Duke Energy Corporation (DUK) got regulatory approval from the Public Service Commission of South Carolina for a general rate case increase of $74.1 million (or 5.2%), which will be effective from Feb. 1, 2010. The hike will increase Duke Energy’s South Carolina residential electricity average monthly bill to $90 – $93 from $80 – $87 for customers. This is the first rate case hike since 1991 in South Carolina for Duke Energy.
Duke Energy Carolinas owns nuclear, coal-fired, natural gas and hydroelectric generation. The diverse fuel mix provides approximately 19,000 MW of electricity capacity to approximately 2.4 million customers in a 22,000-square-mile service area in North Carolina and South Carolina.
Duke Energy is the third largest electric power holding company in the United States, based on kilowatt-hour sales. Its regulated utility operations serve customers located in five states – North Carolina, South Carolina, Indiana, Ohio and Kentucky.
Duke Energy’s steady performance across its solid base of stable utility operations, higher rates, strong balance sheet, an above industry average dividend yield and a relatively cheap earnings-based valuation support our bullish outlook for the company. However, the present unfavorable macro backdrop, lower demand for electricity, foreign currency exchange volatility, and pending regulatory cases continue to restrain valuation.
We currently have a Neutral recommendation on Duke Energy, which reflects our view that the shares will trade at par with its peer companies like Public Service Enterprise Group Inc. (PEG), FirstEnergy Corporation (FE) and Consolidated Edison Inc. (ED).
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