Office of the Ohio Consumers' Counsel

Office of the Ohio Consumers’ Counsel

Communities United for Action

Ohio Partners for Affordable Energy

Natural Resources Defense Council

Sierra Club

Agreement filed on Duke Energy Ohio’s rate plan will benefit residential consumers

COLUMBUS, Ohio – October 27, 2008 – An agreement by the Ohio Consumer and Environmental Advocates, staff of the Public Utilities Commission of Ohio (PUCO), Duke Energy Ohio and other parties 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).

“Together, we successfully negotiated a plan that brings significant benefits to residential consumers by limiting the rate increases sought by Duke,” said Janine Migden-Ostrander, Consumers’ Counsel. “The agreement ensures that energy efficiency and electric reliability measures will be implemented with caps on Duke’s recovery of costs. Duke’s projects will move forward, but with more consumer protections in place so that only fair and reasonable rates are paid by consumers. With households struggling to make ends meet, the plan accomplished through the negotiation process helps prioritize the need to keep rates as low as possible.”

"Under this agreement, Duke's customers in Ohio are going to save energy, save money and reduce the need for dirty power plants that harm our health and the health of the planet,” said Rebecca Stanfield, Senior Energy Advocate, Natural Resources Defense Council. “We're showing that in Ohio, a clean, sustainable energy future is good for our economy, as well as our health and environment. We are grateful to the Ohio Consumers’ Counsel for excellent leadership in bringing this important case to a positive conclusion for consumers and the environment."

Ned Ford of the Ohio Chapter of the Sierra Club said, "This agreement opens the door for Duke to partner with every customer group to modernize businesses and homes, saving money and saving energy at the same time. With care and attention the small shifts in Duke's recovery rules will cause enormous long term benefits for all."

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.

The Office of the Ohio Consumers’ Counsel (OCC) will litigate issues involving the opportunity for local communities to aggregate, or create buying pools to purchase electricity on behalf of residential customers from alternative suppliers. The OCC wants to ensure the same benefits will be provided to those aggregating communities that will be provided to businesses choosing an alternative supplier.

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.

Contact:

• Office of the Ohio Consumers’ Counsel: Ryan Lippe, 614-466-7269
• Natural Resources Defense Council:Rebecca Stanfield, 312-780-7445
• Sierra Club: Ned Ford, 513-600-4200