Duke Energy to soon increase rates; Utilities commission will host hearings for public

Hearings to take place one month after an 8% price increase in June.

Credit: Nick Graham

Credit: Nick Graham

Three newly announced July meetings to discuss a long-proposed Duke Energy rate increase will take place only a month after southwest Ohio customers saw an 8% increase in their electricity prices.

Duke Energy — the primary electric service provider to Butler, Hamilton, Warren, Clermont and Brown counties — submitted the application in October to increase rates to the Public Utilities Commission of Ohio.

The proposed rate increase would begin this fall and affect each of Duke Energy’s 730,000 customers in southwest Ohio.

If Duke Energy’s proposal is fully agreed to by the Public Utilities Commission of Ohio, the average residential bill would increase by 3.68%.

The public meetings will take place in Middletown’s City Hall (6 p.m. July 18); Liberty Twp.’s Butler Tech Public Safety Complex (6 p.m. July 20) and in Cincinnati’s City Hall (at 12:30 p.m. July 26).

According to PUCO, Duke Energy’s proposal would increase revenue by nearly $55 million in a calendar year, or around 10%. PUCO’s staff initially countered with a recommended revenue increase up to 2.72%.

“Distribution utilities in both electric and natural gas sectors in Ohio and across the country earn their profits off of their capital investments into their system,” said Matt Schilling, a spokesman for PUCO.

Ohio’s Distribution utilities are then able to apply for rate increases through PUCO in order to recoup investments and make a profit.

“A utility, by law, is allowed to recover its cost of doing business — plus a reasonable return on their investment,” Schilling said.

The goal of the formal process and its meetings, then, is for all sides to decide what a “reasonable return” on Duke Energy’s investment should be.

Casey Kroger, a Duke Energy spokesperson, said the $55 million would be used to recover money already spent in creating an improved, smarter grid in southwest Ohio.

“Many of Duke Energy Ohio’s investments have focused on the continual buildout of a self-optimizing, smart-thinking grid that automatically isolates issues and reroutes power to reduce the frequency and duration of power outages,” the company said in an October statement.

The hearings will provide an opportunity for customers to express their views to the governor-appointed PUCO commissioners who will eventually issue a final decision through a legally-binding “opinion and order.”

These meetings take place as inflation rates across the globe reach decades-old highs and increase electric generation costs. In particular, energy prices have soared in the time since Duke Energy’s proposal in October.

A statement from Duke Energy said that Ohio customers “will see an 8% increase in their overall bill starting in June due to increased energy prices.”

Each spring, Ohio’s electric distributors take part in an auction that sets the yearly cost of electric generation from independent electric generators. This year, due to varying market factors, each Ohio electric provider is having to pay more for the power that the companies are then distributing to electric customers, according to Schilling.

Electric providers cannot make a profit off this particular exchange, Schilling said.

The increase in electric generation cost is what’s behind the 8% increase starting this month, and is an entirely separate rate increase from Duke Energy’s October proposal. Kroger said the cost of generating electricity makes up about half of each customer’s bill.

The most recent Consumer Price Index data from the U.S. Bureau of Labor and Statistics show an 8.6% inflation rate over the past year. During that time frame, electricity costs have risen 12%; the largest increase since 2006.

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