Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Duke Energy CORP | june20208-k.htm |
EXHIBIT 99.1
Duke Energy Indiana
Summary of Order Issued by the Indiana Utility Regulatory Commission
(IURC Cause No. 45253)
Background
• | On July 2, 2019, Duke Energy Indiana (DEI) filed a general rate case with the Indiana Utility Regulatory Commission (IURC). On September 9, and December 4, 2019, DEI adjusted the request to $396 million for an overall approximate 15.6% increase in retail revenues: |
◦ | The rate case filing requests an overall rate of return of 6.0% based on approval of a 10.4% return on equity (ROE) and a 53.0% equity component of the capital structure |
◦ | The request is based on a DEI forecasted rate base of $10.2 billion as of December 31, 2020 |
◦ | If approved, annualized rates would increase $345 million in 2020 Step 1) and another $50 million in 2021 (Step 2) |
• | On June 29, 2020, the IURC issued an order approving a revenue increase of approximately $146 million for the total increase, before utility receipt taxes. Step 1 rates are estimated to be approximately 75% of the total and become effective late July 2020, and Step 2 rates are estimated to be the remaining 25% of the total rate increase to be effective Q1 2021, trued up with carrying costs to January 2021 |
• | DEI will make a compliance filing with the IURC in July 2020 for their review and approval before Step 1 rates are implemented |
Major Components of the Order
ROE, Capital Structure and Rate Base
• | Implements an overall cost of capital of 5.71% based on a 9.7% return on equity and a 53.0%1 equity component of the capital structure |
• | Approved DEI rate base of $9.9 billion as of December 31, 2019, and $10.2 billion as of December 31, 2020 |
Edwardsport
• | The Edwardsport IGCC station will be moved to base rates and the rider currently recovering the costs will be terminated |
Depreciation
• | Approves the useful lives of the depreciation study, including accelerated retirement dates for certain coal-fired generating units. Also approves the use of a regulatory asset for end-of-life inventory at retired generating plants in lieu of inclusion as a cost of decommission and dismantlement |
• | Changes the methodology to average life group (ALG) from the equal life group (ELG) |
Coal Ash Related Compliance Costs
• | Approves recovery of and on $212 million in coal ash costs incurred through 2018 over an 18-year period |
• | Deferral and cost recovery of expenditures post-2018 are being considered in a pending sub docket proceeding |
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1 Indiana’s capital structure includes Accumulated Deferred Income Taxes (ADIT). When ADIT is excluded, resulting cap structure approximates 53% equity.
Additional Information
• | Includes recovery of and on the remaining 20% of costs under Duke Energy Indiana’s T&D Infrastructure Modernization Plan (TDSIC) plan; 80% is recovered through the TDSIC rider |
• | Approves recovery of various renewables investments through inclusion in rate base |
• | Establishes reserve accounting for major storms expenditures and vegetation management |
• | Approves request to defer O&M, depreciation and carrying costs on the Customer Connect customer service platform during appropriate phases of the project |
• | DEI’s request for a five-year de-coupling program for residential and commercial customers and optional dynamic pricing rates was not approved |
Reconciliation of Request to Order
• | The Indiana Utility Regulatory Commission reduced DEI’s request by slightly more than $200 million, when accounting for the utility receipts tax |
◦ | Approximately 50% is due to the change in depreciation methodology and use of regulatory asset for the end-of-life inventory at retired generating plants |
◦ | Approximately 20% is due to the approved 9.7% ROE versus requested 10.4% |
◦ | Approximately 20% is related to miscellaneous earnings neutral adjustments |
• | DEI’s compliance filing to the IURC for their review and approval before Step 1 rates are implemented will include the final reconciliation and Step 1 and 2 increase amounts |