What is the main impact of this settlement on Duke Energy Florida's (DEF) rates for customers?

For customers, the key impact is a base rate stay-out provision that prevents general base rate increases through the end of 2024. While there are modest incremental increases scheduled for 2022, 2023, and 2024, DEF will retain a $173 million award for spent nuclear fuel to help mitigate overall customer rate impacts during the settlement period.

What is the agreed-upon Return on Equity (ROE) for DEF under this settlement?

The settlement establishes a Return on Equity (ROE) band of 8.85% to 10.85%, with a midpoint of 9.85%, based on a capital structure of 53% equity and 47% debt. This ROE band can be increased by 25 basis points if the average 30-year US Treasury rate rises by 50 basis points or more over a six-month period.

What investments are being made by Duke Energy Florida as part of this settlement?

The settlement includes provisions for the accelerated depreciation of Crystal River North coal-fired power plants. It also approves approximately $1 billion in future investments for cost-effective solar power. Additionally, it allows for the implementation of a new Electric Vehicle Charging Station Program and the deferral and recovery of costs for DEF's Vision Florida program, which focuses on emerging non-carbon emitting generation technology and resiliency projects.

When will these new rates and programs officially go into effect?

The settlement is awaiting review and approval from the Florida Public Service Commission (FPSC), which is expected in the second quarter of 2021. If approved, the new rates would become effective on January 1, 2022, with subsequent base rate increases on January 1, 2023, and January 1, 2024. The new programs would also be implemented following approval.

Duke Energy CORP 8-K SEC Disclosure

Summary

This 8-K filing from Duke Energy Corp. (DUK) on January 15, 2021, announces a significant settlement agreement by its subsidiary, Duke Energy Florida (DEF), with the Florida Public Service Commission (FPSC) and other parties. The settlement includes a base rate stay-out provision through year-end 2024, but allows for incremental base rate increases totaling approximately $195 million over 2022, 2023, and 2024. It also establishes a return on equity (ROE) band, with mechanisms for adjustment based on Treasury rates and DEF retaining a $173 million Department of Energy award for spent nuclear fuel to mitigate customer rates. Furthermore, the agreement addresses the accelerated depreciation of coal-fired power plants, approves substantial investments in solar power, introduces an Electric Vehicle Charging Station Program, and allows for the deferral and recovery of costs related to DEF's Vision Florida program, focusing on emerging non-carbon emitting technologies and resiliency. This settlement, pending FPSC approval expected in Q2 2021, sets the stage for rate adjustments effective January 1, 2022, and subsequent years.

Key Highlights

1Duke Energy Florida (DEF) reached a settlement agreement with the Florida Public Service Commission (FPSC) and other key parties.
2Base rates will remain unchanged through the end of 2024, with limited incremental increases allowed in 2022 ($67M), 2023 ($49M), and 2024 ($79M).
3A Return on Equity (ROE) band of 8.85% to 10.85% (midpoint 9.85%) has been established, with potential upward adjustment linked to Treasury rates.
4DEF will retain a $173 million Department of Energy award for spent nuclear fuel, expected in 2022, to offset customer rate impacts.
5The settlement includes provisions for accelerated depreciation of coal-fired plants and approval of approximately $1 billion in future solar power investments.
6A new Electric Vehicle Charging Station Program and cost recovery for DEF's Vision Florida program (focusing on emerging technologies and resiliency) are also part of the agreement.
7The settlement is subject to FPSC approval, anticipated in the second quarter of 2021, with new rates taking effect January 1, 2022.

Duke Energy CORP 8-K Report, Corporate Update (Jan 15, 2021)

Summary

Key Highlights

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