Exhibit 10.1
Duke Energy Ohio
Electric Security Plan (ESP) Settlement Overview
Background – Ohio Electric Market (Past and Present)
· Ohio Amended Substitute Senate Bill No. 221 (SB221) signed May 1, 2008 (effective July 31, 2008)
· Duke Energy Ohio filed its ESP on July 31, 2008
Settlement and PUCO Order
· Settlement agreement filed on October 27, 2008
· PUCO Order issued December 17, 2008
· 3-year Plan: January 1, 2009 — December 31, 2011
· Pricing and Customer Impacts
· Pricing Impacts
| | 2009 | | 2010 | | 2011 | |
($ in millions) | | Revenue | | Revenue | | Revenue | |
Base Price Increase | | $ | 83 | | $ | 121 | | $ | 219 | |
RTC Termination (Note) | | $ | (47 | ) | $ | (47 | ) | $ | (121 | ) |
Net Revenue Increase | | $ | 36 | | $ | 74 | | $ | 98 | |
| | | | | | | |
Original Proposal | | $ | 110 | | $ | 130 | | $ | 75 | |
Note: Residential and non-residential RTC revenue and equivalent amortization expense terminates 12/31/08 and 12/31/10, respectively.
· Deferral of up to $50MM Beckjord Station O&M, amortized over 3 years (no revenue impact — only amortization expense)
($ in millions) | | 2009 | | 2010 | | 2011 | |
Planned 2009 Beckjord O&M | | $ | 50 | | | | | |
Amortization Expense | | $ | (17 | ) | $ | (17 | ) | $ | (16 | ) |
Deferred Beckjord O&M Balance | | $ | 33 | | $ | 16 | | $ | 0 | |
· Customer Impacts (as % of total bill)
· Overall annual average increase = 2% in 2009 and 2010, and 1.2% in 2011
· Average impact by customer class(excluding distribution rate case impacts):
· Residential = 2% in 2009 and 2010, and 0% in 2011
· Commercial and Industrial = 2% in each year
· Cost-Based Trackers
· Retain existing trackers for:
· Fuel, purchased power and emission allowances (currently FPP, new name PTC-FPP)
· Environmental, homeland security & change in tax law (currently AAC, new name PTC-AAC)
· Capacity purchases (currently SRT, new name SRA-SRT)
· Replaces DSM tracker with new energy efficiency tracker (Save-A-Watt) (Rider DR-SAW)
· New unavoidable trackers for:
· Infrastructure modernization (SmartGrid) (Rider DR-IM) - Provides for deferral of costs and accumulation of carrying charges between point of expenditure and inclusion of such costs in the rider;
· Economic competitiveness (customer incentives approved by PUCO) (Rider DR-ECF)
· Settlement withdrew the proposed inflation adjustment rider and the unavoidable newly dedicated capacity rider
· Projected Average Price-to-Compare ($/MWh)
| | 2009 | | 2010 | | 2011 | |
Base Generation (PTC-BG) | | $ | 29.20 | | $ | 31.10 | | $ | 36.00 | |
Fuel and Purchased Power (Rider PTC-FPP) | | $ | 23.80 | | $ | 27.10 | | $ | 30.10 | |
Environmental (Rider PTC-AAC) | | $ | 5.70 | | $ | 5.50 | | $ | 5.00 | |
Total Price-to-Compare (PTC) | | $ | 58.70 | | $ | 63.70 | | $ | 71.10 | |
PTC in Original ESP Filing | | $ | 62.50 | | $ | 67.30 | | $ | 71.50 | |
· Settlement allows the gas generation assets to be sold or transferred to an affiliated GenCo
· Existing dedicated assets to continue serving Duke Energy Ohio customers during the 3-year term of the ESP
· Earnings Test
· ROE threshold = 15%
· ROE excludes purchase accounting & goodwill, mark-to-market accounting, and material non-recurring gains and losses