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Settlement Reached For Utility To Use Wholesale Auction To Procure Default Service; Change From Current Managed Portfolio

August 25, 2023

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Copyright 2010-23
Reporting by Paul Ring •

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Several parties have reached a settlement under which Duke Energy Ohio would transition to using a wholesale Standard Service Offer (SSO) auction to procure natural gas supplies for default service customers, in a change from its current gas cost recovery (GCR) process

The parties to this stipulation filed today at the PUC of Ohio are Duke Energy Ohio ('the Company'), Interstate Gas Supply, LLC ('IGS Energy'), the Retail Energy Supply Association ('RESA'), Spire Marketing, Inc. ('Spire'), and the Staff of the Public Utilities Commission of Ohio ('Staff'). The Ohio Consumers' Counsel is not a signatory party

The stipulation would resolve all issues concerning Duke's application to transition to an SSO auction to supply non-shopping customers, except the stipulation reserves for litigation issues concerning the inclusion of the price to compare (PTC) on shopping customers' bills, and associated messaging. (In a separate case, PUCO previously ordered the display of the gas PTC on shopping customers' bills at Duke, as previously reported. The stipulation does not resolve this issue, but essentially presents pending rehearing requests from retail suppliers concerning the PTC appearance for resolution in the instant SSO case)

The stipulation generally would establish a wholesale SSO auction similar to the SSO initially used at the other Ohio LDCs with gas customer choice (prior to those LDCs moving to a retail SCO auction for eligible customers)

Suppliers would bid to serve, at wholesale, tranches of Duke's non-shopping load under the SSO. SSO Suppliers would bid a retail price adjustment (RPA) at which to serve customers in addition to the applicable NYMEX price. SSO Suppliers would not supply individual customers

Specifically, Duke would pay the winning SSO Suppliers the Retail Price Adjustment plus the monthly NYMEX Price for the scheduled quantities received at the Company’s city gates which should be equal to the Adjusted Target Supply Quantity (ATSQ) per dekatherm.

For customers, the Standard Service Offer (SSO) Rate would equal the per dekatherm total price of:

(1) The Company’s Retail Price Adjustment ('RPA') established for the length of the Standard Service Offer period per DTH, plus

(2) The final settlement price of the NYMEX natural gas futures contract each month ('NYMEX Price') during the Standard Service Offer period.

The RPA plus NYMEX Price shall be expressed as the SSO Price per DTH converted to a price per CCF at the burner-tip by applying the system loss factor and the Monthly System BTU

The all-in bypassable price to SSO customers would also include a Standard Service Offer Cost Reconciliation Rider (SSOCR). The SSOCR Rider would become nonbypassable if ninety percent of the Company’s total number of firm customers have switched to taking service from CRNGS [retail supplier].

On SSO customer bills, the supply portion would bundle the SSO Rate and Rider SSOCR under a single "Gas Cost" heading.. The bill would state, "This month's gas costs charge (including Rider SSOR and Rider SSOCR) for customers purchasing their natural gas from Duke Energy is $[rate] per CCF."

The stipulation addresses various other terms as follows:

Balancing and Storage Fees

Duke Energy Ohio currently assesses balancing fees for storage directly through the GCR. Further, CRNGS providers currently pay for storage and balancing through Rider FBS and Rider EFBS, with all revenue being credited to the GCR. Choice customers served by CRNGS providers currently pay the balancing fees to the extent that the CRNGS providers include what they pay as part of the Rider EFBS and Rider FBS in the rates charged to their customers.

The Signatory Parties have agreed that Duke Energy Ohio shall modify its current assessment method for balancing fees and instead bill these charges directly to customers without markup. This would ensure all customers pay the same rider fee regardless of their shopping or non-shopping status.

Balancing fees are currently included in the CRNGS contract prices paid by shopping customers. In order to allow time for the market to reflect the fact that these charges will be billed directly to customers, there needs to be a period in which the competitive market is informed of and educated about this transition so that market participants can account for it in their pricing. Accordingly, the Signatory Parties hereby agree the transition will be effective as of April 1, 2025.

The Company will notify customers via bill messages of implementation of this Stipulation upon Commission approval. The Company will notify all CRNGS providers of the change and require each CRNGS to submit a statement/affidavit to Duke Energy Ohio that it has modified its customer rates accordingly and has complied with the terms of this provision.

