Duke Energy Ohio 2012 Electric Security Plan

Ohio

Duke Energy Ohio2012 Electric Security Plan

Duke Energy OhioJune 29, 2012

Jim Ziolkowski, Rates Manager

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Agenda

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

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ELECTRIC SECURITY PLAN OVERVIEW 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.

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ELECTRIC SECURITY PLAN OVERVIEW 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).

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AUCTION SCHEDULE

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OhioDetails of Auction

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.

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OhioAuction Schedule

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ESP Period 3 years and 5 months

1/1/2012 - 17 months 6/1/2013 6/1/201433 3333 33 3334 34 34 34

17 17 17

16 16 16

17 17

16 16

TOTAL TRANCHES 100 100 100

Auction 5 Nov 2013

Auction Date Tranches

Delivery Period Beginning

Auction 1 Dec 2011

Auction 2 May 2012

Auction 3 Nov 2012

Auction 4 May 2013

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2012 ELECTRIC SECURITY PLANRATE STRUCTURE AND IMPACTS

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GENERATION RATES - 2012

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

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PTC – AAC• Environmental• Homeland Security• Taxes

PTC-FPP• Fuel, Purchased Power,

Allowances • RECs

Rider TCR• MISO Transmission

SRA-SRT• System Reliability

SRA-CD (Rider SC)• Capacity Dedication

Distribution rates and riders

PTC - BG• Base generation

Legend

Fully Avoidable

Unavoidable

Rider RTO• Various RTO costs

BTR• Base transmission incl.

NITS


SCR• Supplier Cost

ReconciliationAERR• Alternative Energy

RecoveryRECONReconciles ESP riders

UE-GENGeneration Uncollectibles

Avoidable with waiver

RC and RE• Retail Capacity and

Energy• Derived from auction

RECs

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Old ESP to 2012 ESP Rate Changes – Non-Residential

ESSC• Electric Security

Stabilization

LFA• Load Factor Adjustment

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Allowances • RECs


SRA-SRT *• System Reliability

SRA-CDCapacity Dedication



Legend

Fully Avoidable

Unavoidable



NITS









RECs

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Old ESP to 2012 ESP Rate Changes – Residential


Stabilization


* Conditionally avoidable only for aggregation customers

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RIDER RC (RETAIL CAPACITY)

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.

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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 SECURITYSTABILIZATION 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.)

Will be 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 ENERGYRECOVERY RIDER)

Recovers the cost of RECs associated with Standard Service Offer (i.e., non-switched) load.


Rider AERR is fully avoidable by shoppers.

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RIDER RECON (RECONCILIATION RIDER)

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.

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RIDER UE-GEN (UNCOLLECTIBLEEXPENSE - 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.

Will be adjusted annually.

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RIDER LFA (LOAD FACTOR ADJUSTMENT RIDER)

Revenue neutral to Duke Energy Ohio.


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. 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.

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TYPICAL BILL IMPACTS – RATE DS

LEVEL LEVELLINE RATE of of Dec-11 ESSC+ Total Bill NO. HOURS CODE DEMAND USE NON-SHOP RC+LFA RE SSO Customer $ %

(KW) (KWH) ($) Bypassable1 200 DS 30 6,000 $909 $198 $316 $741 -$168 -19%2 300 30 9,000 1,087 148 474 $854 (233) -21%3 400 30 12,000 1,221 89 632 $959 (263) -21%4 200 50 10,000 1,487 330 526 $1,206 (281) -19%5 300 50 15,000 1,784 247 790 $1,395 (388) -22%6 400 50 20,000 2,007 149 1,053 $1,570 (438) -22%7 200 75 15,000 2,209 495 790 $1,788 (421) -19%8 267 75 20,000 2,506 412 1,053 $1,977 (529) -21%9 400 75 30,000 2,989 223 1,579 $2,333 (656) -22%

