What is the significance of the securitization financing order mentioned in the settlement?

A securitization financing order allows Duke Energy Carolinas to finance the Deferred Storm Costs by issuing bonds. The proceeds from these bonds would then be used to recover the storm costs. This method is often structured to potentially lower the cost of recovery for customers compared to traditional rate recovery mechanisms, and this settlement includes agreed-upon assumptions to demonstrate such customer benefits.

Will customers see an immediate impact on their bills from this partial settlement?

Immediately, the settlement establishes a recovery rider for Deferred Storm Costs that is initially set at $0. However, if DEC is unable to secure recovery through the planned securitization process, it may seek recovery outside of a general rate case, which could potentially impact customer bills in the future.

What critical issues were left unresolved by this partial settlement?

The partial settlement did not address several significant financial and operational matters, including the recovery of coal ash remediation costs, the allowed return on equity (ROE), the company's capitalization structure, depreciation rates, the grid improvement plan, and the return of certain Excess Deferred Income Tax (EDIT) balances. These items will continue to be subjects of negotiation or regulatory decision-making.

Duke Energy CORP 8-K SEC Disclosure

Q: What are the Deferred Storm Costs that Duke Energy Carolinas is seeking to recover?

The Deferred Storm Costs refer to expenses incurred by Duke Energy Carolinas (DEC) related to Hurricanes Florence and Michael, and Winter Storm Diego. These are costs that DEC had initially requested to recover through its general rate case.

Summary

Duke Energy (DUK) announced a significant development regarding its subsidiary, Duke Energy Carolinas, LLC (DEC), in a North Carolina general rate case. On March 25, 2020, DEC reached a partial settlement with the Public Staff - North Carolina Utilities Commission concerning the recovery of Deferred Storm Costs from Hurricanes Florence and Michael, and Winter Storm Diego. Under this agreement, DEC will withdraw its immediate request to recover these costs in the current rate case. Instead, it commits to filing a petition for a securitization financing order for these costs within 120 days of the NCUC's order on the rate case, contingent on the NCUC's findings regarding storm costs and the settlement. A recovery rider for these costs will be established, initially set at $0. This partial settlement excludes several key issues, including coal ash recovery, return on equity, capitalization structure, and depreciation rates, which remain subject to further proceedings. The agreement is also contingent on the North Carolina Utilities Commission's (NCUC) review and approval. Additionally, the filing notes a delay in the procedural schedule for Duke Energy Progress, LLC's (DEP) rate case due to the ongoing COVID-19 pandemic, suspending key filing dates and a scheduled hearing.

Key Highlights

1Duke Energy Carolinas (DEC) reached a partial settlement in its North Carolina rate case regarding Deferred Storm Costs.
2DEC will defer recovery of storm costs in the current rate case, opting for a securitization financing order process.
3A petition for a securitization financing order for Deferred Storm Costs is expected within 120 days of the NCUC's rate case order.
4The partial settlement is subject to NCUC review and approval.
5Key issues such as coal ash recovery, return on equity, and capitalization structure were NOT part of the settlement and remain open for negotiation or adjudication.
6The procedural schedule for Duke Energy Progress (DEP) rate case has been suspended due to COVID-19 uncertainty.
7The settlement aims to provide quantifiable benefits to customers through securitization.

Duke Energy CORP 8-K Report, Corporate Update (Mar 26, 2020)

Summary

Key Highlights

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