Duke Energy will ask customers to pay for canceled reactors

jmurawski@newsobserver.comMay 3, 2013 

  • Duke’s earnings helped by weather

    Duke Energy earned $634 million in the first quarter of the year as colder winter weather and higher customer rates in the Carolinas boosted profits.

    In the third quarter since its July 2012 merger with Progress Energy, Duke reported earnings of 89 cents a share compared with 66 cents a year earlier. Adjusted for merger costs and other special charges, earnings were $1.02 a share, 2 cents below Wall Street analysts’ expectations and down from $1.13 a year earlier.

    CEO Jim Rogers said the results were in line with the company’s guidance of $4.20 to $4.45 a share for 2013.

    Duke’s regulated businesses were helped by weather that, in the Carolinas, was 41 percent colder than a year earlier. Higher rates also lifted profits. Total sales in the Carolinas rose 14 percent.

    Commercial power, or unregulated businesses, fell 3 cents a share on lower earnings from Duke’s power plants in the Midwest.

    Bruce Henderson, The Charlotte Observer

When Progress Energy applied for a rate increase last fall, the request didn’t include $70 million the Raleigh electric utility had spent on a planned addition of two reactors at the Shearon Harris nuclear plant in Wake County.

But Duke Energy, which acquired Progress last summer, plans to recover those costs and pass them on to customers, Duke CEO Jim Rogers told investors Friday.

Rogers revealed the company’s intentions a day after Charlotte-based Duke announced it is canceling the Shearon Harris expansion.

Notwithstanding the Progress-Duke merger, the Shearon Harris costs would be paid only by customers of the Progress subsidiary, now called Duke Energy Progress, which operates independently of the Duke subsidiary.

Progress spokesman Jeff Brooks said it’s not clear when the company will ask the N.C. Utilities Commission and South Carolina regulators to include the Shearon Harris costs in rates.

“We’re going to explore the option of how to recover those costs but we do have the intention of recovering those costs in the fairest possible way from our customers,” Brooks said.

The North Carolina portion of the Shearon Harris expense is about $46 million, and its recovery would likely be spread out over several years, said James McLawhorn, director of the electric division of the Public Staff, the state’s consumer advocacy agency in utility rate matters.

That means residential customers might see their power bills increase by a quarter or half dollar a month over several years.

State law allows utilities to recover prudently incurred costs, McLawhorn said.

The Public Staff would audit those expenses, reviewing board minutes, internal memos, bid documents and other records to determine whether the costs are justified, he said.

The planned cost recovery is likely to be challenged by critics who tried to block the Shearon Harris nuclear expansion and have fought recent rate-hike requests, said Jim Warren, director of Durham anti-nuclear group NC WARN.

“Especially when Duke-Progress are jacking up rates, taking down seven figure salaries,” Warren said. “Duke’s pushing the limits of public toleration.”

In Progress’ pending rate request, which is awaiting a decision from the N.C. Utilities Commission, the company is seeking to add $147.4 million in the first year and $178.7 million a year thereafter to its revenue in North Carolina.

The expenses are related to preparing and filing an application with the Nuclear Regulatory Commission, which was pending and awaiting approval. They cover the site’s qualifications, design safety, environmental effects, operational programs and other licensing factors.

Murawski: 919-829-8932

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