Ohio affirms Duke power rate stabilization plan

NEW YORK, Oct 25 (Reuters) - Ohio utility regulators have affirmed Duke Energy Corp's (DUK.N) plan to stabilize power supply rates in Ohio through the end of 2008, Duke said in a release Thursday.

The Public Utilities Commission of Ohio's (PUCO) affirmation order followed a reconsideration of its original approval in late 2004.

The state Consumers' Counsel, the residential utility consumer advocate, appealed the PUCO's original approval. Ultimately, the Ohio Supreme Court remanded the case back to the PUCO, which issued the ruling Wednesday affirming its earlier decision with a couple modifications.

"This decision will provide customers more certainty about pricing for electricity and will shield them from the volatility in the market," Sandra Meyer, president of Duke Energy Ohio, said in a release, noting the company was still analyzing the PUCO decision.

Under the current rate stabilization plan, Duke will continue to use its power plants in Ohio (plus some energy purchases from the market) to keep energy supply costs stable for customers through the end of 2008.

The average residential customer in Ohio using about 1,000 kilowatt-hours a month pays about $106, or 10.6 cents per kWh.

That is a little over the national average for residential customers of 10.4 cents per kWh in 2006.

AFTER 2008

In August 2006, Duke filed a plan with the PUCO to extend the rate stabilization plan through 2010 and the company said it would be interested in extending that plan for up to 10 years under certain conditions.

Duke wants to see a plan that recognizes and compensates the company for changes it makes in generation or operations.

Under the current rate stabilization plan, the state allows for the recovery of new pollution control equipment but not the construction of a new plant.

Ohio is a deregulated state, meaning its customers can choose to buy power from a competitive supplier rather than their traditional utility. The traditional utility, however, continues to distribute the power to customers.

Only about 11,400 of Duke's 680,000 customers have switched to competitive suppliers.

When the state deregulated the market in 1999, utilities could no longer directly recover the cost of building new generation from customers.

It was thought that the market would finance the needed new base-load power plants, but that has not happened, a spokesman for Duke said.

Duke estimates Ohio will need additional generating capacity by the middle of the next decade to meet growing demand and maintain a reliable system.

Duke and other power companies in Ohio are promoting legislation that would allow the utilities to build plants and recover the costs of that new generation from customers.