On September 5, 2012, FERC approved Duke Energy Ohio, Inc.’s (“Duke Ohio”) proposed internal reorganization within the Duke Energy Corporation (“Duke”). The primary purpose of the reorganization is to transfer Duke Ohio’s generation assets to other subsidiaries of Duke. The internal reorganization is part of a comprehensive retail rate settlement approved by the Ohio Public Utilities Commission (“Ohio PUC”) in November 2011.
Under the settlement, Duke Ohio, a subsidiary of Duke, committed to transfer title of all of its generation assets into separate, yet-to-be formed Duke entities, thereby separating its generation assets from its transmission and distribution operations. Notably, Ohio restructuring law requires electric utilities that supply retail electric service to implement and operate under a corporate separation plan approved by the Ohio PUC. Duke Ohio claims that this transfer of generation assets will achieve full corporate separation.
To effectuate this separation, Duke Ohio will first form several new limited liability companies (“LLCs”), and then transfer its interests into these newly formed LLCs. These LLCs will remain as either direct or indirect subsidiaries of Duke. Ultimately, the transfer of ownership interest will dispose of almost 4,000 MW of Duke Ohio’s generation capacity to the newly formed LLCs.
FERC approved Duke Ohio’s proposed reorganization as consistent with the public interest under section 203 of the Federal Power Act. A copy of the Order is available here.