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Duke Energy Ohio to Purchase Receivables at No Discount Under Electric Security Plan
June 20, 2011
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Duke Energy Ohio would purchase the receivables of competitive electric suppliers "at no discount" under modifications to the program proposed as part of its proposed new electric security plan, which would run through May 31, 2021.
Customers would not be eligible for the non-recourse purchase of accounts receivables program if a customer, currently taking service from a competitive supplier under dual billing, has a distribution arrears with Duke Energy Ohio of 30 days or more totaling $50 or more.
Duke Energy Ohio said that payment would be remitted to suppliers on the 20th day of the month after which billing occurs.
Duke Energy Ohio would recover uncollectible generation expense associated with all generation accounts -- its own and those purchased from competitive providers -- via nonbypassable Rider UE-GEN.
Though Duke Energy Ohio said in testimony that no discount would be applied, its revised supplier tariff retains language under Rate CS (Certified Supplier Charges) stating that Duke Energy Ohio will negotiate a discount rate for purchase of receivables with each supplier.
Supply Costs
As first reported by Matters yesterday, the electric security plan would remove the PJM capacity obligation from competitive suppliers, and make capacity costs nonbypassable (6/20).
The bypassable retail supply rate would consist of Rider RE (Retail Energy), reflecting full requirements generation purchased through descending clock auctions; Rider AER-R (Alternative Energy Recover Rider), consisting of alternative energy compliance costs; Rider RTO, reflecting market-based transmission service (excluding NITS, etc.); and, for a brief period, Rider RECON, reflecting a reconciliation of prior bypassable costs under the old electric security plan.
Generation would be procured under staggered, descending clock auctions for slice-of-system, full requirements supply. After a transition year to align the procurements with the PJM planning year, two auctions would be held annually in June and October, procuring a mix of 12, 24, and 36-month contracts. Duke Energy Ohio proposed a load cap of 80 percent on an aggregated load basis across all auction products for each auction date, such that no bidder may bid on and win more tranches than the load cap.
Rider RE rates reflecting generation costs from the auction would be established annually, with a seasonal (summer, winter) variation. Additionally, bypassable Rider RE would include administrative costs of the auction, as well as reconciliations of the costs of the wholesale generation versus retail revenues under Rider RE.
Duke Energy Ohio is not seeking any deferral of costs resulting from the auctions, nor would market prices from the auctions be blended with existing generation rates, as would occur under a market rate offer.
The laddered portfolio of contracts would be timed such that all contracts terminate on May 31, 2016, to allow for the potential end of the electric security plan, and the transition to a market rate offer, at that time. If a market rate offer is not instituted at that time, a new staggered portfolio would be established using 12, 24, and 36-month contracts, to procure supply through May 31, 2021.
Bypassable Rider AER-R, which recovers alternative energy compliance costs, would be adjusted quarterly. Duke Energy Ohio would continue to procure RECs through brokers and aggregators, and directly from owners of renewable energy resources, rather than including renewable compliance costs in the full requirements auction product. Duke Energy Ohio said that it will continue to favor shorter term REC contracts, but recognizes that it may be necessary to supplement this strategy with longer term transactions to adequately assure compliance with the renewable mandates.
Bypassable Rider RECON will true-up any remaining costs or over-collections from current Rider PTC-FPP (fuel and purchased power) and Rider SRA-SRT (system reliability, capacity) which exist under the current electric security plan but will be eliminated. Duke Energy Ohio expects this reconciliation to be completed within two quarters, with a filing of the Rider RECON tariff made by April 1, 2012.
The electric security plan would not include any standby (POLR) charges.
For residential customers, Duke Energy Ohio will retain optional generation schedules Rate TD (Optional Time of Day Rate), Rate TD-AM (Time of Day Rate for Residential Service with Advanced Metering), Rider PTR (Peak Time Rebate - Residential Pilot Program), Rate TD-CPP-Lite (Residential Critical Peak Pricing), and Rate TD-Lite (Optional Time of Day Rate For Residential Service with Advanced Metering).
For non-residential customers, Duke Energy Ohio will retain Rider LM (Load Management Rider) and Rate RTP (Real Time Pricing Program).
However, Duke Energy Ohio will revise Rider LM to open the schedule to all customers, even those on competitive supply. Rider LM is an optional rider that applies to customers taking service under one of the three demand rates: Rate DS, Rate DP, or Rate TS. Rider LM allows customers to reduce billing demands by shifting some load from on-peak to off-peak periods.
Duke Energy Ohio would also add a new standard rate option under rate ready billing, allowing suppliers to offer a "percentage-off" product via rate ready billing. Existing standard rate ready billing products include non-volumetric; flat charge per kilowatt or kilowatt-hour; multi-tiered; and time-of-use.
However, Duke Energy Ohio will no longer permit "non-standard" products under rate ready billing, e.g. those that do fit any of the five categories above.
Duke Energy Ohio said that, "[t]he proposed ESP removes a perversion that exists in the current ESP where one provider, namely Duke Energy Ohio, must provide energy and capacity at a non-competitive rate while all other providers compete at market rates. The Company's proposed ESP is designed to remove that disconnect. No provider, including Duke Energy Ohio, has a competitive advantage or disadvantage in pricing its product, energy in this case, to retail load, whether it is an aggregated load or it is on an individual customer basis."
Additionally, Duke Energy Ohio said, "[u]nder the Company's proposed ESP, there will be no difference, on average, between the Company's market-based price-to-compare and CRES [competitive] offers."
Furthermore, "[i]t is difficult for the utility, CRES providers, and customers - and for aggregations - to operate with any degree of long-term certainty under a regulatory model that gets reset every three years. The nine-year, five-month duration of the Company's proposed ESP will provide a level of certainty about the future that none of these stakeholders have enjoyed since deregulation began more than ten years ago," Duke Energy Ohio said.
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