(~duke diana l. douglas rates & regulatory planning

(~ DUKE ENERGY®

August 9, 2018

Ms. Mary M. Becerra, Secretary of the Commission Indiana Utility Regulatory Commission 101 W. Washington St. Suite 1500 East Indianapolis, IN 46204-3407

Diana L. Douglas Rates & Regulatory Planning, Director

Duke Energy Indiana, LLC 1000 East Main Street

Plainfield, IN 46168 317-838-1108

[email protected]

Re: Duke Energy Indiana, LLC Thirty-Day Base Rate Change Filing Pursuant to the Settlement Filed in Cause No. 45032-S2; IURC 30-Day Filing No.: 50211

Dear Ms. Becerra:

On July 19, 2018, Duke Energy Indiana, LLC submitted a filing under Section 3 of the Thirty-Day Administrative Filing Procedures and Guidelines (170 IAC 1-6) ("Thirty-Day Filing") (Filing No. 50211) to obtain Commission approval of revised tariff sheets applicable to its base rates and charges for those rates and charges that would change as a result of using the new federal income tax rate instead of the federal income tax rate embedded in the current base rates, including tariff sheets applicable to the rate adjustment riders that are affected by the reductions in base rates, namely Standard Contract Rider No. 62 - Environmental Compliance Investment Adjustment, Standard Contract Rider No. 71 - Environmental Compliance Operating Cost Adjustment, and Standard Contract Rider No. 66-A - Energy Efficiency Adjustment ("Rider 66-A") pursuant to the Settlement Agreement in Cause No. 45032-S2. In addition, on August 1, 2018, Duke Energy Indiana, LLC submitted a supplement to the referenced ThirtyDay Filing to update the filing with proof of publication of the legal notice, with signed verification statement, and to update the tariffs submitted for approval and supporting information related to Standard Contract Rider No. 66-A - Energy Efficiency Adjustment ("Rider 66-A") due to a July 25, 2018, Commission order in Cause No. 43955 DSM-5 ("DSM-5") updating rates for its Rider 66-A.

Subsequent to the Thirty-Day Filing and August 1, 2018, Supplement, the Commission issued an order on August 8, 2018, in Cause No. 42061 ECR-31 ("ECR-31 ") updating rates for its Standard Contract Rider No. 62 - Environmental Compliance Investment Adjustment ("Rider 62") and Standard Contract Rider No. 71 - Environmental Compliance Operating Cost Adjustment ("Rider 71") . Because these are two of the Company's riders that are affected by the change in base rates that was requested in the Thirty-Day Filing, the filing included a revised version of the then-current tariffs for Rider 62 and Rider 71, which were pursuant to approval in the Commission's order in Cause No. 42061 ECR-30 ("ECR-30"). Since these tariffs have now been superseded by the ones approved in ECR-31 on August 8, 2018, we are also hereby revising the

kpeerman

New Stamp

Thirty-Day Filing to include revised red-line tariffs for Rider 62 and Rider 71 included in Attachment C-1, the clean tariffs for Rider 62 and Rider 71 included in Attachment C-2, and supporting work-papers for the revised tariffs included in Attachment C-4 as Schedules 1 and 3, as well as a revised version of the Assumptions and Methodologies document referencing ECR 31 instead of ECR-30 as the rates that are being revised for these two riders.

Please replace the Rider 62 and Rider 71 pages of the Thirty-Day Filing's initial tariff attachments in Attachments C-1 and C-2, the Assumptions and Methodologies document attached to the initial Attachment C-3 (which contains the changes made in the August 1, 2018 filing for Rider 66-A as well as the additional changes in this filing for Riders 62 and 71 ), and the initial Schedules 1 and 3 of Attachment C-4 with the attachments to this letter. We hereby request approval of these revised Rider 62 and 71 tariffs concurrent with the approval for the remainder of the tariffs submitted in the Thirty-Day Filing and the August 1 , 2018 filing for Rider 66-A instead of the ones included for Rider 62 and Rider 71 in the initial filing.

