Duke Energy, PUCO reach agreement on distribution rate increase

Final verdict to be made after Oct. 4 hearing.

Credit: Nick Graham

Credit: Nick Graham

Duke Energy and the Public Utilities Commission of Ohio’s technical staff and other parties signed a stipulation agreement Monday regarding the provider’s proposed electricity distribution rate increase, which would impact hundreds of thousands of southwest Ohio customers.

Any time an Ohio utility provider wants to increase its rates, it has to go through a formal process with the state’s utility regulator, the Public Utilities Commission of Ohio [PUCO].

The process starts when the utility provider applies for specific measures that would increase its revenue by a specific amount. After that, PUCO’s technical staff pours over data and provides its own recommendation on how much the provider should be allowed to increase its revenue by.

In this case, Duke Energy and PUCO’s technical staff were about $40 million apart in their respective initial proposals. Duke Energy asked for nearly $55 million in increased revenue, whereas PUCO staff recommended a maximum of about $15 million.

Once those two parties have made their proposals, the process continues with public hearings, a potential stipulation agreement, and a final evidentiary hearing. PUCO’s regulatory board then makes a final decision on the measures the utility provider can actually take.

Plainly, this non-binding settlement is a compromise that shows PUCO’s technical staff and Duke Energy itself would both be satisfied with a $22.6 million increase in the utility provider’s yearly Ohio revenue.

Other signatories supporting the agreement include Ohio Partners for Affordable Energy; Ohio Energy Group; People Working Cooperatively, Inc.; Retail Energy Suppliers Association; Walmart Stores East & Sam’s East; One Energy Enterprises; Nationwide Energy Partners; and Citizens Utility Board of Ohio.

However, other interveners in the case have not signed the agreement.

“Most notably, the Ohio Consumers’ Counsel [OCC] has not signed on. They’ve not agreed to this,” said Matt Schilling, a spokesperson for PUCO.

The Journal-News previously reported that the OCC had formally recommended PUCO to “... approve a rate decrease (not an increase) of at least $1.4 million for Duke’s consumers.”

Merrilee Embs, a spokesperson for the OCC, previously described the agency as the “official state advocate for Ohio utility consumers” and reiterated that the agency believes it’s a bad time to increase rates.

“The Ohio Consumers’ Counsel, the state’s voice for residential utility consumers, did not find the settlement to be acceptable for Duke’s electric consumers,” Embs wrote in a statement. “With soaring energy prices, inflation and lingering challenges from the pandemic, this is not the time to increase Ohioans’ electric bills.”

Schilling said the OCC’s absence is the most notable from the signatory list, and throws some doubt into what the final verdict might be from the five PUCO regulatory commissioners.

Notably, this agreement and any stipulation agreement is not binding and is somewhat extracurricular, but it’s a common and important step in the long process of an Ohio utility provider getting their rate increase formally approved. Schilling referred to it as a further ‘recommendation’ to the commission.

The evidentiary hearing still has to go on, Schilling said, but the stipulation agreement essentially speeds up the process and gives the commissioners a firmer starting point than they would have had before the agreement was in place.

“The folks that might oppose this settlement, they still have their day in court and they still get to make their case,” Schilling said. “And, they might persuade the commission.”

It also somewhat shifts the focus of the evidentiary hearing, Schilling said. Instead of having to find the middle ground between $55 and $15 million, the commission now gets to hear opposing parties like the OCC and decide whether or not the stipulation agreement is fair.

“Without a settlement, you’re just straight up litigating against the companies application, but here, they’ve come to an agreement with a lot of the parties,” Schilling said. “It’s not everything the utility asked for, and it’s also not as low as the PUCO staff report that was filed earlier this summer.”

Casey Kroger, a spokesperson for Duke Energy, said the utility provider is looking forward to working with PUCO “...on what we believe is a fair request to increase Duke Energy Ohio’s base electric distribution rates.”

The Journal-News previously reported that the proposed increase in rates, which would in turn raise revenues for the utility provider, were measures that would allow the company to recoup its investments made into the energy grid, along with reaping a profit deemed as reasonable by PUCO.

“We’re working hard every day to keep rates reasonable as we continue making strategic, data-driven investments to improve reliability and protect our system against cyber and physical threats as our customers benefit from better service and more control over their energy use,” Kroger said.

The evidentiary hearing will take place at 10 a.m. Oct. 4 at the PUCO’s Columbus office and will be open to the public.

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