Approved Rate of Return

The Economic Research Division testifies before the North Carolina Utilities Commission (Commission) on the appropriate rate of return on rate base for electric, natural gas, and water utilities. The overall rate of return is comprised of long-term debt, short-term debt (natural gas distribution utilities), and common equity capital and the corresponding cost rates for debt and equity capital. The combination of the approved capital structure ratio and the appropriate cost rates of long-term and common equity generates the overall rate of return.

The Commission’s approved rate of return does not guarantee a utility will earn such returns; rather, the approved rate of return allows for the opportunity to produce a fair return for its shareholders, maintain its facilities and service, and compete in the marketplace for capital.

Approved Utility Rate of Returns

Utility Date of Order Docket Number Approved Overall Rate of Return (%) Approved Return on Common Equity (%) Approved Common Equity Ratio (%) Approved Cost of Long Term Debt (%)
DEC 12/15/2023 E-7 Sub 1276 7.50% 10.10% 53.00% 4.56%
DEP 8/18/2023 E-2 Sub 1300 7.09% 9.80% 53.00% 4.03%
DENC 2/24/2020 E-22 Sub 562 7.20% 9.75% 52.00% 4.44%
PNG 1/6/2022 G-9 Sub 781 6.90% 9.60% 51.60% 4.08%
PSNC 1/21/2022 G-5 Sub 632 7.07% 9.60% 51.60% 4.48%
CWS 4/26/2023 W-354 Sub 400 7.22% 9.80% 50.00% 4.85%
Aqua 6/5/2023 W-218 Sub 573 6.885% 9.80% 50.00% 4.21%

Note: Table only includes the most recent proceeding.

Earned Rate of Return

After the North Carolina Utilities Commission (Commission) has approved an overall rate of return, which includes the approved return on common equity, a utility has the opportunity to generate such earnings. The earned rate of return on the common shareholders' investment is a meaningful measure of the profitability of any utility, and consequently the reasonableness of the utility’s overall rates and charges. The ratio, the earned rate of return to the approved rate of return, traditionally represents profitability after all revenues and costs have been taken into consideration.

On January 30, 2020, the Commission issued its Order Requiring Electronic Filing of Quarterly Financial and Operational Data (Docket No. M-100, Sub 157) directed the major electric, natural gas, and telephone utilities under its jurisdiction to begin electronically filing their Quarterly Financial and Operational Data. E.S.-1 or G.S.-1 forms, commonly referred to as ‘electric and gas surveillance reports,’ are prescribed by the Commission and have been used to report selected financial and operational information and data by utilities since 1972. The filed reports for these companies can be found with the following links:

Utility Link
Duke Energy Carolinas, LLC  Docket: M-1 Sub 12DEC
Duke Energy Progress, LLC  Docket: M-1 Sub 12DEP
Dominion Energy NC Docket: M-1 Sub 12DENC
Public Service of North Carolina, Inc. Docket: M-1 Sub 12PSNC
Piedmont Natural Gas Company, Inc. Docket: M-1 Sub 12PNG
Frontier Natural Gas Company Docket: M-1 Sub 12FNG

Past Commission Quarterly Review reports can be found in Docket M-1 Sub 12.