Duke Energy Ohio to Ask State Regulators for Approval to Adjust Electric and Natural Gas Distribution Rates June 7, 2012
• Electric bills would increase by approximately 5.1 percent on average; natural gas bills by 6.6 percent
• Due to low market prices for electric generation and natural gas, the average customer will still pay less for electricity and natural gas than in 2011
• Rate increases compensate the company for investments already made in the infrastructure that delivers electricity and natural gas to customers
Duke Energy Ohio today filed a notice with the Public Utilities Commission of Ohio (PUCO) of its intention to request an increase in the distribution rates customers pay for electric service by $86 million, and for natural gas service by $44 million.
If approved, revised rates are expected to be implemented in early 2013. Duke Energy Ohio is required to distribute electricity and natural gas to all customers within a specific geographic area at rates established by the PUCO.
“Although the distribution component of customer bills is going up, customers continue to benefit from lower generation prices for electricity and low commodity prices for natural gas,” said Julie Janson, president, Duke Energy Ohio. “In fact, electric and natural gas rates paid by Duke Energy Ohio customers are among the lowest in the state.”
Electric costs actually going down
The rates customers pay for electricity include a generation component and a distribution component. The proposed increase is for distribution, which covers the cost of substations, wires, meters and equipment that deliver electricity to customers.
Because of Ohio’s competitive electric generation market, generation prices have been coming down. So even with PUCO approval of the increase, a typical Duke Energy Ohio residential customer who uses 1,000 kilowatt-hours of electricity each month, will pay approximately $116 a month, or about 5.3 percent less than in June of 2011.
The need to increase electric distribution rates is driven by three primary factors:
- A $310 million investment in projects to improve reliability for customers
- Increases in the general costs to operate and maintain the distribution system
- A decline in sales volumes since rates were last approved
The company’s electric distribution rates were last adjusted in 2009.
Historically low natural gas prices continue to benefit customers
Natural gas commodity prices are also sharply lower today than in recent years. Duke Energy Ohio customers are paying about 45 percent less for natural gas than they were in 2006 and 18 percent less than in 2011. If the proposed gas distribution rate increase is approved by the PUCO, the typical Duke Energy Ohio residential customer who uses 70 CCF of natural gas a month will pay about $75 a month.
The requested increase in natural gas distribution rates is not related to the cost of the natural gas commodity used by customers. Instead, this proposed rate increase will reimburse the company for its significant incremental investment in the gas distribution system and the higher costs to operate and maintain the system that delivers gas to customers.
The need to increase natural gas distribution rates is driven by two primary factors:
- The volume of natural gas sales has declined during a time when the company invested more than $500 million to upgrade the pipes and infrastructure that serve customers with newer, safer and even more reliable technology.
- Additionally, the company is investing more than $65 million to clean up two former manufactured gas plant sites consistent with applicable laws. The cleanup also supports a cleaner environment, revitalizes the natural gas distribution center, and improves property aesthetics to support neighborhood and urban redevelopment.
The company’s natural gas distribution rates were last adjusted in 2008.
“The increases in rates will allow the company to begin to collect from customers the investment it has already made to improve the electric and natural gas distribution systems and reflect continued economic pressures since our previous adjustments a few years ago,” said Janson. “The rate increases will better align the rates customers pay with the company’s cost of providing safe and reliable electricity and natural gas services.”
The following chart illustrates the proposed average increases to customer bills by customer type:
Additional component of the rate case filings
The company has also given notice of its intention to file for facility relocation riders associated with mass transportation projects.
These riders would allow the company to recover from a local government or its residents, the costs of relocating infrastructure because of specific projects.
Although the facility relocation rider most immediately provides an opportunity for the city of Cincinnati, it would be available for any governmental entity to use to facilitate mass transportation projects.
“We believe this rider provides flexibility for local governments to cover the costs related to the relocation of utility infrastructure in order to accommodate mass transportation efforts, and to spread those costs over an extended period of time,” Janson added.
The company will file its applications and testimony beginning in early July. After that, the PUCO will hold public and evidentiary hearings and rule on the case.
For more details around the company’s notice to increase rates, visit http://www.duke-energy.com/rates/ohio/rate-request.asp.
Money-saving opportunities for customers
Duke Energy wants to help customers make the best use of every dollar spent on their energy-related costs. As part of this effort, customers can visit www.duke-energy.com for energy-saving tips and more.
Duke Energy Ohio’s operations provide electric service to approximately 690,000 customers and natural gas service to approximately 400,000 customers.
Headquartered in Charlotte, N.C., Duke Energy is one of the largest electric power holding companies in the United States. It is listed on the New York Stock Exchange under the symbol DUK. More information is available at: www.duke-energy.com.
Media - Paige Sheehan / 800-559-3853
Analysts - Bill Currens / 704-382-1603