Duke Energy Carolinas has scaled back its proposed residential electricity rate increase to 11.6%, down from the originally sought 18%, following significant pushback from state regulators, the attorney general, and consumer groups. The revised request, submitted Monday, still requires final approval from the North Carolina Utilities Commission, with new rates potentially taking effect on January 1, 2027.
Regulatory and Legal Opposition
North Carolina Attorney General Jeff Jackson, who had filed to formally oppose the original rate hike, welcomed the reduction but described the new proposal as "still too high." Jackson stated, "Our case was that Duke could afford a lower rate while still meeting its needs. Duke just agreed." He indicated his office will continue to advocate for residential customers, particularly concerning costs tied to large-scale data center demand.
The commission has scheduled an expert-witness hearing for July 7 in Raleigh for Duke Energy Carolinas' rate case, identified as E-7 Sub 1329. The case involves performance-based regulation, a multi-year framework allowing the utility to recover approved costs while being evaluated against specific performance targets.
Key Financial Details
In its original securities filing, Duke Energy Carolinas sought an additional $1.0 billion in annual retail revenue over two years, alongside approximately $4.4 billion in North Carolina retail capital projects. About $155 million of the request was tied to the company's proposed return on equity and capital structure. The company initially requested a 10.95% return on equity, which the attorney general's office countered with a 7.4% proposal, estimating $1.37 billion in customer savings over two years—or roughly $435 per residential bill.
The Southern Environmental Law Center, representing consumer and clean-energy groups, supported a 9.1% return, aligning broadly with Jackson and environmental organizations on the core issue, though the specific figures did not fully match. They argued that Duke could raise necessary capital for its infrastructure projects without requiring the higher profit levels it requested.
Rising Demand and Data Center Controversy
North Carolina's electricity demand is accelerating after years of slower growth. A state energy task force report indicated that Duke's two North Carolina systems could see net load surge by 16% to 60% over the next 15 years. Notably, data centers account for 30% of Duke's tracked economic-development project pipeline but represent 80% of projected energy demand from those projects, according to the report.
The data center issue has sharpened tensions in the case. At a June hearing in Durham, Duke spokesman Jeff Brooks told the commission, "Residential customers should not pay for data centers." However, protesters and consumer groups pushed back, warning that households could still face costs if grid expansions are oversized or poorly timed.
Company Position and Risks
Duke Energy has described its investment plans as essential for reliability and growth in a rapidly expanding state. "Our goal is to deliver reliable power at the lowest possible cost for customers," said Kendal Bowman, president of Duke Energy North Carolina, in the company's November filing. The company argues that its infrastructure investments are necessary to maintain grid reliability and support economic development.
Despite the reduced rate request, the case could still result in outcomes unfavorable to the attorney general. Duke maintains that its investments are critical, and regulators may find that deeper cuts could introduce financing risks or delay grid projects. There is also the risk that if projected demand proves too high, customers could end up paying for infrastructure that is underutilized or never fully needed.
Merger and Outlook
Duke Energy Progress, which also operates in North Carolina, remains part of the broader picture. Duke Energy has proposed merging Duke Energy Carolinas with Duke Energy Progress, arguing that a combined utility could reduce customer costs by over $1 billion through 2038, pending regulatory approval.
The North Carolina Utilities Commission has the authority to approve, reduce, or deny Duke Energy Carolinas' rate request. If regulators approve a version of the new rates, customers could see updated charges on January 1, 2027. A final order is expected this fall, and any decision lower than Duke's revised proposal or the attorney general's recommended rate could significantly alter household bills and the company's expected retail revenue.
