Exhibit 99.1
Progress Energy Carolinas
Summary of Settlement Agreement with North Carolina Public Staff
Docket E-2, Sub 1023
Background
· On October 12, 2012, Progress Energy Carolinas (PEC) filed a rate case with the North Carolina Utilities Commission (NCUC) to request an average 11% increase in retail revenues, or approximately $359 million
· The filing requested a net $359 million increase in rates, which is net of a $28 million reduction in the Demand-Side Management/Energy Efficiency clause
· The filing was based upon 11.25% return on equity (ROE) and a 55.4% equity component of the capital structure
· On February 25, 2013, PEC reached agreement with the North Carolina Public Staff, who represents consumers (see details below)
Major Components of Settlement
· Based upon ROE of 10.2% and a 53% equity component of the capital structure
· Average rate increase of 5.7% for all customer classes by year two
· PEC will make a one-time $20 million contribution to help low-income customers in North Carolina pay their energy bills
· The Company will be allowed to reduce its cost of removal liability by $20 million
· Settlement includes support for the Company’s proposed nuclear levelization accounting and for a new coal inventory rider allowing the company to recover a return on coal inventory levels above those included in base rates
· All issues were not settled with the Public Staff. Key matters left open for NCUC decision are:
· PEC’s change to a single coincident peak cost allocation factor
· The industrial economic recovery rider proposed by PEC
· Resolution of the Richmond CC deferral request (currently pending in another docket)
· Settlement subject to the review and approval by the NCUC
· Hearing is scheduled to commence March 18, 2013
Estimated Rate Increase Impacts to Customer Bills
($ in millions) |
| Year One |
| Year Two |
| ||
Base rates |
| $ | 211 |
| $ | 211 |
|
Decrease in DSM/EE Rider |
| (28 | ) | (28 | ) | ||
Deferral of Sutton CWIP Cash recovery (no earnings impact through in service date) |
| (31 | ) | — |
| ||
Cumulative Net Increase to customers ($) |
| $ | 151 |
| $ | 183 |
|
Cumulative Net Increase to customers (%) |
| 4.7 | % | 5.7 | % | ||
One time donation expense |
| $ | 20 |
| — |
| |
One time reduction of regulatory liability |
| $ | (20 | ) | — |
| |
Reconciliation of Request
($ in millions) |
| Year One |
| Year Two |
| ||
Original request |
| $ | 359 |
| $ | 359 |
|
Supplemental filing update |
| 5 |
| 5 |
| ||
Reduced ROE and capital structure |
| (91 | ) | (91 | ) | ||
Lower decommissioning expense, depreciation and amortizations (no earnings impact) |
| (62 | ) | (62 | ) | ||
Deferral of Sutton CWIP Cash recovery (no earnings impact through in service date) |
| (31 | ) | — |
| ||
Other |
| (29 | ) | (29 | ) | ||
Per Settlement Agreement |
| $ | 151 |
| $ | 183 |
|
