Miami Student

Issue date: 3/4/08 Section: Community

The Public Utilities Commission of Ohio will review an agreement reached by the Ohio Consumers' Counsel regarding a rate increase for Duke Energy March 11.

Ohio electricity consumers who use Duke Energy may see a rate increase if the Public Utilities Commission of Ohio (PUCO) approves of it in a March 11 hearing.

An agreement was reached Jan. 28 between Duke Energy and the Ohio Consumers' Counsel regarding the natural gas distribution rate increase.

The Ohio Consumers' Counsel, which represents consumer utility interests, worked with Duke Energy on an $18.2 million rate increase, said Anthony Dill, public information specialist from the Office of the Ohio Consumers' Counsel.

Duke Energy's original request was to increase their rates by 5 percent, or $31.4 million, he said. Dill said that the $18.2 million is almost a 50 percent decrease from the original proposition.

Matt Butler, communications chief for the PUCO, explained that Duke Energy is responsible for 426,000 natural gas customers in Ohio and is the third largest natural gas utility company in Ohio.

PUCO has to approve this settlement before it will go into effect, according to Dill.

Dill said that Duke Energy's desire to increase its base rates means that the change will only be seen in the amount of money it costs the company to physically transport gas to a person's home. It does not include the actual cost of the gas, which makes up 80 percent of the overall cost.

Butler explained how each utility company in Ohio is, by law, guaranteed a rate of return, which is defined as the ratio of money gained or lost in an investment relative to the amount that was invested.

"This basically means that they are guaranteed to recover their costs at a reasonable profit, so as long as their request falls within those parameters; but usually their rates are not typically approved," Dill said. "There is usually some modification to that but they are guaranteed to recover their losses by law."

Dill said the initial rates are usually not approved because the requested increase is typically viewed as too much by the Ohio Consumers' Council. Therefore, a compromise must be reached.

James Brock, Miami University professor of economics, said that experimenting with deregulating electricity has led to Duke Energy's current desire to increase their rates.

Continued...

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