Duke Energy should reduce rates instead of increasing, council says

The Ohio Consumers' Council has suggested the state's utility regulator enforce cheaper distribution rates for Duke Energy customers. NICK GRAHAM/STAFF

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The Ohio Consumers' Council has suggested the state's utility regulator enforce cheaper distribution rates for Duke Energy customers. NICK GRAHAM/STAFF

As Duke Energy and the Public Utilities Commission of Ohio take the required steps to negotiate new, higher distribution rates at the electrical provider’s behest, the Office of the Ohio Consumers’ Council recommended that Duke Energy be forced to reduce its distribution rates instead.

Merrilee Embs, Spokesperson for Ohio Consumers’ Counsel Bruce Weston, described the OCC as the “official state advocate for Ohio utility consumers.”

“OCC’s role is to give Ohio residential consumers a voice, though legal representation, in the PUCO’s processes for setting the rates of monopoly utilities,” Embs said. “OCC provides the consumer position on requests by utilities such as Duke for rate increases, through expert testimony and cross-examination of utility witnesses.”

For the OCC, it believes Duke Energy’s proposed rate increase — which was filed in Oct. 2021 — would impact customers negatively in today’s economic climate.

“Duke has bad timing for its request to increase Ohioans’ electric rates,” Embs said. “Energy prices are soaring, inflation is rising, food insecurity is increasing, and the pandemic is surging.”

The OCC said it recommends that PUCO “... approve a rate decrease (not an increase) of at least $1.4 million for Duke’s consumers.”

For Duke Energy, this scenario would counter its proposed measures that would provide nearly $55 million in additional yearly revenue — about a 10% increase.

Somewhere in the middle, PUCO’s staff, which is made up of technical experts and economists, already formally recommended a significantly lower rate increase for Duke Energy.

PUCO’s staff recommended allowing measures that add between $1.9 million to $15.3 million to Duke’s yearly revenue.

The OCC, Duke Energy, PUCO staff, and other intervening parties will all present their evidence during a final, multi-day evidentiary hearing in August, where the PUCO board will act as a mediary and issue a final verdict.

Embs said the OCC is unwilling to predict the final, agreed upon rate increases once the rate case has concluded either by settlement or a final verdict following the evidentiary hearing.

Matt Schilling, a spokesperson for PUCO, said utility providers would file a rate case and present evidence that shows operation costs to be higher than the provider’s revenue. But, it is theoretically possible for arguments to be made that prove the inverse, too, depending on the evidence.

Sometimes, Schilling said, groups like the OCC or PUCO’s staff can prove evidence that says, “‘You know what, actually, costs are not above revenues, and so actually, rates should be reduced,’” Schilling said. “That could theoretically happen.”

Schilling said it’s relatively uncommon for PUCO to determine that a provider must reduce its rates, though. Such a case did happen last year, when electric provider AEP agreed to a settlement forcing lower rates.

In part, rates might not commonly go down because of the regulatory process of rate increases. Each proposal needs to be written out, backed with evidence and run through public hearings and evidentiary hearings before a final verdict from the PUCO board.

For that reason, Schilling said, it would be counter-intuitive for providers to apply for a rate increase if that provider believed there was a chance PUCO would vehemently disagree with the provider’s evidence.

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