Duke Energy Ohio 2017 electric distribution rate case
On March 2, 2017, Duke Energy Ohio submitted an application to increase its rates for electric distribution service.
What are distribution rates?
Electric bills are comprised of two main components – the cost of producing electricity and the cost of distributing or delivering electricity to homes and businesses.
The distribution rate pays for all the cost of distributing electricity to your home or business, including the cost of installing and maintaining the electric lines that run through neighborhoods, reading electric meters, processing bills and taking customer service calls.
What is the PUCO’s role in setting electric distribution rates?
Under Ohio law, a public utility is allowed to recover from customers its operating expenses, plus a reasonable return on its infrastructure investments. When a utility requests a rate increase from the PUCO, several steps are taken to review the company’s financial condition and ensure the company is fulfilling its obligations to customers.
When evaluating the company’s application, the PUCO examines whether the proposed rates will provide the company with adequate operating revenue. In general, the cost of providing service to customers, maintenance of infrastructure and equipment expenses, depreciation expense, taxes and a return on the company’s infrastructure investment are used to calculate the company’s revenue requirement. PUCO staff prepares a report that makes recommendations to the Commission.
What did Duke Energy Ohio request in its application?
Duke Energy Ohio requested to increase distribution rates by $15.4 million, or 3.18 percent, over current revenues. The company proposed to establish a rate of return of 7.82 percent.
Additionally, Duke Energy Ohio proposed to increase the fixed customer charge while reducing the volumetric charge of the distribution rate. The fixed customer charge is the portion of the customer’s bill that remains the same regardless of a customer’s monthly consumption of electricity. The volumetric charge is the portion of the customer’s bill that varies based on the customer’s monthly consumption of electricity.
How might my bill be affected?
According to the company's application, the average residential customer using 1,000 kilowatt hours (kWh) would experience a monthly bill increase of $1.15. A full list of typical bill impacts can be found in schedule E-5 of the company's application.
What did the PUCO staff recommend?
On Sept. 26, 2017, the PUCO staff issued a report recommending a distribution revenue decrease in the range of $18 - $29 million or a decrease of 3.77 to 5.94 percent. The PUCO staff recommended a rate of return in the range of 7.22 to 7.74 percent. The PUCO staff also recommended that the existing fixed/volumetric rate-design be maintained.
Under the PUCO staff report, the average residential customer using 1,000 kilowatt hours (kWh) would experience a monthly bill decrease of $1.44.
These recommendations were based on the PUCO’s staff examination of Duke Energy Ohio’s accounts and records. The Commission is not bound by the staff recommendations and may implement some suggestions and reject others.
How can I make my voice heard?
The PUCO has scheduled the following local public hearings.
Monday, Oct. 30, 2017, 6:00 p.m.
Butler Technology and Career Development Schools
3603 Hamilton-Middletown Road
Hamilton, Ohio 45011
Thursday, Nov. 2, 2017, 12:30 p.m.
Cincinnati City Hall, Council Chambers
801 Plum St.
Cincinnati, Ohio 45202
Those who testify at the local public hearings will have their comments added to the case record.
How can I learn more about the rate case?
If you would like to know more about the PUCO or have utility-related questions or concerns, contact the PUCO at (800) 686-PUCO (7826) or visit us online at www.PUCO.ohio.gov.