All storage and balancing charges will be included in the new nonbypasable Storage Balancing Charge Rider ('Rider SBC') which will be trued up quarterly. Revenue from Rate IMBS and any pipeline penalties related to storage that are passed on to suppliers will be credited to Rider SBC. Penalties from the interstate pipeline storage providers will be allocated and billed to the supplier(s) which caused the penalties, and the revenue will be credited to the SBC rider. See Attachment F- Sheet No. 78- Rider SBC (Storage Balancing Charge).

Duke Energy Ohio shall cancel and withdraw Rider FBS, which currently states, in part: "BALANCING SERVICE CHARGE The FBS charge, which will be applied to all monthly consumption of the supplier’s aggregate FT and RFT services not included in a pool receiving service under Rider EFBS, is $0.663 per Mcf."

Duke Energy Ohio shall revise Rate FRAS to clarify that any supplier not currently participating in Rider EFBS will be required to match deliveries to the Target Supply Quantity (TSQ). Any supplier whose MDQ exceeds 6,000 Dth on March 7th for the gas year starting the following April 1 will be required to take service under Rider EFBS. See Attachment B- Sheet No. 44- Rate FRAS (Full Requirements Aggregation Service)

Duke Energy Ohio will also revise the Rider EFBS tariff to remove the Rate section, which currently states:

a) For all services rendered pursuant to this tariff, Supplier each month shall pay the Company the charges set forth below:

1. Demand Charge: $11.48, assessed each month on each Dth of the Supplier’s MDDQ;

2. Commodity Charge: $0.060, per Mcf, applied to all monthly consumption of the supplier’s aggregate FTS, FT-L, RFT and RFT-LI services not included in a pool receiving service under Rider FBS.

b) Rates will be reviewed quarterly and adjusted based on current charges from the Company’s storage service providers.

Duke Energy Ohio shall further revise Rider EFBS to clarify that the only CRNGS providers taking EFBS service will be: (1) any CRNGS providers taking EFBS service as of the date the Commission approves this Stipulation; and (2) any CRNGS provider who has a Maximum Daily Quantity ('MDQ') equal to or greater than 6,000 Dth on March 7th for the gas year starting the following April 1st. A CRNGS provider must transition on or off EFBS service during the other months of the year, but only if its MDQ changes to a new level (i.e., above 6,000 or below 6,000) for three (3) consecutive months. See Attachment C- Sheet No. 50- Rider EFBS (Enhanced Firm Balancing Service).

SSO Gas Peaking Supply Service

The Application shall be amended such that in the Transportation Capacity Requirements section of the Sheet No. 43 Rate SSOS tariff the Company will add the requirement for the Standard Service Offer ('SSO') Suppliers to be required to participate in a newly created, Company-obtained Gas Peaking Supply Service. The Gas Peaking Supply Service will assist the SSO Suppliers in supplying deliveries to help supplement system demands during winter months of December, January and February. The Gas Peaking Supply Service shall operate similarly to the peaking service currently in place for the gas cost recovery ('GCR'). See Attachment A- Sheet No. 43- Rate SSOS (Standard Service Offer Service).

The reservation fee that the Company pays the contractor that provides the peaking supply service ('Peaking Supplier') to have the right to deliver this Gas Peaking Supply Service for the months of December, January and February will be divided equally among the tranches and will be deducted from what the Company pays the SSO Suppliers during those months for supply. Each SSO Supplier will be assigned an equal portion of peaking quantities based on the number of tranches it is responsible for. When an SSO Supplier calls on any volume of the peaking supply, the commodity costs the Company is charged by the Peaking Supplier will be netted with the amount owed to the SSO Supplier.

The SSO Suppliers will have the right to call on their portion of the peaking supply up to their maximum daily quantity on a daily basis and up to the three-month maximum quantity.7 The SSO Supplier must make their daily notification known to the Company by a date and time to be established by the Company based on the terms of its peaking contract.

Retroactive Nominations

Duke Energy Ohio agrees to revise the Rate SSOS tariff proposed in its Application to clarify that it will use reasonable efforts to accommodate retroactive nominations if such nominations do not adversely impact the Company’s management of storage or balancing on its system.

Delivery Of Gas to Zones vs. Specific City Gate

As part of the original Application the Company presented a proposed tariff which, among other things, required auction participants to deliver gas to a specific city gate upon normal operating conditions. The Signatory Parties have agreed that language will be modified in order to allow gas to be delivered by zone rather than specific city gate in normal operating circumstances.

Case No. 21-903-GA-EXM


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