10 200 100 20,000 2,931 660 1,053 $2,369 (561) -19%11 300 100 30,000 3,525 494 1,579 $2,748 (777) -22%12 400 100 40,000 3,972 297 2,106 $3,096 (875) -22%13 500 100 50,000 4,418 101 2,632 $3,445 (973) -22%14 300 300 90,000 10,489 1,482 4,738 $8,159 (2,331) -22%15 400 300 120,000 11,829 892 6,317 $9,204 (2,625) -22%16 200 500 100,000 14,481 3,299 5,264 $11,675 (2,807) -19%17 300 500 150,000 17,453 2,469 7,896 $13,569 (3,884) -22%18 500 1,000 500,000 43,797 1,011 26,321 $34,062 (9,734) -22%

NOTES: EXISTING GENERATION RATE IS COMPRISED OF BASE GEN, FPP, AAC, SRT, AND CD.

Retail Prices for Jan 2012-May 2013Difference from 2011 SSO

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TYPICAL BILL IMPACTS – RATE DPLEVEL LEVEL

of of Dec-11LINE RATE DEMAND USE NON-SHOP ESSC+ Total Bill NO. HOURS CODE RC+LFA RE SSO Customer $ %

(KW) (KWH) ($) Bypassable1 144 DP 100 14,400 $2,631 $787 $758 $2,280 ($350) -13%2 288 100 28,800 3,505 563 1,516 $2,841 (665) -19%3 432 100 43,200 4,196 294 2,274 $3,357 (839) -20%4 144 200 28,800 5,058 1,573 1,516 $4,357 (701) -14%5 288 200 57,600 6,808 1,126 3,032 $5,479 (1,329) -20%6 432 200 86,400 8,190 589 4,548 $6,511 (1,679) -21%7 144 300 43,200 7,486 2,360 2,274 $6,435 (1,051) -14%8 288 300 86,400 10,111 1,689 4,548 $8,117 (1,994) -20%9 432 300 129,600 12,183 883 6,822 $9,665 (2,518) -21%

10 144 500 72,000 12,341 3,933 3,790 $10,589 (1,752) -14%11 288 500 144,000 16,716 2,814 7,580 $13,392 (3,323) -20%12 432 500 216,000 20,170 1,472 11,371 $15,973 (4,197) -21%13 144 800 115,200 19,625 6,293 6,064 $16,821 (2,804) -14%14 288 800 230,400 26,623 4,503 12,129 $21,306 (5,317) -20%15 432 800 345,600 32,150 2,356 18,193 $25,434 (6,716) -21%16 144 1,000 144,000 24,480 7,866 7,580 $20,975 (3,505) -14%17 288 1,000 288,000 33,229 5,629 15,161 $26,582 (6,647) -20%18 432 1,000 432,000 40,137 2,945 22,741 $31,742 (8,395) -21%19 144 1,500 216,000 35,572 11,577 11,371 $31,140 (4,433) -12%20 288 1,500 432,000 48,695 8,221 22,741 $39,550 (9,145) -19%21 432 1,500 648,000 59,058 4,195 34,112 $47,290 (11,768) -20%22 144 3,000 432,000 68,848 22,710 22,741 $61,632 (7,216) -10%23 288 3,000 864,000 95,094 15,997 45,483 $78,452 (16,642) -18%24 432 3,000 1,296,000 115,820 7,946 68,224 $93,933 (21,887) -19%


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TYPICAL BILL IMPACTS – RATE TS

LEVEL LEVELLINE RATE of of Dec-11 ESSC+ Total Bill NO. HOURS CODE DEMAND USE NON-SHOP RC+LFA RE SSO Customer $ %

