UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
| Commission file number | Registrant, State of Incorporation or Organization, Address of Principal Executive Offices and Telephone Number |
IRS Employer Identification Number |
|
(a
|
||
|
(a |
||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which
registered | ||
| each representing a 1/1,000th interest in a share of 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share | ||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01. Regulation FD Disclosure.
On January 19, 2023, Duke Energy Carolinas, LLC (“DEC”) filed a rate case with the North Carolina Utilities Commission (the “NCUC”) to request an increase in base rate retail revenues. DEC’s rate request before the NCUC includes a Performance Based Regulation Application which includes a Multi-Year Rate Plan (“MYRP”) and proposes rates for 3 years within the MYRP period. If approved by the NCUC, the net increase in retail revenues in year one is about $501 million or 9.5%, followed by $172 million (3.3%) in year two and $150 million (2.9%) in year three – a total 15.7% increase by early 2026. The rate case filing requests an overall rate of return of 7.53% based on approval of a 10.4% return on equity and a 53% equity component of the capital structure.
Although a procedural schedule has not yet been established by the NCUC, hearings are expected to commence in August 2023. DEC intends to implement temporary rates, subject to refund, on September 1, 2023 for the historic base case increase and has requested the NCUC approve the requested permanent total Year 1 rates to be effective no later than January 1, 2024.
An overview providing additional detail on the filing is attached to this Form 8-K as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 99.1 | Duke Energy Carolinas Summary of 2023 Rate Case Filing |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DUKE ENERGY CORPORATION | ||
| Date: January 19, 2023 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
| Title: | Vice President, Legal, Chief Governance Officer and Assistant Corporate Secretary | |
| DUKE ENERGY CAROLINAS, LLC | ||
| Date: January 19, 2023 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
| Title: | Vice President, Legal, Chief Governance Officer and Assistant Corporate Secretary | |
Exhibit 99.1
Duke Energy Carolinas, LLC
Summary of 2023 Rate Case Filing in North Carolina
(Docket E-7 Sub 1276)
| · | On January 19, 2023, Duke Energy Carolinas (DEC) filed a rate case with the North Carolina Utilities Commission (NCUC) to request an increase in base rate retail revenues. |
| · | DEC’s rate request before the NCUC includes a Performance Based Regulation (PBR) Application which includes a Multi-Year Rate Plan (MYRP) and proposes rates for 3 years within the MYRP period as well as residential decoupling and performance incentive metrics. |
| · | If approved, the overall retail revenue increase is as follows: |
| Annual Revenues | Average % Rate Impact | |||||||
| Historic Base Case | $ | 361 million | 6.9 | % | ||||
| Year 1 – MYRP | $ | 140 million | 2.7 | % | ||||
| Total Year 1 | $ | 501 million | 9.5 | % | ||||
| Year 2 – MYRP | $ | 172 million | 3.3 | % | ||||
| Year 3 – MYRP | $ | 150 million | 2.9 | % | ||||
| Combined Total | $ | 823 million | 15.7 | % | ||||
| o | The rate case filing requests an overall rate of return of 7.53% based on approval of a 10.4% return on equity (ROE) and a 53% equity component of the capital structure.1 |
| o | The historic base case in the filing is based on a North Carolina retail rate base of $19.1 billion as of December 31, 2021, adjusted for known and measurable changes projected through July 31, 2023. |
| o | Since its previous rate case, Duke Energy Carolinas has reduced its North Carolina Retail annual operating costs by more than $140 million (2018 to 2021). Those savings will be passed on to customers in this case. |
| o | The MYRP includes impacts of approximately $4.7 billion (NC retail allocation) of capital projects that are projected to go in service over the 3-year MYRP period. |
| o | In addition to the MYRP, the PBR Application includes an Earnings Sharing Mechanism, Residential Decoupling Mechanism and Performance Incentive Metrics (PIMs) as required by NC House Bill 951. |
| o | Hearings are expected to commence in August 2023. |
| o | The Company intends to implement temporary rates subject to refund September 1, 2023 for the historic base case increase and has requested the NCUC approve the requested permanent total Year 1 rates to be effective no later than January 1, 2024. |
1 This overall rate of return includes the provisions of the CCR settlement which includes a 150 basis point reduction in the ROE with a 52% equity component for the capital structure allowed for coal ash deferrals during the amortization period.
