March 29, 2013
Update: Duke proposes to increase its collection of capacity charges from all customers by approximately $260 million per year for a period of three years. This increase in revenues is based on Duke’s argument that because of PUCO’s decision in the AEP capacity case, Duke is now entitled to collect its fully embedded cost of providing generation capacity. Duke proposes to collect this amount for the period from August 1, 2012 to May 31, 2015. The actual collection from customers will not be as a capacity charge to load-serving entities on the Duke Energy Ohio system, but rather through a non-bypassable rider. In this manner, all Duke distribution customers will pay this charge.
OMA Counsel conducted a rough calculation of the potential impact of Duke’s request by using a hypothetical customer with a billing demand of 5440 kW, which represents a large industrial customer but not as large as an industrial such as AK Steel. There is no kWh element in this calculation, despite the fact that Duke’s rate design will have an “excess kWh” element. Also, because the rate impact is a function of the PJM base residual auction (“BRA”) rate that is in effect for an annual period, the 2014-2015 year numbers were used and the analysis represents the impact for that period. Accordingly, the estimated impact is as follows: the monthly capacity charge for that period would be $20,641.47. The new charge would be $25,898.79, or an increase of approximately $63,000 per year.
The OMA’s primary argument in this case is that under a legal doctrine of res judicata, Duke is prohibited from relitigating its electric security plan because it agreed to RPM-based capacity pricing, pursuant to a previous stipulation or agreement filed in its prior ESP case. Also, these increases will negatively impact manufacturers in Duke’s service territory. Similar to the DP&L ESP case, OMA Counsel recommends that the OMA advocate its opposition to Duke’s request for a cost-based capacity charge in a post-hearing brief. The evidentiary hearing is scheduled to commence on April 15, 2013, at 10:00 a.m. at the PUCO.