(KVA) (KWH) ($) Bypassable1 200 TS 1,000 200,000 $23,399 $6,728 $10,167 $18,412 ($4,987) -21%2 400 1,000 400,000 32,261 2,947 20,335 $24,818 (7,442) -23%3 200 2,500 500,000 58,195 16,819 25,418 $45,728 (12,467) -21%4 400 2,500 1,000,000 80,350 7,367 50,836 $61,744 (18,606) -23%5 200 5,000 1,000,000 116,188 33,638 50,836 $91,254 (24,934) -21%6 400 5,000 2,000,000 160,499 14,735 101,673 $123,287 (37,212) -23%7 200 10,000 2,000,000 232,175 67,276 101,673 $182,308 (49,867) -21%8 400 10,000 4,000,000 320,797 29,470 203,346 $246,373 (74,424) -23%9 600 10,000 6,000,000 405,999 (9,345) 305,018 $309,429 (96,570) -24%10 200 20,000 4,000,000 464,149 134,551 203,346 $364,414 (99,735) -21%11 400 20,000 8,000,000 641,393 58,940 406,691 $492,544 (148,849) -23%12 520 25,061 13,043,867 932,279 15,255 663,103 $712,330 (219,949) -24%13 535 29,866 15,964,371 1,128,863 10,037 811,571 $862,096 (266,767) -24%14 681 38,553 26,253,097 1,697,645 (96,603) 1,334,613 $1,290,775 (406,869) -24%15 400 80,000 32,000,000 2,467,613 215,602 1,626,765 $1,949,416 (518,197) -21%16 600 80,000 48,000,000 3,149,229 (94,916) 2,440,148 $2,453,865 (695,364) -22%17 500 100,000 50,000,000 3,469,911 67,029 2,541,821 $2,743,601 (726,310) -21%18 600 200,000 120,000,000 7,629,381 (287,685) 6,100,370 $6,083,966 (1,545,415) -20%


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Alternative Energy, Energy Efficiency, Peak Demand Reduction

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.

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ESP TERMINATION

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.

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TRANSMISSION RIDERS

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OhioRTO Membership

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.

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Rider BTR and Rider RTO

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.

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Allowances • RECs


SRA-SRT• System Reliability

SRA-CD (Rider SC)• Capacity Dedication



Legend

Fully Avoidable

Unavoidable



NITS









RECs

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Old ESP to 2012 ESP Rate Changes – Non-Residential


Stabilization


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PRICE TO COMPARE2012

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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 RECON Charge + Rider RTO Charge vs.

The CRES Provider’s price for electricityNote: Price To Compare varies based on load factor

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Load Factor

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

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Price To Compare Calculation

High Load Factor 72%Rate DP kWh 518,400

kW 1,000

Rider RC 1,649.53$ Rider RE 27,289.61 Rider SCR - Rider AERR 201.14 Rider RECON - Rider RTO -

Total 29,140.28$

Billing kWh 518,400 Price To Compare (¢ per kWh) 5.6212

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Price To Compare Calculation

Low Load Factor 21%Rate DP kWh 518,400

kW 3,456

Rider RC 3,551.22$ Rider RE 27,289.61 Rider SCR - Rider AERR 201.14 Rider RECON - Rider RTO -

Total 31,041.97$

Billing kWh 518,400 Price To Compare (¢ per kWh) 5.9880

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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

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Annual Price To Compare (Example)

Load Price TokW kWh Factor AERR, RTO, RECON, SCR RC, RE Total Compare (¢)1,000 518,665 72.0% 201.24 28,953.31 29,154.55 5.621,240 625,120 70.0% 242.55 34,896.63 35,139.17 5.621,450 650,000 62.3% 252.20 36,448.24 36,700.44 5.651,850 689,000 51.7% 267.33 38,955.23 39,222.56 5.692,200 750,000 47.3% 291.00 42,585.26 42,876.26 5.722,850 812,000 39.6% 315.06 46,528.18 46,843.24 5.773,458 518,000 20.8% 200.98 30,820.23 31,021.22 5.993,512 822,000 32.5% 318.94 47,509.96 47,828.90 5.821,888 651,030 47.9% 252.60 36,965.95 37,218.55 5.721,450 525,012 50.3% 203.70 29,767.88 29,971.58 5.711,100 518,665 65.5% 201.24 29,058.94 29,260.18 5.641,098 612,000 77.4% 237.46 34,045.39 34,282.85 5.60

7,691,492 2,984.30 436,535.19 439,519.48 5.71

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Duke Energy Ohio Tariffs

DE OH’s tariffs can be found online at:

www.duke-energy.com

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DE OH Standard Service Offer

Questions?

Duke Energy Ohio 2012 Electric Security Plan

Documents

Transcript of Duke Energy Ohio 2012 Electric Security Plan