Exhibit 99.1
Duke Energy Progress
Summary of 2017 Rate Case Filing in North Carolina
(Docket No. E-2, Sub 1142)
Preliminary Notice of Partial Settlement
· On Nov. 20, 2017, Duke Energy Progress (DEP) and the Public Staff - North Carolina Utilities Commission (Public Staff) notified the North Carolina Utilities Commission (NCUC) that DEP and Public Staff (the Parties) have reached a preliminary partial settlement in principle (Preliminary Settlement) related to certain issues in the docket
· Key matters resolved in the Preliminary Settlement include:
· Return on equity of 9.9% based upon a capital structure of 52% equity and 48% debt
· Certain adjustments will be made to rate base for the Mayo Zero Liquid Discharge and Sutton combustion turbine projects
· The deferred tax liability resulting from the NC state income tax change will be returned to customers over four years (rather than five years as proposed by DEP)
· The company’s depreciation rates shall be based on DEP’s filed Depreciation Study, with exceptions to be further defined in the final agreement.
· Other revenue requirement, cost of service and rate design matters will be further defined in the final agreement and be based upon updated property, plant & equipment, accumulated depreciation and revenues calculated through Oct. 31, 2017
· Key issues on which the parties have not reached a compromise include:
· Coal ash basin deferred costs to be recovered and amortization period, and ongoing coal ash costs to be included in rates
· Deferred storm costs to be recovered and amortization period
· The parties will endeavor to file a final, definitive partial settlement agreement with further details and supporting testimony prior to the commencement of the evidentiary hearing, currently scheduled to begin on Nov. 27, 2017
· A partial settlement will be subject to the review and approval by the NCUC
Background
· On June 1, 2017, DEP filed a rate case with the NCUC to request an average 14.9 percent increase in retail revenues, or approximately $477 million:
· The rate case filing requested an overall rate of return of 7.66% based on approval of a 10.75% return on equity and a 53% equity component of the capital structure
· The filing is based on a North Carolina rate base of $8.1 billion as of December 31, 2016 and adjusted for known and measurable changes through August 2017 (hearings are expected to commence late this year)
· This rate increase request is driven by:
Drivers | | Revenue
Requirement | | % of Total
Request | |
Significant Plant Additions and Changes | | $ | 253 million | | 53 | % |
Coal Ash Pond Closure costs | | $ | 195 million | | 41 | % |
All other changes to rate base, operating costs, and operating revenues | | $ | 29 million | | 6 | % |
· Major capital investments(1) including pro-forma adjustments to reflect known and measurable changes include:
· Four new solar sites - $184 million
· Combustion Turbine Units at the Sutton site - $120 million
· Additional investment to complete the combined cycle natural gas-fueled units at the Sutton site (Construction Work-In-Progress included in the 2013 rate case) - $103 million
· Zero Liquid Discharge wastewater treatment system at the Mayo site - $141 million
· Construction Work-In-Progress for the new natural gas-fueled units at the Asheville site (Western Carolinas Modernization Project) - $193 million
· Coal Ash Pond Closure costs include:
· $67 million to recover previously incurred expenses over a five year period
· $129 million for ongoing expenses
· The request also included the recovery of deferred storm costs, including costs incurred to restore service from the historic impacts of Hurricane Matthew, in the amount of $30 million per year for three years.
· The Company has requested the NCUC approve the requested rates to be effective Jan. 1, 2018
(1) Represents Duke Energy Progress total investment, which is allocated ~60% to NC.
