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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): December 15, 2023
| Commission File Number |
Exact Name of Registrant as Specified in its Charter, State or other Jurisdiction of Incorporation, Address of Principal Executive Offices, Zip Code, and Registrant's Telephone Number, Including Area Code |
IRS Employer Identification No. |
 |
||
| 1-32853 |
DUKE ENERGY CORPORATION (a Delaware corporation) 525 South Tryon Street Charlotte, North Carolina 28202-1803 704-382-3853
|
20-2777218 |
|
1-4928 |
DUKE ENERGY CAROLINAS, LLC (a North Carolina limited liability company) 525 South Tryon Street Charlotte, North Carolina 28202-1803 704-382-3853 |
56-0205520 |
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 | DUK | 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 December 15, 2023, the North Carolina Utilities Commission (the “NCUC”) issued an order approving an increase in base rates, implementing Performance-Based Regulation, and approving a number of settlements reached by Duke Energy Carolinas, LLC (“DEC”), the Public Staff – North Carolina Utilities Commission (the “Public Staff”) and other parties during the proceeding, which resolved certain issues in DEC’s base rate case proceeding originally filed with the NCUC on January 19, 2023. The settled issues approved by the NCUC include (i) agreement on prudence of plant-related investments as of June 30, 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 DEC, with certain adjustments, (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, and (v) the future treatment of nuclear production tax credits related to the Inflation Reduction Act.
In addition, the December 15, 2023, NCUC order approved a return on equity of 10.1% based upon a capital structure of 53% equity and 47% debt. The order also approved the recovery of deferred COVID-related costs, with minor adjustments, over a three-year period with a return on the unamortized balance during the deferral and amortization periods.
DEC will implement revised Year 1 rates and residential decoupling in January 2024.
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 Carolinas Summary of North Carolina Rate Case Order. | ||
| 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: December 18, 2023 | By: | /s/ David S. Maltz |
| Name: | David S. Maltz | |
|
Title: |
Vice President, Legal, Chief Governance Officer and Assistant Corporate Secretary |
|
| DUKE ENERGY CAROLINAS, LLC | ||
| Date: December 18, 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 Carolinas, LLC
Summary of NCUC Order on North Carolina Rate Case (Docket E-7 Sub 1276)
Background:
| · | On January 19, 2023, Duke Energy Carolinas, LLC (“DEC” or “the Company”) filed a rate case with the North Carolina Utilities Commission (“NCUC”) to request an increase in base rate retail revenues. DEC’s rate request before the NCUC includes a Performance Based Regulation (“PBR”) Application which includes a Multi-Year Rate Plan (“MYRP”) that proposes rates for the 3-year MYRP period (January 1, 2024 to December 31, 2026). |
| o | The initial rate case filing requested an approximate overall 15.7% increase in retail revenues over the three-year period, or approximately $823 million. |
| o | The rate case filing requested an overall rate of return of 7.53% based on approval of a 10.4% return on equity (“ROE”) and a 53% equity component of the capital structure.1 |
| o | The historic base case in the initial filing is based on a North Carolina retail rate base of $19.1 billion as of December 31, 2021, adjusted for known and measurable changes projected through July 31, 2023. |
| o | The initial filing included impacts of approximately $4.7 billion (NC retail allocation) of capital projects that are projected to go in service over the 3-year MYRP period. |
| · | On August 22, 2023, DEC 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 August 28, 2023, DEC and the Public Staff filed a second stipulation which includes, among other things, the future treatment of nuclear production tax credits (“Nuclear PTCs”) related to the Inflation Reduction Act (“IRA”). On October 13, 2023, DEC and Public Staff filed a supplemental stipulation resolving all issues related to plant in service in rate base through June 30, 2023. |
