Progress Energy Carolinas electric rates to fall in North Carolina

Although Duke Energy Carolinas and Progress Energy Carolinas continue to operate as separate utilities, the merger agreements allow the companies to jointly dispatch power plants to reduce fuel expenses

Progress Energy Carolinas residential customers in North Carolina will pay slightly less for electricity beginning Dec. 1.

As approved by the N.C. Utilities Commission (NCUC), the bill for a residential customer using 1,000 kWh per month will decrease from $105.15 to $104.06.

The decrease is similar to other decreases applied in 2009 and 2010.

In September, customers began seeing reductions in their bills related to Progress Energy's merger with Duke Energy.

Although Duke Energy Carolinas and Progress Energy Carolinas continue to operate as separate utilities, the merger agreements allow the companies to jointly dispatch power plants to reduce fuel expenses — thereby lowering the fuel costs passed on to customers. These changes are already saving residential customers $.85 on a monthly 1,000 kWh bill.

The additional decrease announced today reflects changes in three components of the rates N.C. residential customers pay. The changes, based on a monthly 1,000 kWh bill, include:

· A decrease of $1.54 in the monthly amount customers are charged for fuels used to generate electricity;

· An increase of 59 cents in the monthly charge used to pay for energy-efficiency and demand-side management programs; and

· A decrease of 14 cents per month in the charge for state-mandated renewable energy.

Commercial customers will see an increase of 0.2 percent and industrial customers will see a 0.6 percent increase.

The fuel portion of the company's rates is adjusted annually by the NCUC to reflect the actual cost of fuel the utility uses to produce electricity to meet customer demand. By law, Progress Energy does not make a profit from the fuel charge.

The company also files annually to recover the costs of implementing programs designed to help reduce energy consumption and save customers money on their energy bills, and for costs associated with the utility's renewable energy investments.

Under North Carolina's energy law passed in 2007, Progress Energy must provide an increasing percentage of energy sales from renewable resources. The requirement grows from 3 percent this year to 12.5 percent in 2021. The company has signed contracts to purchase energy from a number of solar photovoltaic arrays, biofuels facilities and other renewable sources, and continues to evaluate renewable energy opportunities.

Apart from fuel, energy efficiency and renewable energy expenses, the other main component of customer rates is the base retail rate.

In October, Progress Energy filed a request with the NCUC to increase the base rate portion of customer bills to reflect investments made to modernize the power system and other increased costs of providing service.

The NCUC has scheduled public hearings on that request in February and March 2013. If approved, the increase is expected to take effect in mid-2013.

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