Duke Energy Progress Updates Rate Proposal

As you know, Duke Energy Progress is the utility that serves about 169,000 customers in the northeastern corner of South Carolina, to include Dillon, Florence, Darlington and Sumter counties.

We are listening to our customers. To that end, instead of the basic facilities charge of $29 per month the company initially requested in the ongoing case before the Public Service Commission of South Carolina, the company has agreed to adopt the Office of Regulatory Staff’s proposal to limit the increase as follows: $11.78 for residential customers, $12.34 for SGS customers, and $11.31 for SGS Constant Load customers, and to put the remaining revenue requirement ultimately determined by the Public Service Commission of South Carolina in the variable component of such rates.

This only addresses the basic facilities charge issue and the company maintains its other positions on all other issues in this case.

The company still seeks to increase retail revenues by about $59 million, or about 10.3 percent over current revenue amounts. If approved by the Public Service Commission of South Carolina, beginning June 1, 2019, electric rates will increase about 12.5 percent for residential customers. Commercial and industrial customers will see an average increase of around 8.8 percent.

The Public Service Commission of South Carolina will determine the appropriate price electric customers pay after a thorough and very transparent public process for reviewing rate requests.

The next important milestone in the Duke Energy Progress rate request takes place April 1 in Florence and April 2 in Sumter when the commissioners will hold public night hearings to hear directly from customers. Our South Carolina team and leadership will be attending each of these hearings to listen to our customers as well.

Additional background:

At Duke Energy, we work to keep costs as low as possible for our customers and to avoid an increase to customer bills whenever possible, and we aggressively manage costs to delay the need to increase rates.

We are seeking an increase for Duke Energy Progress customers now because we have made significant investments in recent years to build a smarter energy infrastructure to meet the needs of a growing customer base, and to comply with rigid environmental requirements at the state and federal level. These investments help provide affordable, reliable and increasingly clean energy to customers, and are the main reason for the proposed increase

Part of the proposed rate adjustment is to bring the fixed basic facilities charge closer to representing the true costs of serving our South Carolina customers, from the current $9.06 per month to $29 per month. This charge is intended to cover the cost of the facilities the company has installed in order to be able to deliver electricity to a customer’s home.

These costs do not vary with usage. Therefore, it makes sense that the costs of these facilities are recovered through a fixed charge. Duke Energy is asking to increase this charge because historically the basic facilities charge hasn’t recovered all of the fixed costs incurred to deliver electricity. This causes higher use customers to pay costs that should be recovered from lower use customers. The requested basic facilities charge simply accurately reflects the cost to serve every customer, ensuring all customers pay their fair share to access and use the electric grid.

It’s important to note that the higher basic facilities charge results in a lower price per- kilowatt-hour. An average customer shouldn’t see a change in their bill – they will just be paying more through the basic facilities charge and less through the energy charge. Each rate component is adjusted separately to achieve the revenue adjustment sought by the company. A smaller change in the basic facilities charge results in a larger change in other rates.

For additional information, please visit www.duke-energy.com/SCProgressRates. The complete request and more details can be found at the Public Service Commission of South Carolina website, docket number 2018-318-E, at https://dms.psc.sc.gov/Web/Dockets/Detail/116871.

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