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Duke Energy CFO: Electric Security Plan Not Anti-Competitive

September  7, 2011
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Duke Energy Ohio's proposed electric security plan is "not anti-competitive" and "not a platform to build uneconomic generation," Duke Energy CFO Lynn Good said this morning at a Barclays Capital investor conference.

Good said that the plan would appropriately unbundle capacity and energy sales, due to differences in the energy and capacity markets, with Duke Energy Ohio assuming the capacity obligation for all load in its territory.

Capacity would be served by Duke Energy Ohio retained generation, supported through a nonbypassable surcharge, with electric suppliers relieved of any capacity obligation. As a result, the plan has been attacked by competing asset owners who would lose the ability to serve such capacity obligations under PJM's Reliability Pricing Model.

As previously reported (8/30), certain competitive generation groups have resorted to making unsupported claims of "double charging" under Duke's plan, but could not substantiate such claims when pressed for details.

This same group can only describe the double charging as such: "Duke's proposal means customers would pay twice: First for the electricity they buy, and then to support Duke's generation of power."

However, absent Duke Energy Ohio's proposal to self-supply capacity, the same type of "double charging" would occur, with only the entity to which customers must pay for capacity changing as such:

"[C]ustomers would pay twice: First for the electricity they buy, and then to support the generation of power by suppliers awarded capacity under the Reliability Pricing Model"

Good noted that the Duke Energy Ohio plan would encourage customer choice. Standard Service Offer rates would be set via descending clock auction, while other retail market enhancements would be implemented, such as Purchase of Receivables with zero discount.

 

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