Duke Energy, state agency agree on drastic cut to NC rate hike from initial ask

Duke Energy Carolinas has cut its initial proposed residential electric rate increase nearly in half after months of public criticism.

Duke Energy and North Carolina’s consumer watchdog have reached a comprehensive settlement in the utility’s closely watched rate case, further reducing the company’s proposed increase months after customers, advocates and state officials argued the original request was too high. The agreement, announced Friday, marks the first full settlement between Duke Energy Carolinas and the North Carolina Public Staff, the state agency charged with representing utility customers. It builds on partial settlements announced earlier this month by resolving the remaining issues, including Duke’s proposed profit rate.

If approved by the North Carolina Utilities Commission, Duke spokesperson Bill Norton said the settlement would increase residential rates by 5.9% in the first year and 3.6% in the second year, for a cumulative increase of 9.5% over two years. Across all customer classes, the agreement would result in an overall increase of about 4.3% in the first year and 3.1% in the second year, or 7.4% over two years.

Duke has not yet released updated estimates showing how those percentages would translate into monthly bills for the average residential customer. Under the earlier partial settlements announced this month, the average residential customer would have seen monthly bills increase by about $9.39 in 2027 and $5.52 in 2028.

The settlement follows months of public scrutiny over Duke’s proposal, which has steadily declined since it was first filed last November. Duke originally sought substantially larger increases before voluntarily reducing its proposed residential rate increase from about 18% to 11.6% in June, calling it the largest voluntary reduction of a rate request during the rebuttal phase of a case in company history.

“In light of the cost pressures our customers are facing, along with continued conversations with other stakeholders, we felt we had to do more,” Duke Energy North Carolina President Kendal Bowman said in a statement. “We appreciate our stakeholders’ engagement in finding a path that allows us to more cost-effectively serve the Tar Heel State.”

As part of the agreement, Duke agreed to lower its proposed return on equity to 9.8%, down from the 10.48% included in earlier settlement agreements and below the 10.95% it originally requested. Return on equity is the profit rate regulators allow utilities to earn on investments.

The settlement also reduces the share of Duke’s investments that would be financed through shareholder equity to 53%, creates a refund mechanism requiring money to be returned to customers with interest if certain planned infrastructure projects are not completed on time, and lowers customer costs associated with reliability upgrades at the Belews Creek power plant because of federal funding.

In addition, Duke said its shareholders will contribute $10 million for low-income bill assistance and weatherization programs beyond the company’s existing funding commitments.

Several other parties in the case also signed the agreement, including the Carolina Industrial Group for Fair Utility Rates, the Carolina Utility Customers Association, the North Carolina Sustainable Energy Association, Walmart, Microsoft and Meta. Duke said additional parties may join the settlement.

The Utilities Commission will ultimately decide whether to approve the agreement. If approved, the new rates would take effect Jan. 1.