Rate Case Roundup: South Carolina

In an annual review of an electric utility’s base rates for purposes of assessing the propriety of its fuel costs, the South Carolina Public Service Commission accepted a settlement by which the company, Duke Energy Carolinas (DEC), may adjust the fuel factor included in its rates for the next year.

The commission commented that assessing DEC’s fuel costs is distinctly different from most electric utilities in that its generation fleet is 61% nuclear and 39% fossil/hydro. Of that second category, DEC said that 28% of that production is from coal units, 10% from combined cycle operations, about 1% from combustion turbines, and 0.4% from hydropower. No party challenged DEC’s pronouncements as to its generating facility operating characteristics. The utility had reported that for the 17th year in a row (through 2016), the seven units comprising its nuclear plant had exceeded an average capacity factor of 90%.

The company likewise relayed efficient operations from its fossil-fueled and hydro facilities. While few questions were raised as to the efficiency of DEC’s plant operations, the Office of Regulatory Staff (ORS) did voice some doubts about the utility’s forecasts of its avoided and incremental costs with respect to the company’s distributed energy resource program (DERP). The ORS also confirmed that through September of 2017, DEC had a cumulative net over-recovery of environmental program costs but underrecoveries of its base fuel costs and PURPA capacity contract costs.

According to the analysis presented by the ORS, the utility’s DERP expenses must be reduced slightly to account for excess credits paid to DERP customers. The commission said that all parties eventually agreed to the adjustments recommended by the ORS. Relying on predictions that the utility’s nuclear fuel expense is expected to decrease dramatically over the next review period, the commission stated that it was satisfied that the terms of the settlement were justified in providing for a decrease in the company’s nuclear fuel factor from 0.711 cents per kilowatt-hour (kWh) to 0.653 cents per kWh for the upcoming billing period. Re Duke Energy Carolinas, LLC, Docket No. 2017-3-E, Order No. 2017-597, Oct. 17, 2017 (S.C.P.S.C.).