Yahoo Finance Duke Energy's (DUK) Subsidiary Receives New Rate Approval
Duke Energy Corp. DUK recently announced that its subsidiary, Duke Energy Carolinas, has received a rate case approval from the North Carolina Utilities Commission (“NCUC”). The new rates are applicable from Jan 15, 2024.
Since the rate review requested on Jan 19, 2023, the NCUC has approved a net increase in retail revenues in year one of about $436 million (8.3%), followed by $173 million (3.3%) in year two and $165 million (3.1%) in year three.
Benefits of Rate Hike
Utilities file for rate hikes to fund the upgrade of their transmission and distribution systems and install new renewable generation and new technologies to accommodate the clean energy transition.
In line with this, the latest rate hike approved by NCUC will help Duke Energy strengthen its electricity grid and improve reliability during severe weather conditions as it transitions away from fossil fuel sources. The systematic investment made in infrastructure increases the resilience of operations and should thereby enable the company to meet the demand of its expanding customer base.
Impact on DUK’s Customers
For typical residential customers using 1,000 kilowatt-hours (kWh) per month, the monthly bill will increase 7.7% to $140.33 per month. This will be followed by a 3% increase in January 2025 and again in January 2026, reaching a total of $148.62. The rates for North Carolina customers will remain well below the national monthly average, which was $171.67 as of Jan 1, 2023.
Moreover, Duke Energy will provide services to help customers manage their energy bills, including time-of-use rates, energy efficiency programs and the Customer Assistance Program (CAP), which assists the most vulnerable customers by reducing bills through a $42 monthly credit for 12 months.
CAP customers will be referred to weatherization and energy efficiency services that can help them with long-term solutions to reduce energy usage. This way, the rate hike’s burden will not hurt DUK’s economically vulnerable customers.
Other Utility Hikes
Other utilities that are expected to benefit from rate hikes include PG&E Corp. PCG, Portland General Electric Co. POR and FirstEnergy Corp. FE.
PCG received rate approval from the California Public Utilities Commission on Nov 16, 2023, for its 2023-2026 General Rate Case. The rates were applicable from Jan 1, 2024. The monthly combined gas and electric bills will see an average increase of 3.6% over three years for non-California Alternate Rates for Energy (CARE) customers and 3.8% rise for CARE customers.
PCG’s long-term (three- to five-year) earnings growth rate is 2.5%. The Zacks Consensus Estimate for its 2024 sales indicates an increase of 4.5% from the previous year’s figure.
Portland General Electric received rate approval from the Oregon Public Utility Commission on Dec 18, 2023, with rates effective Jan 1, 2024. It anticipates an increase of 18% for residential customers, 14.4% for commercial and 11.6% for industrial customers.
POR’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for its 2024 sales indicates an increase of 7.7% from the previous year’s figure.
FirstEnergy’s subsidiary Potomac Edison received rate approval from the Maryland Public Service Commission on Oct 23, 2023. The average residential customer using 1,000 kWh per month will witness a 3.5 percent overall increase or $4.62 monthly.
The Zacks Consensus Estimate for FE’s 2024 earnings per share indicates an increase of 4.1% from the previous year’s figure. The Zacks Consensus Estimate for 2024 sales suggests an increase of 6.9%.
Price Performance
In the past six months, shares of DUK have gained 7.3 % against the industry’s 8.4% decline.
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Zacks Rank
Duke Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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