Duke consumers to be asked to pay for smart grid without assurance of useful benefits

Duke Energy Ohio today filed a settlement to cover the costs of the
next phase of its plan to implement a smart grid. The Office of the Ohio
Consumers' Counsel (OCC) did not sign the settlement because the plan gives
no assurances about when residential consumers benefit from the smart grid
and dynamic prices.

Duke Energy also may elect to reject $200 million in federal money it
was awarded to implement a $1 billion smart grid in Ohio, Indiana and
Kentucky. The OCC believes it is essential for Duke to accept the federal
grant money given its desire to roll out smart grid throughout its service
territory. This will help defray the costs that consumers will have to pay.

The settlement adds charges to electric and natural gas bills. For the
average residential customer, the monthly charges would add $0.49 to their
electric bill and $0.12 to their natural gas bill. The settlement will
require approval from the Public Utilities Commission of Ohio before new
charges can be added to customers' bills.

Smart grid includes a variety of improvements to electric transmission
and distribution systems that take advantage of several technological
advancements used today. The improvements result in a grid that is more
efficient and reliable. For consumers to take advantage of the smart grid,
dynamic prices are essential. These pricing mechanisms enable consumers to
respond to real-time price that allow better management and control of
energy use in their homes.

Initially, Duke's smart grid proposal plans to add 190,000 automated
electric meters and 130,000 automated natural gas meters. The utility also
will upgrade distribution lines, telecommunications and information
technology equipment. What the proposal doesn't do is provide a timeline to
install a more advanced billing system and dynamic pricing options for
electricity that would make the smart grid useful to residential consumers.

"As long as customers are not experiencing the benefits of a smart
grid, Duke Energy cannot justify the upgrades as useful to consumers," said
Consumers' Counsel Janine Migden-Ostrander. "The utility should not be able
to recover costs for the technology until it can demonstrate benefits
consumers can see."

Additionally, the OCC believes Duke should commit to developing a plan
that makes pricing options available to customers in the near future.

"The key to smart grid for individual consumers is the ability to have
information and programs available to manage how they use electricity to
take advantage of potential savings," Migden-Ostrander said. "With voluntary
programs that allow customers to shift their usage to off-peak times, this
will help defer the need to build very costly new power plants, saving
electricity costs for all customers."

Duke also will not specify how and when it will begin to apply the
financial benefits a smart grid will provide consumers. The utility will
save money by upgrading to a smart grid in the form of reduced operational
costs and could possibly make money because of the investments. The savings
and additional income would result from investments Duke's customers already
have paid or will pay. These savings must be sent back to consumers.

Duke Energy is negotiating the conditions required to accept $200
million in federal stimulus dollars with the U.S. Department of Energy. The
grant would reduce the cost of the utility's smart grid project by 20
percent. Duke has yet to agree to take the American Recovery and
Reinvestment Act money.

About the Office of the Ohio Consumers' Counsel

The Office of the Ohio Consumers' Counsel (OCC), the residential
utility consumer advocate, represents the interests of 4.5 million
households in proceedings before state and federal regulators and in the
courts. The state agency also educates consumers about electric, natural
gas, telephone and water issues and resolves complaints from individuals. To
receive utility information, brochures, schedule a presentation or file a
utility complaint, residential consumers may call 1-877-PICKOCC
(1-877-742-5622) toll free in Ohio or visit the OCC Web site at
www.pickocc.org.