 kWh compared to the prior-year level.
DUK’s Peer Prospects
The United States continues to focus on improving energy efficiency, reducing the cost of generating electricity and helping consumers make efficient usage of electricity. The companies are also installing smart meters to help consumers manage their consumption and reduce energy bills.
The utilities are making every effort to offer competitive prices to their customers while delivering reliable and more environmentally friendly energy. The reduced rates, combined with the improving economy, are sure to draw in more customers for their services.
In April 2024, NextEra Energy’s NEE subsidiary, Florida Power & Light Company (“FPL”), received approval from FPSC to lower utility rates in May. The utility rates for a residential customer using 1,000 kWh of electricity were nearly $14 lower than that in March.
FPSC had earlier approved a rate decline (effective in April), $7 less than that in March, for a typical residential customer using 1,000 kWh of electricity. Owing to these rate cuts, the average electricity bill for a typical FPL residential customer is nearly 13% less than the national average.
DUK’s Stock Price Performance
In the past six months, shares of DUK have risen 23.1% compared with the industry’s 19.4% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
DUK currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks from the same industry are NiSource NI and Xcel Energy XEL, both holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NI’s long-term (three to five year) earnings growth rate is 6%. It delivered an average earnings surprise of 20.6% in the past four quarters.
XEL’s long-term earnings growth rate is 6.39%. The Zacks Consensus Estimate for XEL’s 2024 EPS indicates a year-over-year improvement of 6%.
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