Duke Energy Ohio Agrees to Not Seek FRR Capacity Compensation Rate at FERC; Retail Transmission Rates Adjusted

April 27, 2011
Email This Story

Duke Energy Ohio has agreed to not seek FERC approval of a wholesale capacity charge applicable to competitive retail suppliers receiving capacity under the utility's Fixed Resource Requirement, under a stipulation which will alter how retail transmission costs are charged to customers at the utility (11-2641-EL-RDR).

As part of the settlement, Duke Energy Ohio has agreed that it will not institute a filing at the FERC under Section D of Schedule 8.1 of the PJM Reliability Assurance Agreement to seek FERC approval of a wholesale capacity charge applicable to load serving entities based upon Duke Energy Ohio's costs as a Fixed Resource Requirement (FRR) entity in PJM for the period between January 1, 2012, and May 31, 2016.

Had a Market Rate Offer been instituted at Duke Energy Ohio, Duke Energy Ohio likely would not have continued as the FRR entity (as it contemplated removing generation from the utility); however, as PUCO rejected Duke's Market Rate Offer, the commitment to not seek a FERC-established capacity rate is meaningful.

The stipulation mainly addresses retail transmission costs, and costs of the MISO exit and PJM integration. The stipulation, signed by Duke, PUCO Staff, Ohio Consumers' Counsel, and the Ohio Energy Group, would create two new transmission riders, one bypassable and one nonbypassable, to address transmission cost recovery from Ohio retail customers.

Rider BTR would be a nonbypassable charge assessed on all customers at Duke Energy Ohio, which would recover Network Integration Transmission Services (NITS), Midwest transmission expansion project costs, PJM regional transmission expansion plan costs, and other non-market based costs, such as costs related to Commission-ordered audits. As this rider will be nonbypassable, Duke Energy Ohio would pay all of these costs on behalf of all customers, even those on competitive supply.

As such, starting January 1, 2012, competitive suppliers would no longer be responsible for paying for NITS and other non-market-based transmission costs. "Practical results of this circumstance should be to reduce the risk premium that [competitive] providers may incorporate into their offers and to allow [competitive] providers to lower the price of their offers," Duke Energy Ohio said.

Also effective January 1, 2012, Duke Energy Ohio would institute bypassable Rider RTO to recover market-based FERC transmission costs and RTO charges billed to the company in proportion to its Standard Service Offer load.

With the two new transmission riders, Duke Energy Ohio would eliminate the current Rider TCR effective December 31, 2011.

Email This Story

HOME

Copyright 2010-11 Energy Choice Matters.  If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.

 

Be Seen By Energy Professionals in Retail and Wholesale Marketing

Run Ads with Energy Choice Matters

Call Paul Ring

954-205-1738

 

 

 

 

 

Energy Choice
                            

Matters