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FERC Approves Duke Ohio PJM Integration Plan, Dismisses Capacity Price Concerns

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October 22, 2010

FERC approved Duke Energy Ohio and Duke Energy Kentucky's plan to exit the Midwest ISO and join PJM and conditionally accepted the Duke companies' proposed Fixed Resource Requirement (FRR) Integration Plan (ER10-2254 et. al.).

The Commission approved Duke's proposal to use the Final Zonal Capacity Price to price capacity for wholesale loads in the FRR plan.  The Final Zonal Capacity Price is a weighed average blending the price from the PJM Base Residual Auction with the prices obtained in the Incremental Auctions.  

"The Reliability Assurance Agreement requires Duke Ohio to sell capacity to alternative retail suppliers at the Reliability Pricing Model price if such resources do not self-supply.  While we found reasonable FirstEnergy's proposal to hold separate integration auctions to procure capacity for the load in its footprint, Duke's filing, in this respect, more closely follows the Reliability Assurance Agreement by pricing the capacity at the Reliability Pricing Model price," FERC said.

FERC dismissed Dominion Retail and the Ohio Consumers' Counsel's concerns regarding the rate that Duke Ohio will propose to charge its retail customers, and FirstEnergy Solution's requests for more information in the calculation of Duke Ohio's retail rates, as beyond the scope of the proceeding.  Dominion Retail had asked that the Commission require Duke Ohio to commit to charge its own load no less than the Reliability Pricing Model Price for the time period from January 1, 2012, the date of proposed integration of Duke into PJM, through May 31, 2014, the date of proposed full integration of resources and load into PJM.

"Duke Ohio has not yet initiated a ratemaking proceeding to set retail electric generation rates for the time period of the FRR Integration Plan.  Dominion Resources' cite to Conway is therefore inapplicable.  In Conway [which addressed the discriminatory impact of wholesale prices on retail competition], the Commission was setting a wholesale rate from which a price squeeze resulted.  Here, we are not setting a wholesale rate, and Ohio has not yet set a retail rate; therefore, it is premature for us to consider whether there may be a discriminatory effect between Commission- and state-jurisdictional rates.  Furthermore, we note that alternative retail suppliers, such as Dominion Resources, have the option to self-supply if they do not want to pay the Reliability Pricing Model price to Duke Ohio," FERC said.

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