Duke Energy is seeking 1 percent rate increase

Duke Energy is asking state regulators for a 1 percent residential rate hike to account for rising fuel costs, which would raise the average homeowner's monthly bill by 80 cents.

The Charlotte-based utility, with 1.6 million customers in North Carolina, adjusts its rates every year for fuel costs. The company is asking for the increase also to make up for a $53.5 million shortfall in fuel cost collections last year.

But the impact on customer bills will seem bigger because the utility is also ending a 3 percent rate cut that had been in effect one year. Both changes would be effective July 1 and together would raise residential rates by 4 percent, or about $3.20 a month.

The request is Duke Energy's smallest fuel adjustment since 2002, when the company lowered rates to reflect decreased fuel costs.

The fuels -- coal, natural gas and uranium -- are used to run the company's power plants to generate electricity. Electric utilities in North Carolina adjust their rates annually to reflect the cost of fuel.

Progress Energy plans to make its annual fuel adjustment request in June. The company will ask for at least a 1.4 percent increase, based on a settlement last year with the N.C. Utilities Commission that spread higher fuel costs over three years.

If Duke's request is approved by the utilities commission, the combined effect of the fuel adjustment and expired rate cut on the utility's commercial customers would be about 5 percent. Duke Energy's manufacturing customers would see an increase of about 12 percent.

Last year, the utilities commission approved a one-year rate cut as a condition for agreeing to let Duke merge with Cinergy, a deal that formed one of the nation's largest electric utilities with operations in the South and Midwest.

The utilities commission will hold a public hearing on the fuel-related rate request May 1.