We are filing this supplemental information via the Commission's electronic filing system and sending a copy via email to the Indiana Office of Utility Consumer Counselor.

Sincerely,

Diana L. Douglas

Attachments

cc: J . R. Bailey B. P. Davey K. A. Karn M. D. Price J. Steinhauer (IURC) N. L. Gay

Service List

oucc Randy Helmen William Fine Abby R. Gray Tiffany Murray Indiana Office of Utility Consumer Counselor PNC Center 115 W. Washington Street Suite 1500 South Indianapolis, Indiana 46204 [email protected] [email protected] [email protected] [email protected] [email protected] .gov

Industrial Group Todd A. Richardson Aaron A. Schmoll Joseph P. Rompala LEWIS & KAPPES, P.C. One American Square, Suite 2500 Indianapolis, Indiana 46282-0003 [email protected] [email protected] [email protected]

NUCOR Anne E. Becker Lewis & Kappes, P.C. One American Square, Suite 2500 Indianapolis, Indiana 46282 [email protected]

Courtesy Copies Provided To:

CAC Jennifer A. Washburn Margo Tucker Citizens Action Coalition 1915 West 18t11 Street, Suite C Indianapolis, Indiana 46202 [email protected] [email protected]

Attachment C – Supplemental (to revise and replace Riders 62 and 71

Tariffs and Support included in Original Filing)

Base Rate or Special Contract Related Changes to Rate Adjustment Riders

Attachment C-1

Red-line Rider Tariffs – Base Rate or

Special Contract Related Changes to

Rate Adjustment Riders

Rider 62(1) – ENVIRONMENTAL COMPLIANCE INVESTMENT ADJUSTMENT

Rider 71(1) – ENVIRONMENTAL COMPLIANCE OPERATING COST ADJUSTMENT

(1) Riders 62 and 71 were already updated for tax rate reduction gross-up changes effective March 1,

2018.

Duke Energy Indiana, LLC IURC NO. 14

1000 East Main Street Thirty-firstSecond Revised Sheet No. 62 Plainfield, Indiana 46168 Cancels and Supersedes

Thirty-First Thirtieth Revised Sheet No. 62 Page 1 of 4

STANDARD CONTRACT RIDER NO. 62

ENVIRONMENTAL COMPLIANCE INVESTMENT ADJUSTMENT

APPLICABLE TO RETAIL RATE GROUPS

Issued: Effective: September 2018 – Billing Cycle 1

The applicable charges for electric service to the Company's retail customers, to the extent so served, shall include a charge to reflect rate base treatment for qualified pollution control property, clean energy projects, and other federally-mandated environmental compliance projects in accordance with I.C. 8-1-2-6.6, I.C. 8-1-2-6.8, I.C.8-1-8.4, I.C. 8-1-8.8 and 170 IAC 4-6. The revenue adjustment applicable to the Company’s charges for electric service will be determined under the following provision:

The Environmental Compliance Investment Adjustment by Rate Group per billing cycle month shall be determined by multiplying the Environmental Compliance Investment Adjustment Factor, as determined to the nearest 0.001 mill ($0.000001) per kilowatt-hour in accordance with the following formula, by the monthly billed kilowatt-hours in the case of customers receiving metered service and by the estimated monthly kilowatt-hours used for rate determination in the case of customers receiving unmetered service.

Environmental Compliance Investment Adjustment Factor by Rate Group =

a x b x c x d

e where:

1. "a" is the jurisdictional cost of the Company's cumulative net investment in qualified pollution control property, clean energy projects, and other federally-mandated environmental compliance projects, including costs of completed capital projects or parts of capital projects. For purposes of determining the value of such capital projects for this rate mechanism, the Company's costs as recorded in its books of account in accordance with the Uniform System of Accounts prescribed for Public Utilities and Licensees Subject to the Provisions of the Federal Power Act shall be used.

