Ohio
Duke Energy Ohio
June 29, 2012
Jim Ziolkowski, Rates Manager

 Duke Energy Ohio Electric Security Plan Standard
Service Offer (ESP-SSO) and Distribution Rates

Overview of ESP



Auction
Generation Riders
Other Items
 Transmission (Not Part of ESP)


Move to PJM
New Riders
 Price To Compare
Ohio
2

Ohio
 Duke Energy Ohio filed a 9-year 5-month Electric Security
Plan (ESP) in June 2011. The previous ESP terminated after
December 31, 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.
3

 Major rate provisions of the new ESP include:




Retail generation Standard Service Offer load to be procured through an auction. The cost of this auction-procured load will be recovered through
Riders RC and RE. True-ups addressed through
Rider SCR.
DE OH will move its legacy generation plants to a non-regulated affiliate by 12/31/14.
DE OH will collect $110 million per year for three years through a new non-bypassable charge (Rider
ESSC).
All previous generation-related charges terminated after December 31, 2011 (base generation, FPP,
AAC, SRT, CD, shopping credit).
Ohio
4

Ohio
5

Ohio
 First auction held on December 14, 2011.

Three products:



January 2012 – May 2013
January 2012 – May 2014
January 2012 – May 2015
 Descending-price clock auction
 Charles River Associates was the auction manager. Boston
Pacific monitored for the PUCO.
 Auction was for capacity and energy.
 Blended auction price was $52.68 per MWh for the January
2012 through May 2013 delivery period.
6

ESP Period 3 years and 5 months
Auction
Date
Auction 1
Dec 2011
Tranches
33
33
34
Auction 2
May 2012
17
Auction 3
Nov 2012
16
17
Auction 4
May 2013
16
Auction 5
Nov 2013
TOTAL TRANCHES
Delivery Period Beginning
1/1/2012 - 17 months 6/1/2013
33
33
34
33
34
6/1/2014
34
100
17
16
100
17
16
17
16
100
Ohio
7

Ohio
8

Ohio
 The Price To Compare (bypassable) components of the ESP-
SSO are:






Rider RC (Retail Capacity)
Rider RE (Retail Energy)
Rider SCR (Supplier Cost Reconciliation)
Rider AERR (Alternative Energy Recovery)
Rider RECON (Reconciliation Rider)
Rider RTO (Regional Transmission Organization)
 Other Generation-related riders that are non-bypassable:



Rider ESSC (Electric Security Stabilization Charge)
Rider LFA (Load Factor Adjustment)
Rider UE-GEN* (Uncollectible Expense – Generation)
* Bypassable if CRES opts out of PAR 9

Old ESP to 2012 ESP Rate Changes – Non-Residential
PTC - BG
•Base generation
PTC – AAC
•Environmental
•Homeland Security
•Taxes
PTC-FPP
•Fuel, Purchased Power,
Allowances
•RECs
SRA-SRT
•System Reliability
SRA-CD (Rider SC)
•Capacity Dedication
Rider TCR
•MISO Transmission
Distribution rates and riders
RECs
Legend
Fully Avoidable
Avoidable with waiver
Unavoidable
Ohio
RC and RE
•Retail Capacity and Energy
•Derived from auction
SCR
•Supplier Cost Reconciliation
AERR
•Alternative Energy Recovery
RECON
Reconciles ESP riders
Rider RTO
•Various RTO costs
BTR
•Base transmission incl. NITS
ESSC
•Electric Security Stabilization
UE-GEN
Generation Uncollectibles
LFA
•Load Factor Adjustment
Distribution rates and riders
10

Old ESP to 2012 ESP Rate Changes – Residential
PTC - BG
•Base generation
PTC – AAC
•Environmental
•Homeland Security
•Taxes
PTC-FPP
•Fuel, Purchased Power,
Allowances
•RECs
SRA-SRT *
•System Reliability
SRA-CD
Capacity Dedication
Rider TCR
•MISO Transmission
Distribution rates and riders
* Conditionally avoidable only for aggregation customers
RECs
Legend
Fully Avoidable
Avoidable with waiver
Unavoidable
Ohio
RC and RE
•Retail Capacity and Energy
•Derived from auction
SCR
•Supplier Cost Reconciliation
AERR
•Alternative Energy Recovery
RECON
Reconciles ESP riders
Rider RTO
•Various RTO costs
BTR
•Base transmission incl. NITS
ESSC
•Electric Security Stabilization
UE-GEN
Generation Uncollectibles
LFA
•Load Factor Adjustment
Distribution rates and riders
11

