PUCO Approves Removal of Network Integration Transmission Services As Bypassable Rate Component at Duke Energy Ohio

May 26, 2011
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The Public Utilities Commission of Ohio approved, without modification, a settlement which, among other things, transfers the obligation for Network Integration Transmission Services (NITS) to Duke Energy Ohio for itself as well all competitive retail suppliers in its service area (11-2641-EL-RDR).

The stipulation, first reported in Matters, relates to Duke Energy Ohio's integration into PJM, and related transmission costs (4/27).

The settlement, signed by Duke, PUCO Staff, Ohio Consumers' Counsel, and the Ohio Energy Group, creates two new transmission riders, one bypassable and one nonbypassable, to address transmission cost recovery from Ohio retail customers.

Rider BTR will be a nonbypassable charge assessed on all customers at Duke Energy Ohio, which will recover Network Integration Transmission Services (NITS), Midwest transmission expansion project costs, PJM regional transmission expansion plan costs, and other non-market based costs, such as costs related to Commission-ordered audits. As this rider will be nonbypassable, Duke Energy Ohio will pay all of these costs on behalf of all customers, even those on competitive supply.

As such, starting January 1, 2012, competitive suppliers will no longer be responsible for paying for NITS and other non-market-based transmission costs. "Practical results of this circumstance should be to reduce the risk premium that [competitive] providers may incorporate into their offers and to allow [competitive] providers to lower the price of their offers," Duke Energy Ohio said.

Duke Energy Ohio has also committed to work with retail suppliers to ensure that PJM correctly bills suppliers for transmission and charges Duke directly for the non-market based costs covered under Rider BTR.

Also effective January 1, 2012, Duke Energy Ohio will institute bypassable Rider RTO to recover market-based FERC transmission costs and RTO charges billed to the company in proportion to its Standard Service Offer load.

With the two new transmission riders, Duke Energy Ohio will eliminate the current Rider TCR effective December 31, 2011.

As part of the settlement, Duke Energy Ohio also agreed that it will not institute a filing at the FERC under Section D of Schedule 8.1 of the PJM Reliability Assurance Agreement to seek FERC approval of a wholesale capacity charge applicable to load serving entities based upon Duke Energy Ohio's costs as a Fixed Resource Requirement (FRR) entity in PJM for the period between January 1, 2012, and May 31, 2016.

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