2. "b" is the Company’s weighted average cost of capital as of the date of valuation of the

qualified pollution control property, clean energy projects, and other federally-mandated environmental compliance projects.

3. "c" is the revenue conversion factor (after interest expense synchronization) used to convert

return to operating revenues. 4. "d" is the individual retail rate group's production demand allocator used for allocation purposes

in the cost of service study in Cause No. 42359, as adjusted for migrations between HLF and LLF rate classes and migrations of AL and OL rate classes to the UOLS rate class.

5. "e" is the individual retail rate group's adjusted billing cycle kilowatt-hour sales for the twelve

months ending as of the date of valuation of the qualified pollution control property, clean energy projects, and other federally-mandated environmental compliance projects for all retail rate groups other than industrial customers served under Rate HLF. The revenue adjustment for industrial customers served under Rate HLF shall be based on demands within the HLF customer group such that “e” shall be the sum of kilowatts billed for the applicable twelve month period.

6. The Environmental Compliance Investment Adjustment Factor by Rate Group is as follows:

Duke Energy Indiana, LLC IURC No. 14

1000 East Main Street Thirty-firstSecond Revised Sheet No. 62

Plainfield, Indiana 46168 Cancels and Supersedes

Thirtieth-Thirty-First Revised Sheet No. 62

Page 2 of 4


ENVIRONMENTAL COMPLIANCE INVESTMENT

ADJUSTMENT FACTOR


Line Line

No. Retail Rate Group No.

1 Rate RS $0.003443 $0.003444 1

2 Rates CS and FOC 0.004045 0.004046 2

3 Rate LLF 0.002847 0.002848 3

4 Rate HLF $1.532224 $1.532549 4

5 Customer L 0.001697 0.001697 5

6 Customer D 0.000000 0.000000 6

7 Customer O 0.002247 0.002248 7

8 Rate WP 0.00218 0.00218 8

9 Rate SL 0.001031 0.001031 9

10 Rate MHLS 0.000998 0.000998 10

11 Rates MOLS and UOLS 0.000885 0.000885 11

12 Rates TS, FS and MS 0.003671 0.003672 12

Issued: Effective:

(B)

Environmental

Compliance

Investment

Adjustment

Factor Per KWH

(A)

Environmental

Compliance Investment

Adjustment

Factor Per

Non-Coincident KW





Page 3 of 4

KW Share of Revised Revised

System Peak Percent KW Share Percent

Line (12CP) Per Share Of Rate of System Share Of Line

No. Rate Groups Cause No. 42359 System Peak Migrations Peak (12CP) System Peak No.

(A) (B) (C) (D) (E)

1 Rate RS 1,582,005 36.727% - 1,582,005 36.727% 1

2 Rates CS and FOC 224,244 5.206% - 224,244 5.206% 2

3 Rate LLF 2/636,012 14.765% 112,859 748,871 17.385% 3

4 Rate HLF 1,808,886 41.994% (112,859) 1,696,027 39.374% 4

5 Customer L 10,481 0.243% - 10,481 0.243% 5

6 Customer D 0 0.000% - - 0.000% 6

7 Customer O 19,045 0.442% - 19,045 0.442% 7

8 Rate WP 17,235 0.400% - 17,235 0.400% 8

9 Rate SL 2,185 0.051% - 2,185 0.051% 9

10 Rate MHLS 282 0.007% - 282 0.007% 10

11 Rates MOLS and UOLS 1/5,196 0.121% - 5,196 0.121% 11

12 Rates TS, FS and MS 1,893 0.044% - 1,893 0.044% 12

13 TOTAL RETAIL 4,307,464 100.000% - 4,307,464 100.000% 13

1/ Includes OL and AL rate groups due to rate migration.2/ Includes Customer D who moved to LLF

Issued: Effective:

