Duke Energy is asking state regulators to approve an increase of more than 13% in its rates in 2027 for residential customers, with business customers likely to see smaller increases.
The requests continue a trend of sharply higher electricity costs over the past decade. Residential rates in the U.S. climbed 32% in the last decade, according to the U.S. Energy Information Administration, outpacing the overall inflation rate.
The utility says customers in the Charlotte and Triad areas using 1,000 kilowatt-hours per month would pay about $17 more per month starting Jan. 1, 2027, an increase to about $162 per month. It is also proposing a nearly 4% increase in 2028, putting the monthly bill at about $168.50.
Across 2027-2028, commercial customers would see an average increase of 8.7% and 3.9% while industrial customers would see hikes of 6.3% and 3.4%.
In Duke’s eastern North Carolina region, the average residential customer would see a $23 increase to about $187 a month, then another $6.59 a month in 2028. In those two years, commercial customers would see an average increase of 9.2% and 4.6%, while industrial customers would see an average increase of around 7.4% and 4.3%.
The N.C. Utilities Commission will study the rate increases, which Duke says would boost revenue by about $1.78 billion over the two years in its Duke Energy Carolinas and Duke Energy Progress divisions. The company is planning to merge the units, which have remained distinct from a regulatory basis since Duke Energy and Progress Energy merged in 2012. Overall, Duke Energy reported record annual revenue of $30 billion in 2024 for its six-state region.
Regulators require the utility to balance the needs of ratepayers and investors while maintaining a reliable energy grid. “It’s important to strike the right balance of prioritizing investments that enhance the energy grid for current and future needs while also maximizing cost-saving measures for our customers,” Kendal Bowman, Duke’s North Carolina president, said in a release.
Duke and other utilities are planning record capital investments over the next decade to boost generation capacity because of demand for power from manufacturers, electric vehicles and data centers that enable AI computing.
“The cost of electricity is skyrocketing,” says Kevin Martin of the Carolinas Utility Customers Association, a Raleigh group representing businesses. “Load growth is coming on and not just data centers. There’s also population growth and utilities have to build infrastructure and increase transmission and distribution systems.”
It’s typical for the Utilities Commission to reduce Duke’s rate request following testimony by his and other groups, Martin notes. That debate often centers on the amount of profit sought by the utility.
If approved, the rates would enable Duke to earn a return on equity of 10.95%, the company said. The average return on equity in 2024 for electricity and natural gas utilities was 9.7%, according to S&P Global Commodity Insights.
Nationally, policymakers and regulators appear supportive of utilities, “creating a favorable backdrop for the strongest rate base and earnings growth outlook the sector has seen in decades,” analyst Timothy Winter of New York-based Gabelli Funds said in a July research report. “Notably, rising electric demand enables utilities to spread infrastructure costs over a larger customer base, helping to mitigate affordability concerns.”
But utilities have to execute effectively by raising funds, building infrastructure and managing costs to hit their profit goals, Winter noted.
Duke Energy is shooting for annual earnings per share growth of 5% to 7% over the next few years, CEO Harry Sideris said in November. Duke’s shares have returned an average 11.6% over the past three years, including dividends. That compares with a 20.3% return by the SPDR S&P 500 ETF over the same period.
Over the last decade, Duke said rates have increased more for residential customers than business ones because the utility has invested heavily in upgrading its distribution grid. Moreover, shifting weather trends mean Duke plans its generation needs around the winter peak, versus a summer peak historically, and residential heating needs account for a significant part of the winter peak. Regulators require the company to charge customer classes based on its costs, spokesman Bill Norton said.
Duke faces inflationary pressures like all businesses. “From transformers to poles to power lines, material costs have increased dramatically over the last few years,” Norton says. He notes prices for essential grid items such as transmission crossarms, distribution transformers and voltage regulators have more than doubled over the past five years. Duke’s size enables it to negotiate better prices than smaller utilities, but material prices have climbed substantially, he adds.
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.