Breaking: Duke Energy Ohio to Assume Capacity Obligation for All Distribution Customers Under Proposed ESP

Duke Energy Ohio announced this morning the filing of a new proposed electric security plan (ESP) under which it would assume the capacity obligation of all retail customers taking its distribution service.

The ESP would run from January 1, 2012 through May 31, 2021.

Effectively, Duke Energy Ohio's ESP would remove capacity as a component of competitive generation supply, removing capacity charges from the bypassable generation price while also relieving competitive retail suppliers of their PJM capacity obligations.

Such action appropriately treats capacity, which has nothing to do with competitive retail generation and whose purchase is mandated, as a regulated charge.

All distribution customers would pay a competitively neutral nonbypassable charge to Duke Energy Ohio for capacity.

Duke Energy Ohio would meet its capacity obligations from its retained generation, with supplemental purchases as needed.

Generation from the Duke Energy Ohio plants would not be dedicated to Standard Service Offer load, and instead would be sold into the market in a competitively neutral manner. Profits from such sales would be shared with all distribution customers to reduce capacity costs. Customers would receive 80% of such profits, with Duke Energy Ohio retaining the remaining 20%.

Generation from Standard Service Offer customers would be procured through competitive descending clock auctions for full requirements service, staggered over the period of the ESP.

More details on the auctions and other aspects of the proposal will follow in tomorrow's story.