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Duke Energy (NYSE: DUK ) announced today that it has reached a compromise on its base rate increase request for its Carolinas division. The settlement with North Carolina Public Staff reduces Duke's initial $446 million request to $235 million and spreads rate increases over a three-year period.
The new agreement equates to an almost 50% cut off Duke's initial ask and also includes a $10 million assistance package to offset new rate hikes for low-income customers.
"The agreement represents an effective balance between reducing the rate impact to customers and allowing the company to begin recovering the cost of investments made for the benefit of customers," said Paul Newton, Duke Energy's North Carolina state president, in a statement. "We have made significant investments to replace older, less efficient facilities with new state-of-the art power plants that are more environmentally friendly. These new facilities will serve our customers for decades to come."
Details of the settlement include a 10.2% ROE as well as a base rate request sabbatical until 2015 or beyond, notwithstanding new generation or regulatory compliance costs. The North Carolina Utilities Commission will review the new agreement in July, with rate increases effective September.