Duke Energy Ohio Electric Security Plan Settlement Agreement (2009–2011)
This agreement outlines the settlement of Duke Energy Ohio's Electric Security Plan (ESP) for the period from January 1, 2009, to December 31, 2011, as approved by the Public Utilities Commission of Ohio (PUCO). It details pricing changes, customer bill impacts, cost deferrals, and the use of various cost-based trackers for fuel, environmental, and infrastructure expenses. The plan also allows for the sale or transfer of gas generation assets and sets an earnings test with a 15% return on equity threshold. The agreement aims to manage electricity pricing and service stability for Duke Energy Ohio customers.
Exhibit 10.1
Duke Energy Ohio
Electric Security Plan (ESP) Settlement Overview
Background – Ohio Electric Market (Past and Present)
· Ohio Amended Substitute Senate Bill No. 221 (SB221) signed May 1, 2008 (effective July 31, 2008)
· Duke Energy Ohio filed its ESP on July 31, 2008
Settlement and PUCO Order
· Settlement agreement filed on October 27, 2008
· PUCO Order issued December 17, 2008
· 3-year Plan: January 1, 2009 — December 31, 2011
· Pricing and Customer Impacts
· Pricing Impacts
|
|
| 2009 |
| 2010 |
| 2011 |
| |||
| ($ in millions) |
| Revenue |
| Revenue |
| Revenue |
| |||
| Base Price Increase |
| $ | 83 |
| $ | 121 |
| $ | 219 |
|
| RTC Termination (Note) |
| $ | (47 | ) | $ | (47 | ) | $ | (121 | ) |
| Net Revenue Increase |
| $ | 36 |
| $ | 74 |
| $ | 98 |
|
|
|
|
|
|
|
|
|
| |||
| Original Proposal |
| $ | 110 |
| $ | 130 |
| $ | 75 |
|
Note: Residential and non-residential RTC revenue and equivalent amortization expense terminates 12/31/08 and 12/31/10, respectively.
· Deferral of up to $50MM Beckjord Station O&M, amortized over 3 years (no revenue impact — only amortization expense)
| ($ in millions) |
| 2009 |
| 2010 |
| 2011 |
| |||
| Planned 2009 Beckjord O&M |
| $ | 50 |
|
|
|
|
| ||
| Amortization Expense |
| $ | (17 | ) | $ | (17 | ) | $ | (16 | ) |
| Deferred Beckjord O&M Balance |
| $ | 33 |
| $ | 16 |
| $ | 0 |
|
· Customer Impacts (as % of total bill)
· Overall annual average increase = 2% in 2009 and 2010, and 1.2% in 2011
· Average impact by customer class(excluding distribution rate case impacts):
· Residential = 2% in 2009 and 2010, and 0% in 2011
· Commercial and Industrial = 2% in each year
· Cost-Based Trackers
· Retain existing trackers for:
· Fuel, purchased power and emission allowances (currently FPP, new name PTC-FPP)
· Environmental, homeland security & change in tax law (currently AAC, new name PTC-AAC)
· Capacity purchases (currently SRT, new name SRA-SRT)
· Replaces DSM tracker with new energy efficiency tracker (Save-A-Watt) (Rider DR-SAW)
· New unavoidable trackers for:
· Infrastructure modernization (SmartGrid) (Rider DR-IM) - Provides for deferral of costs and accumulation of carrying charges between point of expenditure and inclusion of such costs in the rider;
· Economic competitiveness (customer incentives approved by PUCO) (Rider DR-ECF)
· Settlement withdrew the proposed inflation adjustment rider and the unavoidable newly dedicated capacity rider
· Projected Average Price-to-Compare ($/MWh)
|
|
| 2009 |
| 2010 |
| 2011 |
| |||
| Base Generation (PTC-BG) |
| $ | 29.20 |
| $ | 31.10 |
| $ | 36.00 |
|
| Fuel and Purchased Power (Rider PTC-FPP) |
| $ | 23.80 |
| $ | 27.10 |
| $ | 30.10 |
|
| Environmental (Rider PTC-AAC) |
| $ | 5.70 |
| $ | 5.50 |
| $ | 5.00 |
|
| Total Price-to-Compare (PTC) |
| $ | 58.70 |
| $ | 63.70 |
| $ | 71.10 |
|
| PTC in Original ESP Filing |
| $ | 62.50 |
| $ | 67.30 |
| $ | 71.50 |
|
· Settlement allows the gas generation assets to be sold or transferred to an affiliated GenCo
· Existing dedicated assets to continue serving Duke Energy Ohio customers during the 3-year term of the ESP
· Earnings Test
· ROE threshold = 15%
· ROE excludes purchase accounting & goodwill, mark-to-market accounting, and material non-recurring gains and losses
Duke Energy Ohio
Price Structure Transition From RSP to ESP