ADJUSTED TOTAL RETAIL SYSTEM PEAK DEMAND AS DEVELOPED FOR COST OF

SERVICE PURPOSES IN CAUSE NO. 42359, AS REVISED FOR RATE MIGRATIONS



ADJUSTMENT FACTOR


ALLOCATED SHARE OF ADJUSTED SYSTEM PEAK DEMAND FOR RETAIL CUSTOMERS

BY RATE GROUP EXPRESSED AS A PERCENTAGE OF THE COMPANY'S





Page 4 of 4

Sum Of Monthly

Line Billing Cycle Non-Coincident Line

No. Rate Groups KWH Sales Peak Demands No.

(A) (B)

1 Rate RS 8,550,451,744 1

2 Rates CS and FOC 1,031,536,000 2

3 Rate LLF 1/4,894,460,675 3

4 Rate HLF 10,906,590,756 20,597,913 4

5 Customer L 114,806,810 5

6 Customer D 0 6

7 Customer O 157,645,853 7

.

8 Rate WP 147,089,202 8

9 Rate SL 39,648,920 9

10 Rate MHLS 5,624,930 10

11 Rates MOLS and UOLS 109,646,147 11

12 Rates TS, FS and MS 9,607,314 12

13 TOTAL RETAIL 25,967,108,351 13

1/ Includes Customer D who moved to LLF

Issued: Effective:

ON THE TWELVE MONTH PERIOD ENDED DECEMBER 31, 2017



ADJUSTMENT FACTOR


BILLING CYCLE KWH SALES FOR THE COMPANY'S

RETAIL CUSTOMERS BY RATE GROUP BASED


1000 East Main Street Thirty-FirstSecond Revised Sheet No. 71

Plainfield, Indiana 46168 Cancels and Supersedes Thirty-FirstThirtieth Revised Sheet No. 71

Page 1 of 4



ENVIRONMENTAL COMPLIANCE OPERATING COST ADJUSTMENT APPLICABLE TO RETAIL RATE GROUPS

The applicable charges for electric service to the Company's retail customers, shall be increased or decreased to the nearest 0.001 mill ($.000001) per kWh to reflect recovery of clean energy and other federally-mandated environmental compliance project operating costs (depreciation and operation and maintenance expenses) in accordance with Ind. Code 8-1-8.8 and Ind. Code 8-1-8.4. The revenue adjustment applicable to the Company’s charges for electric service, which shall be updated and reconciled to actual costs by the Company no more often than every six months, will be determined based on the following provisions:

Environmental Compliance Operating Cost Adjustment Factor by Rate Group =

[(a+b) x c] x d

e Where:

1. "a" is the forecasted depreciation expense applicable to investments in clean energy and other federally-mandated environmental compliance projects that comply with provisions of Ind. Code 8-1-8.8 and Ind. Code 8-1-8.4. For purposes of determining the value of depreciation expense, the projects shall reflect the recovery of depreciation expense over a period of eighteen or twenty years beginning with the month following the in-service date of the applicable projects or using rates as otherwise approved by the Commission.

2. "b" is the forecasted operating expenses of the Company's clean energy and other federally-

mandated environmental compliance projects (specifically, incremental operation and maintenance expense not reflected in base rates), associated with clean energy and other federally-mandated environmental compliance projects that comply with provisions of Ind. Code 8-1-8.8 and Ind. Code 8-1-8.4 and that have been approved by the Commission pursuant to Ind. Code 8-1-8.8 and Ind. Code 8-1-8.4. For purposes of determining the value of such operating expenses for this rate mechanism, the Company shall use costs as recorded in its books of account in accordance with the Uniform System of Accounts prescribed for Public Utilities and Licensees by the Federal Energy Regulatory Commission.

3. "c" is the revenue conversion factor used to convert the applicable operating expenses to

operating revenues.