Ohio
 Based on PJM RPM 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.
12

Ohio
 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.
13

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.
Ohio
14

RIDER SCR (SUPPLIER COST
RECONCILIATION) Ohio
 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.)
 Will be adjusted quarterly.
 Normally bypassable for shopping customers, but Rider
SCR contains a non-bypassable provision.
15

RIDER SCR (SUPPLIER COST
RECONCILIATION) – “Circuit Breaker” Ohio
 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 underrecovery falls below the ten percent threshold.
16

RIDER AERR (ALTERNATIVE ENERGY
RECOVERY RIDER)
 Recovers the cost of RECs associated with Standard
Service Offer (i.e., non-switched) load.
 Will be adjusted quarterly.
 Rider AERR is fully avoidable by shoppers.
Ohio
17

Ohio
 Rider RECON recovers costs necessary to true up revenue collected under Rider PTC-FPP and Rider SRA-
SRT with actual costs associated with each of these two riders through December 31, 2011.
 Rider RECON will terminate when the net over- and/or under-recovery balances for Rider PTC-FPP and Rider
SRA-SRT are eliminated but no later than two quarters after the filing of a final entry in the docket initiated by the
Commission for purposes of conducting a final audit of
Rider PTC-FPP and Rider SRA-SRT.
 Rider RECON is fully avoidable by shoppers.
18

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.
Ohio
 Non-bypassable except it is bypassable for accounts that are not designated for Duke Energy Ohio’s Purchase of
Accounts Receivables program.
 Will be adjusted annually.
19

RIDER LFA (LOAD FACTOR ADJUSTMENT RIDER)
 Revenue neutral to Duke Energy Ohio.
 Will be 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.
Ohio
20

Ohio
 Minimum stay rules eliminated for all customer classes.
 DE OH received approval to sell its generation plants to a non-regulated affiliate.
 Duke Energy Ohio will purchase 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.
 Filed an application in December for a new Distribution
Decoupling Rider. Will not apply to DS, DP, and TS.
21

Ohio
LINE RATE
NO.
HOURS CODE
14
15
16
17
10
11
12
13
18
1
8
9
6
7
4
5
2
3
200
300
400
500
300
400
200
300
500
200
300
400
200
300
400
200
267
400
DS
LEVEL of
DEMAND
(KW)
30
30
30
50
50
50
75
75
75
100
100
100
100
300
300
500
500
1,000
LEVEL of
USE
(KWH)
6,000
9,000
12,000
10,000
15,000
20,000
15,000
20,000
30,000
20,000
30,000
40,000
50,000
90,000
120,000
100,000
150,000
500,000
Dec-11
NON-SHOP
($)
$909
1,087
1,221
1,487
1,784
2,007
2,209
2,506
2,989
2,931
3,525
3,972
4,418
10,489
11,829
14,481
17,453
43,797
ESSC+
RC+LFA
$198
148
89
330
247
149
495
412
223
660
494
297
101
1,482
892
3,299
2,469
1,011
Retail Prices for Jan 2012-May 2013
RE
Bypassable
Total Bill
SSO Customer
Difference from 2011 SSO
$ %
$316 $741 -$168 -19%
1,053
474
632
526
790
790
1,053
1,579
$854
$959
$1,206
$1,395
$1,570
$1,788
$1,977
$2,333
(233)
(263)
(281)
(388)
(438)
(421)
(529)
(656)
-21%
-21%
-19%
-22%
-22%
-19%
-21%
-22%
1,053
1,579
2,106
2,632
4,738
6,317
5,264
7,896
26,321
$2,369
$2,748
$3,096
$3,445
$8,159
$9,204
$11,675
$13,569
$34,062
(561)
(777)
(875)
(973)
(2,331)
(2,625)
(2,807)
(3,884)
(9,734)
-19%
-22%
-22%
-22%
-22%
-22%
-19%
-22%
-22%
NOTES: EXISTING GENERATION RATE IS COMPRISED OF BASE GEN, FPP, AAC, SRT, AND CD.
22

