Update:  On February 13, 2014, the Commission issued an Opinion and Order in the Duke Capacity Case denying Duke’s Application.  The Commission found that Duke’s request to recover capacity charges on a cost-based charge calculated by the “newly established state compensation mechanism” was in direct contravention of the stipulation reached in Duke’s base transmission rate rider and regional transmission organization rider cost recovery proceeding (BTR/RTO).  The Commission agreed that allowing Duke to recover a cost-based charge would require the Commission to reopen the evidentiary considerations in the Duke ESP case to afford all signatory parties the opportunity to revise or litigate other terms of the stipulation in that case.  The Commission determined that the language of the Duke ESP and BTR/RTO Stipulations was clear, and that Duke agreed to provide capacity at the final zonal capacity price until such time as a subsequent SSO is approved.  No such SSO has been approved and, therefore, Duke cannot unilaterally change its capacity charges.  The Commission further noted that as part of the negotiations of the BTR/RTO Stipulation, the parties agreed upon a $110 million electric stability service rider, to be collected by Duke, to provide stability and certainty for Duke’s provision of retail electric service as an FRR entity during the term of the ESP.  Because the application was in direct contravention to the Stipulations, the Commission found that the Application in Duke’s capacity case must be denied.

The Commission rejected Duke’s argument that the Application was not a violation of the Stipulations because the Stipulations only specifically barred Duke from filing with FERC.  The Commission stated that when it approved the Stipulations, it was with the understanding that all applicable capacity pricing and compensation issues were resolved in their entirety at the state level.

The Commission did not rule on whether the AEP Capacity Case created a state compensation mechanism because the Commission determined that the Application was in conflict with the Stipulations signed by Duke.

Moreover, the Commission agreed, in its Opinion & Order, with the intervening parties that Duke’s Application was an application for an increase in rates and not an application for a new service.  The Commission also agreed that the Application was actually a late-filed application for rehearing of the Duke ESP case.  The Commission stated that, at the time Duke negotiated the Stipulations, it was involved in FERC proceedings in which the issue involved a request to implement cost-based pricing for capacity.  Therefore, Duke was fully informed of the status of capacity pricing at the time it signed the Stipulations.  The Commission stated that Duke’s Application should be denied and dismissed as a late-filed application for rehearing.

The Commission also found that Duke “raised nothing new that has not already been considered, addressed, and open for litigation through [the Commission’s] review and consideration of the application and the ESP stipulation in the Duke ESP Case.”  Accordingly, the Commission held that even if Duke had met its burden of proof, the Application would be denied on the basis of collateral estoppel and res judicata.

The Commission did not make a determination as to whether it has the authority, pursuant to R.C. Chapters 4905, 4909, or 4928, to consider Duke’s Application.  The Commission did note that many of the arguments raised by the parties were fully considered and addressed by the Commission in the AEP Capacity Case.

The Commission similarly did not make a determination regarding the applicability of the AEP Capacity Case to the circumstances of Duke or any other EDU.  The Commission, however, emphasized that the record in each proceeding stands on its own merits and that its decisions rest on the evidence presented therein.

Commissioner Slaby issued a concurring opinion, stating that, had Duke’s Application been summarily dismissed as a late-filed application for rehearing, it would have been unnecessary to consider the other arguments of the parties.

Applications for Rehearing are due March 17, 2014.