Duke Energy – Ohio RSP Remand
Case No. 03-93-EL-ATA, et. al.

In late 2006, the Ohio Supreme Court unanimously affirmed in part and reversed in part the PUCO’s Order on Rehearing of September 29, 2004, in Case No. 03-93-EL-ATA, et al. This case established Duke Energy Ohio’s (f/k/a CG&E) (“DE-Ohio”) rate stabilization plan (“RSP”). The court remanded the case back to the Commission for the limited purpose of addressing the errors found by the Court. The appeal was filed by the Ohio Consumers’ Counsel (“OCC”). In its appeal, the OCC had raised seven arguments against the RSP as adopted by the Commission, of which the Court upheld two.

In the 7-0 decision authored by Justice Pfeifer, the Court affirmed OCC’s objections that (1) the Commission erred in allowing DE-Ohio to incorporate supplemental charges into a previously approved rate plan without making on-the-record findings of fact or citing evidence that supported its decision, and (2) the Commission abused its discretion when it denied motions by the OCC to compel discovery of undisclosed side agreements between DE-Ohio and non-residential customer groups that were entered into before those parties agreed to the stipulated terms of the RSP. On remand, the commission is required to thoroughly explain its conclusion that the modifications on rehearing are reasonable and identify the evidence it considered to support its findings.

With respect to the second point concerning the undisclosed side agreements between DE-Ohio and others, the Court said “[t]he commission found that ‘serious bargaining did occur, among capable, knowledgeable parties and that ‘[m]ultiple bargaining sessions, open to all parties, took place before the commencement of the hearings.’” The Court determined that the Commission could not rely merely on the terms of stipulation but must determine if there was sufficient evidence that stipulation was in fact the product of serious bargaining. The Court concluded that the Commission had “abused its discretion” in barring discovery of side agreements and remanded the matter to the Commission with directions to compel disclosure.

Remand of Cincinnati Gas & Electric Company’s Rate Stabilization Plan
Case No. 03-93-EL-ATA

The remand proceeding has an immediate impact on a series of pending dockets involving the various riders that have their origin in the RSP case, and which were due for adjustment on January 1, 2007. The OCC had requested that the RSP riders be abated while the matter was on remand. Instead, the Commission issued an Entry that either froze the rider amounts, suspended the rider, or allowed the rider to expire. The PUCO found as follow with respect to the riders:

1. Annually Adjusted Rider (AAC), which had been set at a specific rate through 2006, is continued at the same rate through 2007 subject to a true-up, until such time as the PUCO approves a change.

2. System Reliability Tracker (SRT): DE – Ohio proposed a new rate for 2007 subject to a true up. OCC argued that DE – Ohio had substantially overstated its costs for 2006 such that the SRT had been providing a credit. The PUCO decided that it would allow the SRT to expire by its own terms on December 31, 2006.

3. Fuel and Purchased Power Rider (FPP): This rider is adjusted quarterly and is intended to recover actual costs. The PUCO allowed DE – Ohio to reflect the congestion costs and losses from the transmission cost rider to the FPP. The PUCO allowed the continuation of the quarterly adjustments to the FPP subject to subsequent audit and true up (including the congestion costs).

4. Infrastructure Maintenance Fee (IMF): The PUCO did not stay the IMF but noted that it was subject to true-up “depending on the Commission’s ultimate determination” [this is an issue that the Ohio Supreme Court remanded to the PUCO due to lack of an adequate record].