| · | On December 15, 2023, the NCUC issued an Order approving the Company’s PBR Application, as modified by the Stipulations and the Order. 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 10.1% based upon a capital structure of 53% equity and 47% debt (an increase from the current approved ROE of 9.6% and equity component of the capital structure of 52%), for a weighted-average rate of return of 7.496%. |
| · | Approved recovery of deferred COVID-related costs, with minor adjustments, over three years with a weighted-average cost of capital (“WACC”) return on the unamortized balance during the deferral and amortization periods. |
| · | Approved DEC’s proposal to net over amortizations (regulatory liabilities) against similar regulatory assets, with some limited exceptions. |
| · | Approved the Stipulations, including the following key provisions: |
| o | Rate base: Approval of NC retail rate base for the historic base case of approximately $19.5 billion. |
| o | MYRP Capital: Approval of capital projects and related costs to be included in the 3-year MYRP, including $4.6 billion (NC retail allocation) projected to go in service over the MYRP period. |
| o | Depreciation rates: Approval of depreciation rates proposed by DEC, 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 Allen Units 1 and 5, Marshall Units 1 and 2, and Cliffside Unit 5) to be deferred to a regulatory asset (as compared to 50% originally proposed by DEC) 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 DEC) with a debt return during the deferral period and a full WACC return during the amortization period. |
| o | Residential Decoupling and Performance Incentive Measures (“PIMs”): Approval as requested under the PBR Application and revised by the Stipulations. |
| o | Duke Energy Plaza: Approved recovery of the cost of the Duke Energy Plaza (new headquarters building in downtown Charlotte, NC) with an agreed upon reduction of $50 million of system-level capital costs (annual revenue requirement is reduced by the NC retail allocation). |
| o | Nuclear PTCs: Approved a standalone rider to provide the benefit of nuclear production tax credits (“Nuclear PTCs”) under the IRA to customers, net of transaction costs and discounts, beginning January 1, 2025. DEC will flow back to customers Nuclear PTC benefits of $50 million in 2025 and $100 million in 2026. Thereafter, Nuclear PTCs will be tracked on an annual basis and flowed back to customers through the rider with a four-year amortization for each annual amount. |
Additional Information:
| · | DEC will implement revised Year 1 rates and residential decoupling in January 2024. |
Reconciliation of Company Request to Reflect Stipulations and NCUC Order
| ($ in millions) | Historic Base Case |
Year 1 - MYRP | Total Year 1 | |||||||||
| Original requested revenue requirement increase | $ | 361 | $ | 140 | $ | 501 | ||||||
| Post-filing, pre-Stipulation adjustments | 95 | 23 | 117 | |||||||||
| Revised requested revenue requirement increase | $ | 456 | $ | 163 | $ | 618 | ||||||
| Stipulation Adjustments | (97 | ) | (39 | ) | (136 | ) | ||||||
| Company requested revenue requirement increase, including stipulations | $ | 358 | $ | 125 | $ | 483 | ||||||
| 10.1% ROE vs. 10.4% requested | (41 | ) | (2 | ) | (43 | ) | ||||||
| Other (primarily COVID deferral adjustments) | (4 | ) | - | (4 | ) | |||||||
| Revised incremental annual revenue requirement per NCUC Order | $ | 313 | $ | 123 | $ | 436 | ||||||
| Net annualized customer rate increase | 6.0 | % | 2.3 | % | 8.3 | % | ||||||
| ($ in millions) | Year 2 - MYRP | Year 3 - MYRP | Combined Total |
|||||||||
| Original requested revenue requirement increase | $ | 172 | $ | 150 | $ | 823 | ||||||
| Post-filing, pre-Stipulation adjustments | 8 | 33 | 158 | |||||||||
| Revised requested revenue requirement increase | $ | 180 | $ | 183 | $ | 981 | ||||||
| Stipulation Adjustments | (3 | ) | (22 | ) | (161 | ) | ||||||
| Company requested revenue requirement increase, including stipulations | $ | 177 | $ | 161 | $ | 820 | ||||||
| 10.1% ROE vs. 10.4% requested | (3 | ) | (2 | ) | (48 | ) | ||||||
| Other (primarily COVID deferral adjustments) | - | - | (4 | ) | ||||||||
| Revised incremental annual revenue requirement per NCUC Order | $ | 174 | $ | 159 | $ | 768 | ||||||
| Net annualized customer rate increase | 3.3 | % | 3.0 | % | 14.6 | % | ||||||
Totals may not add due to rounding. Final revenue requirements are estimates based on the NCUC’s findings and rulings, and subject to Public Staff review.
Historic Base Case includes Company requested change of $10.5M to EDIT decrement rider and new decrement rider for over amortizations of $0.5M which will expire after one year.