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Regulators OK settlement with $19.2M base rate reduction for Duke Energy Ohio

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Regulators OK settlement with $19.2M base rate reduction for Duke Energy Ohio

Duke Energy Ohio Inc. will cut its electric base distribution rates by more than $19 million a year under a settlement agreement approved by the Public Utilities Commission of Ohio.

PUCO on Dec. 19 adopted a comprehensive settlement under which Duke Energy Ohio will implement an annual $19.2 million base rate reduction premised upon a 9.84% return on equity and a rate of return of 7.54% on a $1.302 billion rate base.

The Duke Energy Corp. subsidiary in March 2017 filed its first rate increase request in nearly five years. Duke Energy Ohio sought a $15.4 million rate hike with an overall return of 7.82% and a 10.4% ROE.

Duke Energy Ohio noted that the main reason for filing the application was its commitment to file a distribution rate case within one year of completing its deployment of smart grid technologies, "so that the revenue requirement, including savings, for that deployment would be incorporated into base rates." Duke Energy Ohio also asked to extend a distribution rider to recover capital investments in the distribution system that are not tied to existing riders or base rates.

The approved settlement allows Duke Energy Ohio to continue to use its distribution capital investment rider through May 31, 2025.

The commission also addressed Duke Energy Ohio's electric security plan, or ESP, reliability standard case and power purchase agreement with the Ohio Valley Electric Corp.

Under the commission's order, Duke Energy Ohio will continue to set its default generation rates through competitive auctions through May 2025 as part of its ESP.

"Duke will continue to make grid modernization investments and capital improvements during the term of the ESP, subject to annual cost caps and ongoing commission review," PUCO said in a news release. "Grid modernization efforts will allow competitive electric suppliers and third-parties access to usage data, enabling them to offer innovative products and services to their customers."

Duke Energy Ohio also is required to file an application with the commission outlining potential investments in battery storage projects as part of a new pilot program. In addition, the utility must pursue "more aggressive annual reliability measures" and continue its vegetation management program.

The company will recover and credit net proceeds from selling power tied to its share of the OVEC-operated Kyger Creek and Clifty Creek coal plants into the PJM Interconnection market through a nonbypassable rider.

As a result of the order, PUCO said a typical residential customer using 1,000 kWh of electricity per month will see an increase of about $1.57 in their bill. The commission contends its pending decision on a rate reduction as a result of federal tax reform will help mitigate the rate increase.

(PUCO docket 17-0032-EL-AIR)