4. "d" is the individual rate group's jurisdictional production demand allocator used for allocation purposes in the cost of service study last approved by the IURC, as adjusted for migrations between HLF and LLF rate classes and migrations of AL and OL rate classes to the UOLS rate class.

5. "e" is the individual retail rate group’s adjusted billing cycle kilowatt-hour sales for the

applicable six month period for all retail rate groups other than industrial customers served under Rate HLF. The revenue adjustment for retail customers served under Rate HLF shall be based on demands within the HLF customer group such that “e” shall be the sum of kilowatts billed for the applicable six month period.

The factor shall be further modified to reflect the difference between estimated incremental operating costs billed and incremental operating costs actually experienced during the period such estimated operating costs were billed. The Environmental Compliance Operating Cost Adjustment Factor applicable to retail rate groups shall be as follows:





Page 2 of 4


ENVIRONMENTAL COMPLIANCE OPERATING COST

ADJUSTMENT


Line Line

No. Retail Rate Group No.

1 Rate RS $0.006562 $0.006580 1

2 Rates CS and FOC 0.007549 0.007570 2

3 Rate LLF 1/0.005208 0.005222 3

4 Rate HLF $2.883803 $2.891749 4

5 Customer L 0.003165 0.003173 5

6 Customer D 0.000000 0.000000 6

7 Customer O 0.004282 0.004293 7

8 Rate WP 0.004208 0.004220 8

9 Rate SL 0.001978 0.001984 9

10 Rate MHLS 0.001949 0.001955 10

11 Rates MOLS and UOLS 0.001695 0.001700 11

12 Rates TS, FS and MS 0.007004 0.007024 12

1/Includes Customer D who moved to LLF

Issued: Effective:

Environmental

Non-Coincident KW

(B)

Factor Per

Revenue Adjustment

Operating Cost

Compliance

(A)

Environmental

Compliance

Operating Cost

Revenue Adjustment

Factor Per KWH





Page 3 of 4

Revised Revised

KW Share Percent KW Share Percent

Line of Share Of Rate of System Share Of Line

No. Rate Groups System Peak System Peak Migrations Peak (12CP) System Peak No.

(A) (B) (C) (D) (E)

1 Rate RS 1,582,005 36.727% - 1,582,005 36.727% 1

2 Rates CS and FOC 224,244 5.206% - 224,244 5.206% 2

3 Rate LLF 2/636,012 14.765% 112,859 748,871 17.385% 3

4 Rate HLF 1,808,886 41.994% (112,859) 1,696,027 39.374% 4

5 Customer L 10,481 0.243% - 10,481 0.243% 5

6 Customer D 0 0.000% - - 0.000% 6

7 Customer O 19,045 0.442% - 19,045 0.442% 7

8 Rate WP 17,235 0.400% - 17,235 0.400% 8

9 Rate SL 2,185 0.051% - 2,185 0.051% 9

10 Rate MHLS 282 0.007% - 282 0.007% 10


12 Rates TS, FS and MS 1,893 0.044% - 1,893 0.044% 12

13 TOTAL RETAIL 4,307,464 100.000% - 4,307,464 100.000% 13


Issued: Effective:





ADJUSTMENT




Duke Energy Indiana, LLC Thirty-firstSecond Revised Sheet No. 71

1000 East Main Street Cancels and Supersedes

Plainfield, Indiana 46168 Thirtieth-Thirty-First Revised Sheet No. 71

Page 4 of 4

Sum Of Monthly



(A) (B)

1 Rate RS 4,284,496,454 1

2 Rates CS and FOC 527,907,294 2

3 Rate LLF 1/2,555,319,272 3

4 Rate HLF 5,545,195,509 10,451,343 4

5 Customer L 58,774,914 5

6 Customer D 0 6

7 Customer O 79,021,083 7

8 Rate WP 72,761,176 8

9 Rate SL 19,734,598 9

10 Rate MHLS 2,748,853 10



13 TOTAL RETAIL 13,205,413,279 13


Issued: Effective:

