Duke cuts rate hike

The Public Service Commission of South Carolina is scheduled to vote on Duke Energy’s request for a rate increase in coming weeks – a request now less than half the amount the company originally asked for.
In August, Duke Energy asked the commission for a rate increase of 15.2 percent, which included an average 17 percent increase for residential customers, 13 percent for industrial customers and 11 percent for commercial customers.
The commission, which must approve increases for the utility, held a public hearing on the matter in Lancaster in November.
Last month, the utilities company agreed to settle with public advocates of the S.C. Office of Regulatory Staff and other parties to the rate hearing for a rate increase of only 5.98 percent this year.
Office of Regulatory Staff Executive Director Dukes Scott said the commission would likely vote on the proposed request in the next few weeks and announce its decision soon after.
“By law, the order for the case has to be issued six months from the date the application is filed, so the order is due Feb. 6,” Scott said. “But the commission can give themselves five more days after that, so they should have an order sometime on or before Feb. 11.”
The increase would go into effect in March and raise residential rates by 7 percent, commercial rates by 5.2 percent and industrial rates by 5.1 percent.
But there’s an obvious downside for the utility company in the smaller increase: It would generate only $91 million in revenue, $125 million less than the $216 million it originally said it needed to begin paying off $6.5 billion in capital improvements.
The projects include three new power plants, power lines and upgrades mandated by federal emissions regulations, among others.
The increase would be the second in as many years – and the utility will likely ask for another for 2013.
Unlike an earlier proposed 6 percent settlement that would have kept Duke from asking for another increase until 2015 in exchange for two smaller increases in 2013 and 2014, the new settlement allows for another increase request for 2013.
Scott said the Office of Regulatory Staff decided not to pursue the original agreement due to legal concerns when the S.C. Energy Users Commission, a group of industrial energy customers party to the rate hearing, objected.
“So Duke can ask for another increase as early as this summer,” Scott said. “I’m not saying they’re going to, but by law they can file for one as early as August.”
Duke Energy spokesman Jason Walls said Friday the company knew for years that it could take a series of three rate increases to pay for the improvements.
Walls confirmed the company would seek an increase next year and said the company believes this settlement represents a fair and balanced compromise between the company’s interests and those of its customers.
“We do expect to come back to the commission later in the year to ask for an increase to adjust our rates to reflect the continuing investments we’re making in the electric system,” Walls said.
“It’s part of the company’s continuing modernization efforts, which is about making investments in the system so we can continue to deliver quality service and affordable energy to our customers for decades to come,” he said.