According to PUCO, Duke Energy’s proposal would increase revenue by nearly $55 million over a calendar year, or about 10%. PUCO staff initially responded with a recommended revenue increase of up to 2.72%.
“Distribution utilities in the electric and natural gas industries in Ohio and across the country derive benefits from their capital investments in their system,” said Matt Schilling, PUCO spokesman.
Ohio’s distribution utilities are then able to request rate increases through PUCO to recoup the investment and earn a profit.
“A utility, by law, is allowed to recoup its cost of doing business — plus a reasonable return on its investment,” Schilling said.
The purpose of the formal process and its meetings is therefore for all parties to decide what a “reasonable return” on Duke Energy’s investment should be.
Casey Kroger, a spokesman for Duke Energy, said the $55 million would be used to recoup money already spent to create an improved, smarter grid in southwestern Ohio.
“Many of Duke Energy Ohio’s investments have focused on the continued construction of a self-optimizing, intelligent network that automatically isolates problems and reroutes power to reduce the frequency and duration of power outages,” the company said. company in an October press release.
The hearings will give clients an opportunity to express their views to the Governor-appointed PUCO Commissioners, who will ultimately render a final decision through a legally binding “notice and order.”
These meetings are taking place as inflation rates across the world are reaching decades-old highs and driving up the costs of power generation. In particular, energy prices have soared since Duke Energy’s proposal in October.
A statement from Duke Energy said Ohio customers “will see an 8% increase in their overall bill beginning in June due to rising energy prices.”
Every spring, electricity distributors in Ohio participate in an auction that sets the annual cost of generating electricity from independent power generators. This year, due to varying market factors, each electricity provider in Ohio must pay more for the electricity that the companies then distribute to electric customers, according to Schilling.
Electricity providers cannot profit from this particular exchange, Schilling said.
The rising cost of power generation is driving 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 accounts for about half of each customer’s bill.
The most recent Consumer Price Index data from the US Bureau of Labor and Statistics shows an inflation rate of 8.6% over the past year. During this period, electricity costs increased by 12%; the biggest increase since 2006.