ON THE SIX MONTH PERIOD ENDED DECEMBER 31, 2017



ADJUSTMENT




Attachment C-2

Clean Rider Tariffs – Base Rate or

Special Contract Related Changes to

Rate Adjustment Riders

Rider 62(1) – ENVIRONMENTAL COMPLIANCE INVESTMENT ADJUSTMENT

Rider 71(1) – ENVIRONMENTAL COMPLIANCE OPERATING COST ADJUSTMENT

(1) Riders 62 and 71 were already updated for tax rate reduction gross-up changes effective March 1,

2018.


1000 East Main Street Thirty-Second Revised Sheet No. 62 Plainfield, Indiana 46168 Cancels and Supersedes

Thirty-First Revised Sheet No. 62 Page 1 of 4


ENVIRONMENTAL COMPLIANCE INVESTMENT ADJUSTMENT



The applicable charges for electric service to the Company's retail customers, to the extent so served, shall include a charge to reflect rate base treatment for qualified pollution control property, clean energy projects, and other federally-mandated environmental compliance projects in accordance with I.C. 8-1-2-6.6, I.C. 8-1-2-6.8, I.C.8-1-8.4, I.C. 8-1-8.8 and 170 IAC 4-6. The revenue adjustment applicable to the Company’s charges for electric service will be determined under the following provision:

The Environmental Compliance Investment Adjustment by Rate Group per billing cycle month shall be determined by multiplying the Environmental Compliance Investment Adjustment Factor, as determined to the nearest 0.001 mill ($0.000001) per kilowatt-hour in accordance with the following formula, by the monthly billed kilowatt-hours in the case of customers receiving metered service and by the estimated monthly kilowatt-hours used for rate determination in the case of customers receiving unmetered service.

Environmental Compliance Investment Adjustment Factor by Rate Group =

a x b x c x d

e where:

1. "a" is the jurisdictional cost of the Company's cumulative net investment in qualified pollution control property, clean energy projects, and other federally-mandated environmental compliance projects, including costs of completed capital projects or parts of capital projects. For purposes of determining the value of such capital projects for this rate mechanism, the Company's costs as recorded in its books of account in accordance with the Uniform System of Accounts prescribed for Public Utilities and Licensees Subject to the Provisions of the Federal Power Act shall be used.

2. "b" is the Company’s weighted average cost of capital as of the date of valuation of the

qualified pollution control property, clean energy projects, and other federally-mandated environmental compliance projects.

3. "c" is the revenue conversion factor (after interest expense synchronization) used to convert

return to operating revenues. 4. "d" is the individual retail rate group's production demand allocator used for allocation purposes

in the cost of service study in Cause No. 42359, as adjusted for migrations between HLF and LLF rate classes and migrations of AL and OL rate classes to the UOLS rate class.

5. "e" is the individual retail rate group's adjusted billing cycle kilowatt-hour sales for the twelve

months ending as of the date of valuation of the qualified pollution control property, clean energy projects, and other federally-mandated environmental compliance projects for all retail rate groups other than industrial customers served under Rate HLF. The revenue adjustment for industrial customers served under Rate HLF shall be based on demands within the HLF customer group such that “e” shall be the sum of kilowatts billed for the applicable twelve month period.

6. The Environmental Compliance Investment Adjustment Factor by Rate Group is as follows:


1000 East Main Street Thirty-Second Revised Sheet No. 62


Thirty-First Revised Sheet No. 62

Page 2 of 4



ADJUSTMENT FACTOR


Environmental Environmental

Compliance Compliance Investment

Investment Adjustment

Line Adjustment Factor Per Line

No. Retail Rate Group Factor Per KWH Non-Coincident KW No.

