Storm bonds to save Duke Energy North Carolina customers $300M repair costs
Thanks to the passage of Senate Bill 559 in November 2019, Duke Energy announced last week that it was able to securitize the $300 million in repair costs caused by storms in North Carolina in 2018 and 2019, allowing customers to get those costs back beginning this December.
The arrival of this boon was due to Duke Energy being able to issue low-interest, 20-year bonds to get paid back for its storm repairs. Those repairs covered the effects of hurricanes Florence, Michael, and Dorian, as well as Winter Storm Diego. Those storms slammed North Carolina, disabling substations, transmission lines, poles and transformers, and forcing the company to engage in an extensive rebuild of parts of the electrical system.
“Our first priority is to safely restore service to our customers, which we achieved quickly and efficiently, substantially limiting outage time,” Stephen De May, Duke Energy’s North Carolina president, said. “We are also constantly mindful of customer bills, so we’re very pleased this new cost recovery tool enabled us to drastically reduce storm repair costs for our customers.”
As a result of that tool, the average Duke Energy Progress residential customer will save about 37 percent compared to the costs of traditional storm cost recovery. Bills will still increase by about $2.44 per month. However, average Duke Energy Carolinas (DEC) residential customers will see bill increases of just 49 cents per month, a 35 percent savings over what it would have been. The credits allowing this will appear as “storm recovery charges” beginning in December.
Overall, Duke Energy estimated its storm recovery bond financings hit $1 billion last month. With interest factored in, that means a cost to customers of $1.3 billion spread over 20 years. Thanks to the 20-year bonds the company pursued, customer savings increased to 35 percent, meaning the original costs for Duke’s North Carolina customers would have been around $1.6 billion.
