Electric and Gas Rate Update – June 14, 2013
Jim Ziolkowski, Rates Manager
Agenda
 Duke Energy Ohio Standard Service Offer


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Electric Security Plan Overview
Auction
Generation Riders
Other Items
 Base Rate Cases
 Electric Distribution Base Rate Case Filing
 Gas Base Rate Case Filing
 Capacity Case Filing
 Price To Compare
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Electric Security Plan Overview

Duke Energy Ohio filed for approval of its Standard Service Offer (SSO) in the
form of an Electric Security Plan (ESP) in June 2011.

Settlement was reached in October 2011 with intervening parties.

Hearing held during November 2011.

ESP was approved by the PUCO in November 2011.

ESP effective January 1, 2012, through May 31, 2015.
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Electric Security Plan Overview
Highlights:


SSO load is procured through an auction. The cost of this auction-procured load is
recovered through Riders RC and RE. True-ups addressed through Rider SCR.

Duke Energy Ohio will move its legacy generation plants to a non-regulated affiliate by
12/31/14.

Duke Energy Ohio will collect $110 million per year for three years through a new nonbypassable charge (Rider ESSC).

All previous generation-related charges terminated after December 31, 2011 (base
generation, FPP, AAC, SRT, CD, shopping credit).
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AUCTION SCHEDULE
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Details of Auctions
 First auction held in December 2011.
 Three products:
 January 2012 – May 2013 (33 tranches - $49.72)
 January 2012 – May 2014 (33 tranches – $51.10)
 January 2012 – May 2015 (34 tranches - $57.08)
 Resulting blended auction price was $52.68 per MWh for the January 2012 through May 2013
delivery period.
 Descending-price clock auction.
 Charles River Associates was the auction manager. Boston Pacific monitored for the PUCO.
 Auctions for full requirements service.
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Details of Auctions
 Second auction held in May 2012 (17 tranches - $52.14 – June 2013 - May 2015).
 Third auction held in November 2012 (16 tranches - $50.56 – June 2013 – May 2015).
 Blended auction price is $53.22 per MWh for the June 2013 through May 2014 delivery period.
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Auction Schedule
ESP Period 3 years and 5 months
Auction
Date
Auction 1
Dec 2011
Tranches
33
33
34
Delivery Period Beginning
1/1/2012 - 17 months
6/1/2013
33
33
33
34
34
6/1/2014
34
Auction 2
May 2012
17
17
17
Auction 3
Nov 2012
16
16
16
Auction 4
May 2013
Auction 5
Nov 2013
17
17
16
16
TOTAL TRANCHES
100
100
100
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2012 ELECTRIC SECURITY PLAN
RATE STRUCTURE
9
Generation Rates - 2013
 The Price To Compare (bypassable) components of the ESP are:

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
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
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Rider RC (Retail Capacity)
Rider RE (Retail Energy)
Rider SCR (Supplier Cost Reconciliation)
Rider AERR (Alternative Energy Recovery)
Rider RECON (Reconciliation Rider) – Withdrawn May 2013
Rider RTO (Regional Transmission Organization)**
 The non-bypassable components of the ESP are:




Rider ESSC (Electric Security Stabilization Charge)
Rider LFA (Load Factor Adjustment)
Rider UE-GEN* (Uncollectible Expense – Generation)
Rider BTR (Base Transmission Rider)**
* Bypassable if CRES opts out of PAR **Approved in separate proceeding
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Electric Security Plan Rate Structure
RC and RE
•Retail Capacity and Energy
•Derived from auction
SCR
•Supplier Cost Reconciliation
AERR (RECs)
•Alternative Energy Recovery
RECON - Withdrawn
Reconciles ESP riders
Rider RTO
•Various RTO costs
BTR
•Base transmission incl. NITS
ESSC
•Electric Security Stabilization
Legend
Fully Bypassable
Non-Bypassable
UE-GEN
Generation Uncollectibles
LFA
•Load Factor Adjustment
Distribution rates and
riders
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Rider RC (Retail Capacity)
 Based on PJM market capacity price for the delivery period.
 Converted into retail rates.
 Rider RC will be adjusted before each of the three delivery periods in the ESP.
 Rider RC is fully avoidable by shoppers.
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Rider RE (Retail Energy)
 At the wholesale level, calculated by subtracting the capacity price for the delivery period from
the blended auction price.
 Converted into retail rates by adjusting for losses, taxes, and seasonality / blocks (for some
rates).
 Rider RE will be adjusted before each of the three delivery periods in the ESP.
 Rider RE is fully avoidable by shoppers.
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Rider ESSC (Electric Security Stabilization Charge)
 Collects $110 million per year for three years.
 Expires after 12/31/14.
 Will be trued up each year.
 Rider ESSC is non-bypassable.
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Rider SCR (Supplier Cost Reconciliation)
 Reconciles the Rider RE and Rider RC revenues received from retail customers with the
payments owed to auction providers.
 Recovers costs associated with auctions (e.g., consultants, setting up CBP website, etc.)
 Adjusted quarterly.
 Normally bypassable for shopping customers, but Rider SCR contains a non-bypassable
provision.
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Rider SCR (Supplier Cost Reconciliation) – “Circuit Breaker”
 Subject to Commission approval, Rider SCR becomes applicable to all retail jurisdictional
customers in the Company’s electric service territory including those customers taking
generation service from a CRES provider under the following circumstance:
 The revenue balance within the SCR account becomes equal to or greater than ten percent of the
Company’s total actual SSO revenues collected for the most recent twelve month period under Riders
RE, RC, RECON, RTO, and AER-R. The total actual SSO revenue will be determined from data
covering the most recent quarter for which it is available.
 Duke Energy Ohio shall apply to the Commission for confirmation that the Company should modify
the Rider such that it becomes non-bypassable regardless as to whether or not the balance in the
Rider results from over- or under-recovery.
 For customers of CRES providers, Rider SCR will become bypassable again when, at the
time of the quarterly filing, the Rider balance of over- or under-recovery falls below the ten
percent threshold.
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Rider AERR (Alternative Energy Recovery Rider)
 Recovers the cost of Renewable Energy Certificates (RECs) associated with SSO (i.e., nonswitched) load.
 Adjusted quarterly.
 Rider AERR is fully avoidable by shoppers.
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Rider UE-GEN (Uncollectible Expense - Generation)
 Recovers uncollectible accounts expense related to generation service, including Percentage
of Income Payment (PIPP) customer installments not collected through the Universal Service
Fund Rider.
 Non-bypassable, except it is bypassable for accounts that are not designated for Duke Energy
Ohio’s Purchase of Accounts Receivables program.
 Adjusted annually.
18
Rider LFA (Load Factor Adjustment Rider)
 Revenue neutral to Duke Energy Ohio.
 Adjusted quarterly.
 Rider LFA is non-bypassable.
 Rider LFA applies to customers taking service under Rates DS, DP, and TS.
 Demand charge and kWh credit.
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Other Items
 Minimum stay rules eliminated for all customer classes.
 Duke Energy Ohio purchases accounts receivables from CRES providers at zero
discount.
 Rider LM has been re-opened to both shoppers and non-shoppers.
 Funding provided to various community agencies serving low income customers.
 Distribution Decoupling Rider that does not apply to Rates DS, DP, and TS.
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Alternative Energy, Energy Efficiency, Peak Demand Reduction
 ESP does not impact commitment to meeting alternative energy, energy efficiency, or peak
demand reduction requirements.
 Duke Energy Ohio will continue energy efficiency and peak demand reduction programs (Rider EEPDR).
 Duke Energy Ohio continues to purchase RECs and also enter contracts to comply with alternative
energy requirements.
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ESP Termination
 The ESP will be effective through May 31, 2015.
 The Company is required to make its next SSO filing by June 1, 2014.
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ELECTRIC DISTRIBUTION
&
GAS BASE RATE CASES
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Electric Distribution Case – Filed July 2012
 Test Period: January 2012 – December 2012
 Proposed Rate Increase: $86 million
 Settlement Rate Increase: $49 million
 Proposed ROE: 10.6%
 Settlement ROE: 9.84%
 Tariff-related changes:
 Rider LM (Load Management Rider) – monthly charge is $7.50 for Rate DS and DP
 Rate RTP (Real Time Pricing) – hourly prices based on PJM day-ahead prices
 Hearing began on March 25, 2013. Settlement approved on May 1, 2013.
 New electric distribution base rates effective May 6, 2013 on a service-rendered basis.
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Typical Bill Impacts (Total Bill Including Generation)
 Rate DS
 200 hours-use: 2.9%
 300 hours-use: 2.5%
 400 hours-use: 2.2%
 Rate DM
 Approximately 2.5%
 Rate DP
 200 hours-use: 2.4%
 300 hours-use: 2.1%
 500 hours-use: 1.6%
 Rate TS: Zero increase for all usage levels
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Gas Case – Filed July 2012
 Test Period: January 2012 – December 2012
 Proposed Rate Increase: $44.6 million
 Settlement Rate Increase: $0 (April 2013 AMRP rates rolled into base rates with zero net bill
impacts)
 Proposed ROE: 10.6%
 Settlement ROE: 9.84%
 Some key components:




Recovery and Continued Deferral of Manufactured Gas Plant Costs
Accelerated Main Replacement Program (Rider AMRP) continues
Grid Modernization (Rider AU) continues
New Riders (Natural Gas Vehicles and Gas Generation IT)
 Hearing held the week of April 29, 2013 to litigate the Manufactured Gas Plant environmental
cleanup costs. All other issues in the case were settled. Revised base rates not yet approved
by PUCO.
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Typical Bill Impacts (Total Bill Including Gas Cost)
 Rate GS-Small and FT-Small – 0%
 Rate GS-Large and FT-Large – 0%
 Rate IT: 0%
 Residential – 0%
 Note: These impacts exclude any increases that might result from the separate MGP
litigation (hearing conducted during the week of April 29).
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CAPACITY CASE
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Capacity Case – Filed August 2012
 Requests cost-based capacity pricing consistent with traditional ratemaking principles for
Duke Energy Ohio’s provision of capacity of its load zone.
 Requests deferral for three years of $258.8 million per year, and subsequent recovery. This
amount represents the difference between the cost-based capacity price and the PJM
auction-based capacity price.
 Recovery through the proposed Rider DR-CO (Deferred Recovery – Capacity Obligation
Rider).
 Hearing held on April 15 through April 25, 2013. Rebuttal hearing held on May 20, 2013.
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Price To Compare
Jan 2012 – May 2015
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Electric Security Plan Rate Structure
RC and RE
•Retail Capacity and Energy
•Derived from auction
SCR
•Supplier Cost Reconciliation
AERR (RECs)
•Alternative Energy Recovery
RECON - Withdrawn
Reconciles ESP riders
Rider RTO
•Various RTO costs
BTR
•Base transmission incl. NITS
ESSC
•Electric Security Stabilization
Legend
Fully Bypassable
Non-Bypassable
UE-GEN
Generation Uncollectibles
LFA
•Load Factor Adjustment
Distribution rates and
riders
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How Do I Calculate My Price to Compare?
Compare:
DE OH’s Rider RC Charge
+ Rider RE Charge
+ Rider SCR Charge
+ Rider AERR Charge
+ Rider RTO Charge
vs.
The CRES Provider’s price for electricity
Note: Price To Compare varies based on load factor
32
Price To Compare Calculation
Load Factor
Rate DP
72%
kWh
kW
518,400
1,000
Rider RC
Rider RE
Rider SCR
Rider AERR
Rider RTO
$
1,649.53
27,289.61
818.55
243.13
(204.25)
Total
$
29,796.58
Billing kWh
Price To Compare (¢ per kWh)
518,400
5.7478
33
Recommendations
Use twelve months of demand and energy to develop an “average
annual price to compare” for the best price comparison
Compare competing offers using the same usage data
34
Annual Price To Compare (Example)
kW
1,000
1,240
1,450
1,850
2,200
2,850
3,458
3,512
1,888
1,450
1,100
1,098
kWh
518,665
625,120
650,000
689,000
750,000
812,000
518,000
822,000
651,030
525,012
518,665
612,000
7,691,492
Load
Factor
72.0%
70.0%
62.3%
51.7%
47.3%
39.6%
20.8%
32.5%
47.9%
50.3%
65.5%
77.4%
AERR, RTO, SCR
857.87
1,033.95
1,075.10
1,139.61
1,240.50
1,343.05
856.77
1,359.59
1,076.80
868.37
857.87
1,012.25
RC, RE
28,953.31
34,896.63
36,448.24
38,955.23
42,585.26
46,528.18
30,820.23
47,509.96
36,965.95
29,767.88
29,058.94
34,045.39
Total
29,811.18
35,930.57
37,523.34
40,094.83
43,825.76
47,871.23
31,677.00
48,869.55
38,042.75
30,636.25
29,916.81
35,057.64
Price To
Compare (¢)
5.75
5.75
5.77
5.82
5.84
5.90
6.12
5.95
5.84
5.84
5.77
5.73
12,721.73
436,535.19
449,256.91
5.84
35
Duke Energy Ohio Tariffs
 Duke Energy Ohio’s tariffs can be found online at:
www.duke-energy.com
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