Ohio
LINE RATE
NO.
HOURS CODE
DP
16
17
18
19
12
13
14
15
20
21
22
23
24
10
11
8
9
6
7
4
5
1
2
3
432
144
288
432
144
288
432
144
288
432
144
288
432
144
288
432
144
288
432
144
288
432
144
288
LEVEL of
DEMAND
(KW)
100
100
100
200
200
200
300
300
300
500
500
500
800
800
800
1,000
1,000
1,000
1,500
1,500
1,500
3,000
3,000
3,000
LEVEL of
USE
Dec-11
NON-SHOP
216,000
115,200
230,400
345,600
144,000
288,000
432,000
216,000
432,000
648,000
432,000
864,000
1,296,000
(KWH)
14,400
28,800
43,200
28,800
57,600
86,400
43,200
86,400
129,600
72,000
144,000
($)
$2,631
3,505
4,196
5,058
6,808
8,190
7,486
10,111
12,183
12,341
16,716
20,170
19,625
26,623
32,150
24,480
33,229
40,137
35,572
48,695
59,058
68,848
95,094
115,820
ESSC+
RC+LFA
$787
563
294
1,573
1,126
589
2,360
1,689
883
3,933
2,814
1,472
6,293
4,503
2,356
7,866
5,629
2,945
11,577
8,221
4,195
22,710
15,997
7,946
Retail Prices for Jan 2012-May 2013
RE
Bypassable
Total Bill
SSO Customer
Difference from 2011 SSO
$ %
$758
1,516
2,274
$2,280
$2,841
$3,357
($350)
(665)
(839)
-13%
-19%
-20%
1,516
3,032
4,548
2,274
4,548
6,822
3,790
7,580
$4,357
$5,479
$6,511
$6,435
$8,117
$9,665
$10,589
$13,392
(701)
(1,329)
(1,679)
(1,051)
(1,994)
(2,518)
(1,752)
(3,323)
-14%
-20%
-21%
-14%
-20%
-21%
-14%
-20%
12,129
18,193
11,371
6,064
7,580
15,161
22,741
11,371
22,741
34,112
22,741
45,483
68,224
$15,973
$16,821
$21,306
$25,434
$20,975
$26,582
$31,742
$31,140
$39,550
$47,290
$61,632
$78,452
$93,933
(4,197)
(2,804)
(5,317)
(6,716)
(3,505)
(6,647)
(8,395)
(4,433)
(9,145)
(11,768)
(7,216)
(16,642)
(21,887)
-21%
-14%
-20%
-21%
-14%
-20%
-21%
-12%
-19%
-20%
-10%
-18%
-19%
23

Ohio
13
14
15
16
9
10
11
12
17
18
7
8
5
6
3
4
1
2
LINE RATE
LEVEL of
NO.
HOURS CODE DEMAND
(KVA)
TS 200
400
200
400
200
400
200
400
1,000
1,000
2,500
2,500
5,000
5,000
10,000
10,000
600
200
400
520
535
681
400
600
500
600
10,000
20,000
20,000
25,061
29,866
38,553
80,000
80,000
100,000
200,000
LEVEL of
USE
(KWH)
200,000
400,000
500,000
1,000,000
1,000,000
2,000,000
2,000,000
4,000,000
6,000,000
4,000,000
8,000,000
13,043,867
15,964,371
26,253,097
32,000,000
48,000,000
50,000,000
120,000,000
Dec-11
NON-SHOP
($)
$23,399
32,261
58,195
80,350
116,188
160,499
232,175
320,797
405,999
464,149
641,393
932,279
1,128,863
1,697,645
2,467,613
3,149,229
3,469,911
7,629,381
ESSC+
RC+LFA
$6,728
2,947
16,819
7,367
33,638
14,735
67,276
29,470
(9,345)
134,551
58,940
15,255
10,037
(96,603)
215,602
(94,916)
67,029
(287,685)
Retail Prices for Jan 2012-May 2013
RE
Bypassable
Total Bill
SSO Customer
Difference from 2011 SSO
$ %
$10,167
20,335
25,418
50,836
50,836
101,673
101,673
203,346
$18,412
$24,818
$45,728
$61,744
$91,254
$123,287
$182,308
$246,373
($4,987)
(7,442)
(12,467)
(18,606)
(24,934)
(37,212)
(49,867)
(74,424)
-21%
-23%
-21%
-23%
-21%
-23%
-21%
-23%
305,018
203,346
406,691
663,103
811,571
1,334,613
1,626,765
2,440,148
2,541,821
6,100,370
$309,429
$364,414
$492,544
$712,330
$862,096
$1,290,775
$1,949,416
$2,453,865
$2,743,601
$6,083,966
(96,570)
(99,735)
(148,849)
(219,949)
(266,767)
(406,869)
(518,197)
(695,364)
(726,310)
(1,545,415)
-24%
-21%
-23%
-24%
-24%
-24%
-21%
-22%
-21%
-20%
24

