AP Energy Writer
Columbus, OH — Utility company Duke Energy said Tuesday it will ask North Carolina regulators to increase customer rates by an average of 12.6 percent beginning Jan. 1 as it seeks to recover costs for pollution control equipment and new power lines and plants.
If approved by regulators, the increase would boost rates for the average residential customer by $11 a month to $93, according to the company. Rates for industrial customers would go up 15 percent and rates for other customers would increase by nearly 10 percent.
The increase would generate nearly $500 million a year for Duke. About 70 percent of the $5.9 billion in revenue the company received from its 2.4 million customers in the Carolinas in 2008 came from customers in North Carolina.
Charlotte, N.C.-based Duke Energy Corp. adjusts its fuel costs that customers pay annually, but the last general rate increase in North Carolina was 1991.
“Our current rates are simply not sufficient to meet our day-to-day expenses, build cleaner and more reliable energy infrastructure, provide a fair return to our investors, and maintain a strong financial position that keeps our credit rating high and our cost of borrowing low,” the company said.
Even with the requested increase, Duke said rates in the Carolinas will remain well below national averages.
Current rates are 31 percent below national averages in North Carolina, and Duke cut rates by an average of 7.5 percent in 2007.
About 75 percent of the increase will go toward recovering the $4.8 billion the company spent since 2006 on pollution control equipment, power lines and plants as Duke looks to modernize its fleet of power plants and retire old units.
Like other utilities, the recession has cut demand for electricity in Duke’s five-state service territory that also includes Ohio, Indiana and Kentucky.
In response, the company wants to cut costs by $100 million in 2009. It also has frozen wages for most salaried workers and slashed its capital spending budget.
Brett Carter, president of Duke Energy Carolinas, said even during the recession electricity consumption among residential customers is on the rise. He also said the company must be ready when the recession ends and power demand increases.
“That growth we’re seeing in the residential segment is an indication that growth in the region is still there,” he said. “When we do come out of this recession there is that need for generation to serve those customers.”