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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 18, 2023
| Commission File Number |
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and Zip Code |
IRS Employer Identification No. |
|
||
| 1-32853 |
DUKE ENERGY CORPORATION (a Delaware corporation) 550 South Tryon Street Charlotte, North Carolina 28202-1803 704-382-3853
|
20-2777218 |
|
1-3382 |
DUKE ENERGY PROGRESS, LLC (a North Carolina limited liability company) 410 South Wilmington Street Raleigh, North Carolina 27601-1748 704-382-3853 |
56-0165465 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
| Registrant | Title of each class | Trading Symbol(s) | Name
of each exchange on which registered |
| Duke Energy | Common stock, $0.001 par value | DUK | New York Stock Exchange LLC |
| Duke Energy | 5.625% Junior Subordinated Debentures due September 15, 2078 | DUKB | New York Stock Exchange LLC |
| Duke Energy | Depositary Shares each representing a 1/1,000th interest in a share of 5.75% Series A Cumulative Redeemable Perpetual Preferred Stock, par value $0.001 per share | DUK PR A | New York Stock Exchange LLC |
| Duke Energy | 3.10% Senior Notes due 2028 | DUK 28A | New York Stock Exchange LLC |
| Duke Energy | 3.85% Senior Notes due 2034 | DUK34 | New York Stock Exchange LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01. Regulation FD Disclosure.
On August 18, 2023 the North Carolina Utilities Commission (the “NCUC”) issued an order approving previous settlements reached by Duke Energy Progress, LLC (“DEP”), the Public Staff – North Carolina Utilities Commission (the “Public Staff”) and other parties on April 26, 2023 and April 27, 2023, which resolved certain issues in DEP’s base rate case proceeding originally filed with the NCUC on October 6, 2022. These issues include (i) agreement on prudence of plant-related investments as of March 31, 2023, (ii) agreement on capital projects and related costs to be included in the 3-year multi-year rate plan, (iii) the acceptance of depreciation rates proposed by DEP, with certain adjustments, and (iv) support for full recovery of Grid Improvement Plan deferred costs over 18 years with a debt return during the deferral period and a full weighted-average cost of capital return during the amortization period.
In addition, the August 18, 2023 NCUC order approved a return on equity of 9.8% based upon a capital structure of 53% equity and 47% debt. The order also approved the recovery of certain deferred COVID-related costs over a six-year period with no return on the unamortized balance during the deferral and amortization periods.
DEP will implement revised Year 1 rates and residential decoupling on October 1, 2023.
The Order will result in Duke Energy Corporation recognizing a one-time accounting charge of approximately $75 - 100 million, to be recognized in 3rd quarter 2023.
An overview providing additional detail on the order is attached to this Form 8-K as Exhibit 99.1. The information in Exhibit 99.1 is being furnished pursuant to this Item 7.01 and shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 99.1 | Duke Energy Progress Summary of Order in North Carolina Rate Case. | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DUKE ENERGY CORPORATION | ||
| Date: August 21, 2023 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
|
Title: |
Vice President, Legal, Chief Governance Officer and Assistant Corporate Secretary |
|
| DUKE ENERGY PROGRESS, LLC | ||
| Date: August 21, 2023 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
|
Title: |
Vice President, Legal, Chief Governance Officer and Assistant Secretary |
|
Exhibit 99.1
Duke Energy Progress, LLC
Summary of NCUC Order on North Carolina Rate Case (Docket E-2 Sub 1300)
Background:
| · | On October 6, 2022, Duke Energy Progress (“DEP” or “the Company”) filed a rate case with the North Carolina Utilities Commission (“NCUC”) to request an increase in base rate retail revenues. DEP’s rate request before the NCUC includes a Performance Based Regulation (“PBR”) Application which includes a Multi-Year Rate Plan (“MYRP”) and proposes rates for 3 years within the MYRP period. |
| o | The initial rate case filing requested an approximate overall 16.0% increase in retail revenues over the three-year period, or approximately $615 million. |
| o | The rate case filing requested an overall rate of return of 7.13% based on approval of a 10.2% return on equity (“ROE”) and a 53% equity component of the capital structure.1 Note that the requested ROE was updated to 10.4% in subsequent updates. |
| o | The historic base case in the filing is based on a North Carolina retail rate base of $12.3 billion as of December 31, 2021, adjusted for known and measurable changes projected through April 30, 2023. |
| o | The MYRP in the initial filing included impacts of approximately $3.8 billion (NC retail allocation) of capital projects that are projected to go in service over the MYRP period. |
| · | On April 26, 2023, DEP and the Public Staff - North Carolina Utilities Commission (“Public Staff”) filed an Agreement and Stipulation of Partial Settlement with the NCUC resolving certain issues in the base rate and MYRP proceeding. Additionally, on April 27, 2023, DEP and the Public Staff filed a Transmission Cost Allocation Agreement and Stipulation of Settlement (together with the Partial Settlement, the “Stipulations”). |
| · | On August 18, 2023, the NCUC issued an Order approving the Company’s PBR Application, as modified by the Stipulations and the Order. This Order marks the first implementation of PBR for the State under the performance-based regulations authorized by HB 951 for electric utilities. As part of the approval of implementation of PBR, the Order addresses a number of key items, including certain unresolved issues from the Stipulations. |
1 This overall rate of return includes the provisions of the CCR settlement which includes a 150 basis point reduction in the ROE with a 52% equity component for the capital structure allowed for coal ash deferrals during the amortization period.
