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NC Utilities Commission Rules in Duke Energy Carolinas, LLC Rate Case and Grants Extension for Compliance Filing until July 12, 2018

The North Carolina Utilities Commission (“Commission’) issued an Order Accepting Stipulation, Deciding Contested Issues and Requiring Revenue Reduction (“Order”) in the Duke Energy Carolinas, LLC (“DEC”) rate case on June 22, 2018. The full Order can be found here. http://starw1.ncuc.net/NCUC/ViewFile.aspx?Id=80a5a760-f3e8-4c9a-a7a6-282d791f3f23

Due to Motions for Clarification filed after the Order was issued, the Commission extended until July 12, 2018, the time for DEC to calculate and file its annual revenue requirement and required schedules summarizing the gross revenue and rate of return that DEC should have the opportunity to achieve consistent with the Order.

The Order approved the Stipulation filed by DEC and the Public Staff in its entirety. The Stipulation includes a 9.9% rate of return on equity, a 52% equity and 48% debt ratio, and a 4.59% cost of debt. The Order also approved the Lighting Settlement entered into by DEC, the North Carolina League of Municipalities, Concord, Kings Mountain, and Durham in its entirety. Smith Moore Leatherwood represented the North Carolina League of Municipalities in the rate case.

Among the most significant issues, the Commission decided:

1) To recognize a $211,512,000 reduction in DEC’s revenue requirement to reflect the current 21% Federal corporate income tax rate, reduced since the rate case was filed;

2) To deny DEC’s request to establish a rider to recover Power Forward costs, and instead to instruct DEC to collaborate with intervening parties toward the goal of resolving issues surrounding grid modernization and the most appropriate cost recovery mechanism;

3) To allow DEC to cancel the Lee Nuclear Project;

4) To allow DEC to increase the monthly basic facilities charge from $11.80 to $14.00 for the residential rate class;

5) To allow DEC to recover the cost of AMI meters, and to require DEC to file within six months the details of proposed new time-of-use, peak pricing and other dynamic rate structures that will allow ratepayers of all customer classes to use the information provided by AMI to reduce their peak-time usage and save energy;

6) To allow DEC to recover coal ash basin closure costs from January 1, 2015, through December 31, 2017, in the amount of $545.7 million, adjusted to comply with the revenue requirement ordering paragraph; and

7) To deny recovery of on an ongoing basis of $201.3 million of coal ash basin closure costs, subject to a true-up in future rate cases.

Commissioners Clodfelter and Bland-Brown concurred in part and dissented in part. They would have disallowed:

1) Recovery of $244,433,678 from expenditures made from 2015-2017 related to closure of coal ash storage facilities, and associated rates of return;

2) Any increase to the monthly basic facilities charge for residential customers; and

3) Costs recovery in rates for deployment of AMI meters when existing meters have not reached their useful lives, because DEC is not presently able to offer customers any material benefits from the new AMI meters.

For further information, please contact Deborah Ross at deborah.ross@smithmoorelaw.com or 919-755-8835.