Duke Energy Corporation (DUK) said that its unit Duke Energy Carolinas has filed for a rate increase, as planned, with the North Carolina Utilities Commission to recover the investments made by the company over the last two years. If approved, the new rates will come into effect from February 2012.
The previous rate hike for the company was approved in 2009, which resulted in an increase of $7.30 per month in the residential bill for consumers who typically use 1,000 kilowatt-hours (kWh) of power per month.
If the new rate is approved by the commission it will result in a steep $19 hike per month for residential consumers utilizing 1,000 kWh of power month. In the process the company will stand to benefit $646 million from the rate hike.
The rate increase implies a 17% rise in residential customer bill, a 14% increase in the bills of commercial and industrial users while an 8% growth when power is used for lighting purposes.
Around 75% of the rate hike takes into account the capital investment made by the company in the Carolinas. It also accounts for lower-than-expected electric sales due to the recession, changes in financing and other general costs.
Duke Energy has invested $4.8 billion in the last two years. These investments were made by the company for installing a scrubber in its Cliffside power plant to meet environmental regulations. Besides, investments were made for technology improvement in the nuclear power plants and also for developing the transmission and distribution infrastructure.
Capital outlays were also made for a new natural gas-fired power plant at the Buck facility in Rowan County, North Carolinas and for a new hydroelectric powerhouse at the Bridgewater facility in Burke County, North Carolinas.
Duke Energy Corporation currently retains a Zacks #3 Rank (short-term Hold rating). The company competes with American Electric Power Co. Inc. (AEP) and Constellation Energy Group Inc. (CEG).
Duke Energy peer, American Electric Power Co. filed for a distribution rate increase, in February 2011, to recover its current investment and costs necessary to provide safe, reliable distribution service to customers. The rates, on approval, will increase the monthly bill of Ohio Power’s consumers using 1,000 kWh of power per month by $4.38 effective 2012.
Based in Charlotte, North Carolina, Duke Energy is an energy company. The company operates through three segments: U.S. Franchised Electric and Gas, Commercial Power, and International Energy.
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