Duke Energy Ohio's Electric Security Plan
Electric Security Plan 101
An electric security plan (ESP) is a rate plan for the supply and pricing of electric generation service. The PUCO approved Duke Ohio’s first ESP in December 2008, setting gradual increases for the base price of electric generation through December 2011.
On Nov. 22, 2011, the PUCO approved an agreement that set electric generation rates for Duke Energy Ohio customers from Jan. 1, 2012 through May 31, 2015. Under this ESP, Duke will transfer its generation assets to an affiliate by December 31, 2014 and hold auctions to determine generation rates. Upon completion of the transfer, Duke Energy Ohio will become a distribution-only utility.
From 2011 to 2013 Duke held five auctions conducted by independent bidding managers and monitored by the PUCO.
What did Duke Energy Ohio request in its new application?
In May 2014, Duke Energy filed an application for the time period beginning June 1, 2015 through May 31, 2018.
In this application Duke proposes to secure all supply needed for its standard service offer (SSO) customers through a competitive bidding process. Duke proposes to conduct six auctions over a three year period.
In the application, Duke requested the addition of three new riders.
The Distribution Capital Investment Rider is proposed to recover costs associated with updating aging distribution technologies and to ensure a reliable and increasingly sophisticated delivery of electric service.
Duke has requested approval of a Distribution Storm Rider to balance storm recovery costs already incorporated in customers’ distribution rates and actual costs associated with unforeseen significant weather events.
In the 2014 application, Duke requests a Price Stabilization Rider in order to hedge benefits of the costs associated with the company’s ownership and contractual obligation to Ohio Valley Electric Corporation. Duke proposes to sell its portion of energy and associated services into the competitive market in order to maintain the integrity of a fully competitive auction process. In the application, Duke has stated that this rider will help to relieve some volatility of the price customers pay for generation service because the amount paid in this rider will reflect market conditions.
In addition to the proposed new riders, Duke has also asked for withdrawal of eight riders and modification of two.
Did the PUCO consider public opinion?
In September 2014, the PUCO held four local public hearings to provide the public an opportunity to express their views regarding Duke's electric security plan application. There were three hearings held in Cincinnati and one in Middletown.
What happens next?
All testimony from parties that have intervened in the case will be filed by Sept. 26, 2014 and PUCO staff will file its testimony by Oct. 2, 2014. An evidentiary hearing is scheduled to begin Oct. 22, 2014 at the PUCO offices.
History of deregulation
A law enacted in 1999 restructured Ohio’s electric industry by changing the way customers shop for electricity. The law, which took effect January 2001, provided for a five-year market development period. During this time, electric rates were frozen to allow a competitive retail market to develop.
As the end of the market development period neared, there was a growing concern that an immediate shift to market-based rates in 2006 would not be in the best interest of customers. To minimize the effects of rate “sticker shock” and transition customers to market-based rates, the Public Utilities Commission of Ohio (PUCO) worked with Ohio’s electric utilities to develop rate stabilization plans. The rate stabilization plans, along with other changes, eliminated market uncertainty and provided customers with stable rates. Most of these plans expired at the end of 2008.
In 2008, the Ohio General Assembly passed Senate Bill 221 to keep electric rates stable going forward, create jobs, implement energy efficiency and expand Ohio’s alternative energy industry. The new law incorporated a system under which rates would be approved by the PUCO beginning in 2009. Senate Bill 221 also outlined alternative paths for electric utilities to implement different forms of market-based pricing.
How can I learn more?
To find out more about the pending case, visit our online Docketing Information System at www.PUCO.ohio.gov and search case number 14-0841-EL-SSO