What is the financial impact of the NCUC order on Duke Energy?

Duke Energy anticipates a pre-tax charge of approximately $100 million in the first quarter of 2018. This charge relates to disallowed deferred coal ash costs, a management penalty, and adjustments to deferred storm cost recovery. Importantly, this charge will be excluded from adjusted diluted earnings per share and classified as a special item.

How does the NCUC order affect the recovery of coal ash costs?

The NCUC approved the recovery of $232 million in deferred coal ash costs over five years at DEP's weighted average cost of capital (WACC). However, $9.5 million related to ash hauling at the Asheville Plant was disallowed. The company's request to recover ongoing annual coal ash costs of $129 million was denied, and these costs will be deferred for future rate case consideration.

What is the approved return on equity (ROE) and capital structure for Duke Energy Progress?

The NCUC order approves a return on equity (ROE) of 9.9% and a capital structure consisting of 52% equity and 48% debt for Duke Energy Progress, LLC.

When will the new rates approved by the NCUC become effective?

New rates for DEP's retail customers in North Carolina will become effective one day after the Commission approves DEP's recalculated revenue requirements. This recalculation is based on the findings in the NCUC's order, and is currently estimated to be approved by mid-March 2018.

Duke Energy CORP 8-K SEC Disclosure

Summary

Duke Energy's subsidiary, Duke Energy Progress, LLC (DEP), has received a favorable order from the North Carolina Utilities Commission (NCUC) regarding its 2017 rate case settlement. The NCUC approved the settlement without modification, establishing a return on equity (ROE) of 9.9% and a capital structure of 52% equity/48% debt. This decision addresses critical issues including the recovery of deferred storm and coal ash costs, providing clarity on the company's regulatory environment in North Carolina. While the order largely supports DEP's position, it includes certain disallowances and adjustments. The company will incur an estimated pre-tax charge of $100 million in Q1 2018 related to these adjustments, which will be treated as a special item and excluded from adjusted diluted earnings per share. The approval of new rates, expected in mid-March, will reflect these outcomes, providing a clearer picture of future revenue streams for this key operating segment.

Key Highlights

1NCUC approved the settlement agreement between Duke Energy Progress (DEP) and the Public Staff - North Carolina Utilities Commission without modification.
2The settlement establishes a return on equity (ROE) of 9.9% and a capital structure of 52% equity/48% debt for DEP.
3DEP will recover $232 million in deferred coal ash costs over 5 years at its weighted average cost of capital (WACC), though $9.5 million related to Asheville Plant hauling was disallowed.
4A $30 million management penalty was assessed, reducing annual recovery of deferred costs by $6 million per year for five years.
5Deferred storm cost recovery was reduced from $80 million to $51 million, with a five-year amortization starting in October 2016.
6DEP's request to recover estimated ongoing annual coal ash costs of $129 million was denied; these will be deferred for consideration in the next rate case.
7Duke Energy expects a pre-tax charge of approximately $100 million in Q1 2018 due to disallowances and adjustments, to be treated as a special item.

Duke Energy CORP 8-K Report, Corporate Update (Feb 26, 2018)

Summary

Key Highlights

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