Key aspects of the Order:
| · | Approved an ROE of 9.8% based upon a capital structure of 53% equity and 47% debt (an increase from the current approved ROE of 9.6% and an equity component of the capital structure of 52%), for a weighted-average rate of return of 7.09%. |
| · | Approved recovery over six-years of certain deferred COVID-related costs with no return on the unamortized balance during the deferral and amortization periods. |
| · | Approved DEP’s proposal to net over amortizations (regulatory liabilities) against similar regulatory assets, with some limited exceptions. |
| · | Approval to defer the benefits of the Infrastructure Investment and Jobs Act (“IIJA”) and Inflation Reduction Act (“IRA”), net of costs. Estimated IRA benefits associated with solar and storage MYRP projects were included in the case. Any variance to these estimates and additional benefits, such as nuclear PTCs, to be deferred and addressed in future proceedings. |
| · | Approved the Stipulations (with minor modifications), including the following key provisions: |
| o | Rate base: Approval of NC retail rate base for the historic base case of approximately $12.2 billion. |
| o | MYRP Capital: Approval of capital projects and related costs to be included in the 3-year MYRP, including $3.5 billion (NC retail allocation) projected to go in service over the MYRP period. |
| o | Depreciation rates: Approval of depreciation rates proposed by DEP, including coal plant retirement dates, with certain depreciable lives of transmission and general plant investments adjusted to conform to recommendations by Public Staff. |
| § | 75% of impact of updated subcritical coal plant retirement dates (for Mayo and Roxboro Units 3 and 4) to be deferred to a regulatory asset (as compared to 50% originally proposed by DEP) and agreement on traditional recovery for any amounts not eligible for securitization. |
| o | Grid Improvement Plan (“GIP”): Approval for full recovery of GIP deferred costs over 18 years (rather than 3 years proposed by DEP) with a debt return during the deferral period and a full weighted-average cost of capital (“WACC”) return during the amortization period. |
| o | Transmission Cost Allocation: Approval of re-allocation of certain transmission costs between DEP and Duke Energy Carolinas (“DEC”). |
| o | Residential Decoupling and Performance Incentive Measures (“PIMs”): Approval as requested under the PBR Application and revised by the Stipulations. |
| o | Affordability Contribution: Approval of 3-year shareholder funded commitment between DEP and DEC to contribute $16 million to support low-income customers. |
| · | Denial of DEP’s request to establish a storm balancing account. |
Additional Information:
| · | DEP will implement revised Year 1 rates and residential decoupling on October 1, 2023. | |
| · | The Order will result in Duke Energy Corporation recognizing a one-time accounting charge of approximately $75 - 100 million, to be recognized in 3rd quarter 2023. |
Reconciliation of Company Request to Reflect Stipulations and NCUC Order
| ($ in millions) | Historic Base Case |
Year 1 -MYRP | Total Year 1 | |||||||||
| Original requested revenue requirement increase | $ | 219 | $ | 107 | $ | 326 | ||||||
| Post-filing, pre-Stipulation adjustments | 87 | (2 | ) | 85 | ||||||||
| Revised company requested revenue requirement increase | 306 | 105 | 411 | |||||||||
| Agreed upon adjustments: | ||||||||||||
| Reduction in depreciation expense | (26 | ) | (2 | ) | (28 | ) | ||||||
| Reduction due to transmission cost allocation | (20 | ) | (20 | ) | ||||||||
| Extended amortization period for GIP deferral | (11 | ) | (11 | ) | ||||||||
| Reduced contingency in MYRP projects | (4 | ) | (4 | ) | ||||||||
| Change to in-service dates | (10 | ) | 4 | (6 | ) | |||||||
| Other revenue reductions | (20 | ) | (2 | ) | (22 | ) | ||||||
| Total adjustments per Stipulations | (87 | ) | (4 | ) | (91 | ) | ||||||
| 9.8% ROE vs. 10.4% requested | (51 | ) | (3 | ) | (54 | ) | ||||||
| Other (primarily COVID deferral adjustments) | (33 | ) | (33 | ) | ||||||||
| Revised incremental annual revenue requirement per NCUC Order | $ | 136 | $ | 98 | $ | 233 | ||||||
| Net annualized customer rate increase | 3.3 | % | 2.4 | % | 5.6 | % | ||||||
| ($ in millions) | Year 2 -MYRP | Year 3 -MYRP | Combined Total |
|||||||||
| Original requested revenue requirement increase | $ | 151 | $ | 138 | $ | 615 | ||||||
| Post-filing, pre-Stipulation adjustments | (18 | ) | 10 | 77 | ||||||||
| Revised company requested revenue requirement increase | 133 | 148 | 692 | |||||||||
| Agreed upon adjustments: | ||||||||||||
| Reduction in depreciation expense | (2 | ) | (1 | ) | (31 | ) | ||||||
| Reduction due to transmission cost allocation | (20 | ) | ||||||||||
| Extended amortization period for GIP deferral | (11 | ) | ||||||||||
| Reduced contingency in MYRP projects | (7 | ) | (8 | ) | (19 | ) | ||||||
| Change to in-service dates | 4 | 3 | 1 | |||||||||
| Other revenue reductions | (1 | ) | (2 | ) | (25 | ) | ||||||
| Total adjustments per Stipulations | (6 | ) | (8 | ) | (105 | ) | ||||||
| 9.8% ROE vs. 10.4% requested | (4 | ) | (5 | ) | (63 | ) | ||||||
| Other (primarily COVID deferral adjustments) | 3 | (30 | ) | |||||||||
| Revised incremental annual revenue requirement per NCUC Order | $ | 126 | $ | 135 | $ | 494 | ||||||
| Net annualized customer rate increase | 3.0 | % | 3.3 | % | 11.9 | % | ||||||
Totals may not add due to rounding.
Historic Base Case includes Company requested change of $8M to EDIT decrement rider and new decrement rider for over amortizations of $3M which will expire at the end of Year 1.