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Keep lights on electricity deals

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  • duke_did_it_too
    Setting up an unregulated subsidiary the sole function of which was to make payments to opponents of a rate increase raises suspicions. The Cincinnati
    Message 1 of 1 , Jan 19, 2008
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      "Setting up an unregulated subsidiary the sole function of which was
      to make payments to opponents of a rate increase raises suspicions."

      The Cincinnati Enquirer, Friday, January 18, 2008

      Keep lights on electricity deals

      The controversy over whether Duke Energy made improper deals with
      some of its largest customers to win their support for a rate hike
      might have been avoided if the company was as open about how much
      electricity costs those customers as it is about how much the rest of
      us pay to keep the lights on.

      An antitrust lawsuit, filed Wednesday in U.S. District Court on
      behalf of Ohio consumers, accuses Duke of engaging in a conspiracy
      with large industrial and commercial customers against the rest of
      its electric customers.

      The suit claims Duke set up a "sham" company, Cinergy Retail
      Services, to pay $22 million a year since 2004 to the unidentified
      industrial and commercial customers. The purpose of the payments,
      according to the suit, was to get those customers to back off their
      opposition to the energy company's 2004 request to the Public
      Utilities Commission of Ohio (PUCO) for a rate increase. The company,
      then known as Cinergy Corp., received the rate increase. A company e-
      mail that surfaced in the case Thursday characterized the opposition
      from the large customers as a "roadblock" to approval of the rate
      increase.

      Duke spokesman Steve Brash acknowledges the payments, but says they
      were perfectly legal. They weren't payments from the public utility
      company, but from "a non-regulated entity" owned by Duke. Such
      maneuvers are legal options for utilities in Ohio trying to keep
      their biggest customers from buying their electricity from competing
      companies in the unregulated energy market, he said. He said the
      timing of the payments in 2004 was simply coincidental to the large
      customers dropping their opposition to the rate increase.

      We don't know exactly how good these deals were - the details are
      redacted from company records included in the court files. That's all
      confidential information for competitive reasons, Brash said.

      But that is a big part of the problem. For most of its customers,
      Duke is the only practical source of electricity. That monopolistic
      status ought to oblige the company to conduct all of its business
      openly, so customers can see that they are getting a fair deal and
      are not paying higher rates to benefit favored customers. Setting up
      an unregulated subsidiary the sole function of which was to make
      payments to opponents of a rate increase raises suspicions.

      The allegations of the suit will be settled in court. The Ohio
      Legislature, now studying changes to the regulatory system, needs to
      take careful note of this case and make sure that in the future
      electric companies are required to keep the lights turned on high to
      illuminate all the details of how they charge for their services.
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