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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Registrant, State of Incorporation or Organization, Address of Principal Executive Offices and Telephone Number |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
| Registrant | Title of each class | Trading Symbol(s) | Name
of each exchange on which registered |
| Duke Energy | |||
| Duke Energy | |||
| Duke Energy | each representing a 1/1,000th interest in a share of 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share | ||
| Duke Energy | |||
| Duke Energy | |||
| Duke Energy |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01. Regulation FD Disclosure.
On July 3, 2024, the Public Service Commission of South Carolina (the “PSCSC”) issued a written order (the “Order”) approving an increase in base rates, and approving nearly all components of a settlement agreement reached by Duke Energy Carolinas, LLC (“DEC”), the South Carolina Office of Regulatory Staff (the “ORS”) and other parties on May 17, 2024, which resolved all issues in DEC’s base rate case proceeding originally filed with the PSCSC on January 4, 2024.
The Order revised recovery of certain environmental compliance costs, the only provision of the settlement agreement not fully approved by the PSCSC. Revised customer rates will be effective August 1, 2024 and are based upon a South Carolina retail rate base of $7.4 billion and a return on equity of 9.94% and a capital structure of 51.21% equity and 48.79% debt. The Order will result in Duke Energy Corporation recognizing a one-time net pre-tax accounting charge of approximately $30 to 40 million, to be recognized in the second quarter of 2024.
An overview providing additional detail on the Order is attached to this Form 8-K as Exhibit 99.1. The information in Exhibit 99.1 is being furnished pursuant to this Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 99.1 | Duke Energy Carolinas, LLC Fact Sheet Regarding 2024 Rate Case Settlement. |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DUKE ENERGY CORPORATION | ||
| Date: July 8, 2024 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
|
Title: |
Vice President, Legal, Chief Governance Officer and Assistant Corporate Secretary | |
| DUKE ENERGY CAROLINAS, LLC | ||
| Date: July 8, 2024 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
|
Title: |
Vice President, Legal, Chief Governance Officer and Assistant Secretary | |
Exhibit 99.1
Duke Energy Carolinas
Summary of 2024 South Carolina Rate Case Order
(Docket 2023-388-E)
Background:
| · | On January 4, 2024, Duke Energy Carolinas (DEC) filed a rate case with the Public Service Commission of South Carolina (PSCSC) to request an increase in retail revenues. This is the first base rate case filed by DEC in South Carolina since 2018. The filing requests an overall average effective increase in annual retail revenues of 11.4%, or approximately $239 million, in the first two years, and an additional overall effective increase of about 4.1%, or approximately $84 million additional revenue, after the first two years. |
| · | The requested increase results in an overall average 15.5% increase in annual retail revenues, or approximately $323 million: |
| o | To mitigate the rate increase, the Company has proposed to accelerate the return of remaining federal unprotected Excess Deferred Income Taxes (EDIT) balances to customers over two years. This offset reduces the impact to customers in the first two years, after which the credit for EDIT balances expire. |
| o | The rate case filing requests an overall rate of return of 7.71% based on approval of a 10.5% return on equity and a 53% equity component of the capital structure. |
| o | The filing is based on a South Carolina retail rate base of $7.3 billion as of December 31, 2022, adjusted for known and measurable changes through December 31, 2023. |
| · | On May 17, 2024, DEC and the Office of Regulatory Staff (ORS), as well as other consumer, environmental, and industrial intervening parties, filed an Agreement and Stipulation of Settlement (Stipulation) resolving all issues in the base rate proceeding. |
| · | On July 3, 2024, the PSCSC issued a written order (the Order) approving nearly all of the components of the Stipulation. |
Major components of the Order:
| · | $234 million annual customer rate increase prior to a reduction from the accelerated return to customers of federal unprotected EDIT balances. After accelerating EDIT giveback to customers over two years, the net annual rate increase is $150 million for the first two years. |
| · | Return on equity of 9.94% based upon a capital structure of 51.21% equity and 48.79% debt and an overall rate of return of 7.32%. |
| · | South Carolina retail rate base of $7.4 billion. |
| · | Coal Ash Recovery: Recovery of $184 million (SC retail allocation) of coal ash compliance costs over 7 years with a debt return during the deferral period and a full weighted-average cost of capital (WACC) return during the amortization period. |
| o | Continuation of deferral treatment for ongoing coal ash basin closure costs. |
July 8, 2024
| · | Grid Improvement Plan (GIP) Investments: In lieu of ongoing deferral treatment for GIP costs, approximately $188 million of construction work in progress (CWIP) is included in rate base. |
| · | Inflation Reduction Act (IRA) / Nuclear Production Tax Credits (PTC’s): Agreement to discuss the applicability of Nuclear PTCs to South Carolina with the ORS within 30 days from issuance of U.S. Treasury Guidance and/or initiate a separate docket at the Commission to determine the most appropriate way to handle these credits in future ratemaking. |
| · | One-time shareholder contribution of $2 million to fund low-income and energy efficiency customer matters. |
Additional Information:
| · | Revised customer rates will go into effect on August 1, 2024. |
| · | The Order will result in Duke Energy Corporation recognizing a one-time net pre-tax accounting charge of approximately $30-40 million in Q2 2024. |
Reconciliation of Original Request to Order
| ($ in millions) | Cumulative Increase | |||
| Original filed base revenue increase | $ | 323 | ||
| Reduced ROE (from 10.5% to 9.94%) | $ | (28 | ) | |
| Reduced equity component of capital structure (from 53% to 51.21%) | $ | (13 | ) | |
| Reduced coal ash recovery | $ | (14 | ) | |
| Deferrals, including extended amortization periods | $ | (22 | ) | |
| Other revenue changes | $ | (6 | ) | |
| Base annual revenue increase per Stipulation | $ | 240 | ||
| Coal ash adjustment per Order | $ | (6 | ) | |
| Base annual revenue increase per Order | $ | 234 | ||
| Acceleration of federal unprotected PP&E related EDIT over 2 years | $ | (84 | ) | |
| Net increase for first two years | $ | 150 | ||
| Average % increase in annual retail revenues for the first 2 years | 7.2 | % | ||
Note: Totals may not add due to rounding.
July 8, 2024
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