Duke Energy Ohio Reaches Agreement on the Electric Security Plan

On Monday, October 27, Duke Energy Ohio reached a settlement agreement with most intervening parties, the staff of the Public Utilities Commission of Ohio (PUCO), and the Ohio Consumers’ Counsel on its electric security plan (ESP) under Ohio’s new energy law. The agreement, which establishes generation rates for 2009 through 2011, must be approved by the PUCO.

Duke Energy Ohio’s ESP settlement agreement recognizes the current economic situation by reducing the first-year impact and spreading the proposed increase evenly over the three-year term of the plan. Under the terms of the settlement, the base cost for generation service for commercial and industrial customers will increase by approximately two percent of the total bill annually in 2009 through 2011. Customers' bills for generation service will continue to include cost-based trackers for fuel and purchased power, capacity purchases, and environmental compliance expenditures. The ESP also extends to customers the benefit of the company’s existing favorable coal contracts which will reduce exposure to the higher coal prices affecting the market today.

The settlement includes plans to develop an Electronic Bulletin Board that will help consumers compare competitor pricing for electric generation supply. Also, an economic development rate mechanism is established under the settlement to fund any individual arrangements or programs approved by the PUCO.

Duke Energy Ohio has issued requests for proposals for renewable energy supplies and long-term traditional generating capacity. These requests will add fuel diversity, comply with the renewable portfolio standard under the new energy law and balance available supply with customer demand for the three-year period of the ESP and beyond.

During the ESP period, Duke Energy Ohio will implement a new infrastructure modernization program that will begin the installation of smart grid technology to enhance delivery system reliability, improve outage response and enable increased energy efficiency. The new technology is an interactive digital system that can communicate with customers about their energy usage, monitor power quality, identify power outages, read meters continuously, turn service on/off remotely, and support energy efficiency.

The agreement also replaces the existing energy efficiency tracker with a new save-a-watt model that will compensate
Duke Energy based on the success of its energy efficiency programs. The new energy efficiency programs, to include interruptible tariffs for business customers, will help customers lower their overall bills and will help Duke Energy achieve the significant energy efficiency targets established by Ohio’s new energy law.