Jul. 20—The Public Utilities Commission of Ohio hosted its first of three regional public hearings in Middletown on Monday to allow consumers to opine on Duke Energy's proposed distribution rate increase.

These public hearings work as part of the negotiation process between the regulatory agency and Duke Energy, the primary energy provider for Butler, Hamilton and three other southwest Ohio counties.

In Middletown, only one member of the public made a sworn testimony.

Jeffrey Diver, the executive director of Supports to Encourage Low-income Families, spoke on behalf of lower-income consumers and suggested that PUCO and Duke Energy work to eliminate the $1.50 fee that occurs when a consumer pays with a credit card.

"While this is not a Duke charge, it nonetheless is burdensome and frustrating to the customers," Diver said. "This fee-free support — especially to those of low-to-moderate income means — is appreciated."

For Ohio electric utility providers, bills are made of two main components: the actual electric cost — which is set each year through a complicated auction — and then the cost of that electric's distribution.

Ohio providers cannot make a profit off of the actual energy cost, meaning customers pay exactly what Duke Energy pays for the electricity itself. So, in order for Duke Energy or other providers to make any profit, companies will regularly negotiate with PUCO for higher distribution rate costs.

Sally Thelen, a spokesperson for Duke Energy at the meeting, said this process has been typical so far.

"We'll put out what we believe is a prudent ask, they'll come back with what they believe is a prudent approval," Thelen said. "I'll say things are often much lower than what our ask is — once we ultimately get to a point where everyone can live with it."

The goal of the process, then, is to broker an agreement that would allow providers to recoup their investments and make a marginal profit that would continually incentivize further investment into the grid, PUCO spokesperson Matt Schilling said.

"We have to balance the interests between all types of consumers and the utility itself," Schilling said. "Of course, a utility is interested in earning enough revenue to cover its expenses and earn a return on its investments so they can continue to invest in its system."

But, for consumers, their interest lies in maintaining "...the lowest possible rates while still having adequate service," Schilling said. "The commission is charged with balancing all of those interests."

"Certainly, the primary motivator for this rate request is improvements on the reliability and the infrastructure," Thelen said.

The hearings regard Duke Energy's submitted proposal to add $54.7 in annual revenue in early Oct. 2021 — well before inflation rates hit their recent peak and several market factors caused energy prices to boom.

In that proposal, Duke Energy requested permission to increase both its distribution rates and its monthly "residential service rate," which is essentially a flat convenience fee tacked on the top of your bill.

For 1000 kilowatt hours of electricity usage, Duke Energy's fully proposed increase would take a $117.58 bill to $122.12, an increase below four percent; while also proposing doubling its $6 monthly service fee to $12.

These measures are what would attain that $54.7 million in additional revenue that Duke Energy requested. PUCO staff — which pours over regulatory statistics and makes their own evaluation -, recommended a revenue increase up to up to $15.3 million through a smaller distribution rate hike and only a $1.32 bump in the monthly service fee.

PUCO's recommendation of a lower monthly service fee increase is due to concerns for lower-usage customers and the commission's preference of what Schilling called "gradualism."

"We don't want to very starkly change the way utility bills charge customers, because it's such a shocking change to how you're billed," Schilling said.

That evaluation gap, Schilling said, is largely a result of PUCO staff and Duke Energy disagreeing on both what the company's annual revenue already is and the "value of Duke's rate base," which is essentially all things Duke Energy owns to provide power throughout southwest Ohio.

Thelen said the gap in this rate case is "fairly typical," and that changing economic circumstances have made increases potentially harder for residents to swallow.

"We know that there's never a good time to be seeking any sort of a rate increase, we try and spread them out as much as we can, and certainly, times are challenging," Thelen said.

Thelen said Duke Energy has been working with organizations across southwest Ohio to help customers pay their bills through the pandemic and now as inflation impacts the public.

The two final public meetings will be held on July 20 at the Butler Tech Public Safety Complex at 6 p.m. and on July 26 in Cincinnati City Hall at 12:30 p.m., which Schilling said is for the express purpose of hearing from the public.

"We're interested in any of their views or experiences of being a Duke customer, and / or their opinions on Duke's proposal to raise its rates and how it might impact them," Schilling said.

Once public hearings wind down, a muli-day, highly formal "evidentiary hearing" between Duke Energy and PUCO staff, is scheduled for Sept. 19 in Columbus and will be the main event for this negotiation.