Alternative Energy, Energy Efficiency,
Peak Demand Reduction
Ohio
 ESP will not impact commitment to meeting alternative energy, energy efficiency, or peak demand reduction requirements.
 Duke Energy Ohio currently acquires RECs to meet alternative energy requirements.
 Duke Energy Ohio will continue to purchase RECs and also enter contracts to comply with alternative energy requirements.
 Duke Energy Ohio will continue energy efficiency and peak demand reduction programs.
25

Ohio
 The Electric Security Plan will be effective through May
31, 2015.
 The Company is required to make its next ESP filing by
June 1, 2014.
26

Ohio
27

Ohio
 Duke Energy Ohio received FERC approval to realign RTO membership with PJM.
 Realignment effective January 1, 2012.
 Auction timeline designed to coordinate with PJM planning year.
28

Ohio
 Rider TCR (Transmission Cost Recovery) terminated after
December 31, 2011. Rider TCR was bypassable for shoppers.
 New transmission riders effective January 1, 2012:

Rider BTR (Base Transmission Rider). Non-bypassable, i.e., no longer part of the price to compare.

Rider RTO (Regional Transmission Organization Rider).
Fully bypassable. Currently zero.
29

Old ESP to 2012 ESP Rate Changes – Non-Residential
PTC - BG
•Base generation
PTC – AAC
•Environmental
•Homeland Security
•Taxes
PTC-FPP
•Fuel, Purchased Power,
Allowances
•RECs
SRA-SRT
•System Reliability
SRA-CD (Rider SC)
•Capacity Dedication
Rider TCR
•MISO Transmission
Distribution rates and riders
RECs
Legend
Fully Avoidable
Avoidable with waiver
Unavoidable
Ohio
RC and RE
•Retail Capacity and Energy
•Derived from auction
SCR
•Supplier Cost Reconciliation
AERR
•Alternative Energy Recovery
RECON
Reconciles ESP riders
Rider RTO
•Various RTO costs
BTR
•Base transmission incl. NITS
ESSC
•Electric Security Stabilization
UE-GEN
Generation Uncollectibles
LFA
•Load Factor Adjustment
Distribution rates and riders
30

Ohio
31

Compare:
DE OH’s Rider RC Charge
+ Rider RE Charge
+ Rider SCR Charge
+ Rider AERR Charge
+ Rider RECON Charge
+ Rider RTO Charge vs.
The CRES Provider’s price for electricity
Note: Price To Compare varies based on load factor
Ohio
32

Load Factor: kWh used during the month divided by hours in the month x monthly demand
Impact:
> The higher the load factor, the lower the rate per kWh
> The lower the load factor, the higher the rate per kWh
Ohio
33

High Load Factor
Rate DP
Rider RC
Rider RE
Rider SCR
Rider AERR
Rider RECON
Rider RTO
Total
Billing kWh
Price To Compare (¢ per kWh)
Ohio
72% kWh kW
518,400
1,000
$ 1,649.53
27,289.61
-
201.14
-
-
$ 29,140.28
518,400
5.6212
34

Low Load Factor
Rate DP
Rider RC
Rider RE
Rider SCR
Rider AERR
Rider RECON
Rider RTO
Total
Billing kWh
Price To Compare (¢ per kWh)
Ohio
21% kWh kW
518,400
3,456
$ 3,551.22
27,289.61
-
201.14
-
-
$ 31,041.97
518,400
5.9880
35

Ohio
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
36

Ohio 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, RECON, SCR
201.24
242.55
252.20
267.33
291.00
315.06
200.98
318.94
252.60
203.70
201.24
237.46
2,984.30
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
436,535.19
Total
29,154.55
35,139.17
36,700.44
39,222.56
42,876.26
46,843.24
31,021.22
47,828.90
37,218.55
29,971.58
29,260.18
34,282.85
439,519.48
Price To
Compare (¢)
5.62
5.62
5.65
5.69
5.72
5.77
5.99
5.82
5.72
5.71
5.64
5.60
5.71
37


Ohio
38

Ohio
39