Duke sends rate increase plan to state

COLUMBUS, OH (FOX19) - The Ohio Consumer and Environmental Advocates, staff of the Public Utilities Commission of Ohio (PUCO), Duke Energy Ohio and other parties say an agreement on a rate increase will benefit residential consumers by limiting the rate increases over the first two years and eliminating the increase in the third year within Duke's proposed electric security plan.

The agreement must first be approved by the Public Utilities Commission of Ohio (PUCO).

Specific examples of how residential customers will benefit include:

  • Limits on rate increases - Under the agreement, rate increases to average residential customers' electric bills will be eliminated in 2011 and limited to 2 percent in each of the next two years (2009 and 2010). Duke's original plan would have increased the average total electric bill for residential consumers at least 5.7 percent over the next three years.Under the agreement and Duke's original plan, riders on customers' bills will be used to account for the rise and fall of certain costs such as fuel and environmental compliance.
  • Low-income assistance - Duke Energy will invest $1.75 million per year in low-income assistance which will be distributed by local nonprofit organizations.
  • Save-a-Watt - The agreement establishes lower caps on what Duke can earn through energy efficiency programs while providing significant incentives for the utility to exceed Ohio's new standards. Duke will not be able to earn a rate of return profit for meeting the state's mandatory requirements and can earn limited profits for reducing its energy load above and beyond those standards. Duke is the first Ohio electric utility to have energy efficiency play a significant role in its electric security plan.
  • SmartGrid and automated metering - The agreement establishes guidelines for Duke's SmartGrid and automated metering proposals, including annual cost caps. SmartGrid system performance and costs will be monitored and evaluated annually. Each year, Duke's past and future investments in technology to help make its operations more efficient will be reviewed by parties through PUCO proceedings to see whether they are performing as planned and also whether its costs are recoverable from ratepayers. Duke's original proposal would have placed all of the risk of this new emerging technology on its customers.
  • Renewable energy - Duke will develop by June 30, 2009, a standard renewable certificate purchase program to promote the development of customer-sited renewable energy. Under this program, customers who invest in a renewable energy project would receive payment by Duke for the project's positive environmental and social attributes. This, in turn, would help Duke meet its renewable energy requirements under Ohio's electric policy law (Senate Bill 221).
  • Potential for excess earnings - Through the agreement, an earnings threshold of 15 percent has been established. Since utilities like Duke are not subject to a full rate case examination concerning the generation and distribution costs in the electric security plans, Ohio's electric policy law contains provisions mandating the measurement of profits earned by the utility and the refund of excess profits to consumers.

Duke filed its electric security plan with the PUCO on July 31. If approved by the PUCO, the agreement would go into effect January 2009.