| · | This rate increase is driven by: |
| Drivers | Revenue Requirement | % of Total Request | ||||||
| Significant historical plant investments and changes, including changes in depreciation rates | $ | 474 million | 58 | % | ||||
| MYRP projected investments | $ | 462 million | 56 | % | ||||
| All other changes, including lower O&M costs | $ | (113) million | (14 | )% | ||||
| Rate Increase – Total | $ | 823 million | ||||||
| · | Major capital investments2 including pro-forma adjustment to reflect known and measurable changes include: |
| o | Transmission and Distribution (T&D) investments, including Grid improvement investments, of approximately $3.1 billion since the last rate case through the capital cutoff in the base case and $3.5 billion of T&D investments proposed in the MYRP (approximately 75% of MYRP). |
| o | $319 million of investment in energy storage and solar assets included in MYRP consistent with Carbon Plan order. |
| o | Nuclear life extensions and accelerated coal plant retirement dates are factored into the depreciation study. |
| o | Includes estimated Inflation Reduction Act of 2022 (IRA) benefits, associated with solar and storage MYRP investments with a deferral request for any differences between estimated and actual IRA benefits, net of costs. The deferral request includes a request for deferral of actual, future nuclear production tax credits. No estimated nuclear tax production credits have been included in the case. |
| · | Performance Based Regulation Application |
| o | MYRP with an Earnings Sharing Mechanism |
| o | Quarterly reporting required on status of MYRP projects as well as ROE |
| o | If adjusted annual earnings exceed the authorized ROE plus 50 basis points, the excess earnings will be distributed to customers through a rider. |
| o | If adjusted annual earnings fall below the authorized ROE, the utility may file a rate case (prior to the end of the MYRP). |
| o | Residential Decoupling |
| o | Residential revenues will grow based on growth in number of customers instead of growth in kwh. Decoupling mechanism will break link between earnings and changes in usage per residential customer, including decreases due to NEM/DER and volatility due to weather. |
2 Amounts presented represent the NC Retail allocation of project costs
| o | One exemption is that growth in sales from EV adoption are proposed to be excluded from the mechanism, to incent the utility to encourage EV adoption. |
| o | Net lost revenues associated with DSM/EE programs will continue to be recovered through EE rider and therefore will not be included in the decoupling calculation. |
| o | PIMs and Tracking Metrics |
| o | DEC already has performance incentives in place for its DSM/EE programs, and therefore is not proposing an additional DSM/EE PIM. The existing DSM/EE incentives are collected through the DSM/EE rider and are excluded from the 1% cap on PIMs under HB951. |
| o | 4 PIMs proposed - Peak Load Reduction, Low-Income, Renewables Integration, and Reliability |
| o | 3 Tracking Metrics – Electric vehicle adoption, Carbon reductions, Customer Service |
| o | Rewards and Penalties associated with PIMs – potential maximum upside of $12M annually and maximum downside of $12M annually. Amounts associated with PIMs will be collected from or distributed to customers through annual PIMs rider. |
| · | Coal Ash Compliance Costs: |
| o | Requests continued regulatory asset treatment for ongoing coal ash closure costs. |
| o | Includes recovery of approximately $200 million (NC retail) of deferred coal ash closure costs over a 5-year period. Consists of costs from February 2020 – July 2023 which are partially offset by proceeds received from insurance litigation and the CCR Settlement adjustment that was approved by the Commission. |
| o | Net decrease of $73M in NC retail revenues requested due to earlier tranche of coal ash spend being fully amortized and expiring. Change is included in “All Other Changes” line above. |