(A) (B)

1 Rate RS $0.003444 1

2 Rates CS and FOC 0.004046 2

3 Rate LLF 0.002848 3

4 Rate HLF $1.532549 4

5 Customer L 0.001697 5

6 Customer D 0.000000 6

7 Customer O 0.002248 7

8 Rate WP 0.002180 8

9 Rate SL 0.001031 9

10 Rate MHLS 0.000998 10

11 Rates MOLS and UOLS 0.000885 11

12 Rates TS, FS and MS 0.003672 12

Issued: Effective:





Page 3 of 4

KW Share of Revised Revised

System Peak Percent KW Share Percent

Line (12CP) Per Share Of Rate of System Share Of Line

No. Rate Groups Cause No. 42359 System Peak Migrations Peak (12CP) System Peak No.

(A) (B) (C) (D) (E)

1 Rate RS 1,582,005 36.727% - 1,582,005 36.727% 1

2 Rates CS and FOC 224,244 5.206% - 224,244 5.206% 2

3 Rate LLF 2/636,012 14.765% 112,859 748,871 17.385% 3

4 Rate HLF 1,808,886 41.994% (112,859) 1,696,027 39.374% 4

5 Customer L 10,481 0.243% - 10,481 0.243% 5

6 Customer D 0 0.000% - - 0.000% 6

7 Customer O 19,045 0.442% - 19,045 0.442% 7

8 Rate WP 17,235 0.400% - 17,235 0.400% 8

9 Rate SL 2,185 0.051% - 2,185 0.051% 9

10 Rate MHLS 282 0.007% - 282 0.007% 10


12 Rates TS, FS and MS 1,893 0.044% - 1,893 0.044% 12

13 TOTAL RETAIL 4,307,464 100.000% - 4,307,464 100.000% 13


Issued: Effective:







ADJUSTMENT FACTOR






Page 4 of 4

Sum Of Monthly



(A) (B)

1 Rate RS 8,550,451,744 1

2 Rates CS and FOC 1,031,536,000 2

3 Rate LLF 1/4,894,460,675 3

4 Rate HLF 10,906,590,756 20,597,913 4

5 Customer L 114,806,810 5

6 Customer D 0 6

7 Customer O 157,645,853 7

.

8 Rate WP 147,089,202 8

9 Rate SL 39,648,920 9

10 Rate MHLS 5,624,930 10



13 TOTAL RETAIL 25,967,108,351 13

1/ Includes Customer D who moved to LLF

Issued: Effective:

ON THE TWELVE MONTH PERIOD ENDED DECEMBER 31, 2017



ADJUSTMENT FACTOR






Plainfield, Indiana 46168 Cancels and Supersedes Thirty-First Revised Sheet No. 71

Page 1 of 4



ENVIRONMENTAL COMPLIANCE OPERATING COST ADJUSTMENT APPLICABLE TO RETAIL RATE GROUPS

The applicable charges for electric service to the Company's retail customers, shall be increased or decreased to the nearest 0.001 mill ($.000001) per kWh to reflect recovery of clean energy and other federally-mandated environmental compliance project operating costs (depreciation and operation and maintenance expenses) in accordance with Ind. Code 8-1-8.8 and Ind. Code 8-1-8.4. The revenue adjustment applicable to the Company’s charges for electric service, which shall be updated and reconciled to actual costs by the Company no more often than every six months, will be determined based on the following provisions:

Environmental Compliance Operating Cost Adjustment Factor by Rate Group =

[(a+b) x c] x d

e Where:

1. "a" is the forecasted depreciation expense applicable to investments in clean energy and other federally-mandated environmental compliance projects that comply with provisions of Ind. Code 8-1-8.8 and Ind. Code 8-1-8.4. For purposes of determining the value of depreciation expense, the projects shall reflect the recovery of depreciation expense over a period of eighteen or twenty years beginning with the month following the in-service date of the applicable projects or using rates as otherwise approved by the Commission.

2. "b" is the forecasted operating expenses of the Company's clean energy and other federally-

mandated environmental compliance projects (specifically, incremental operation and maintenance expense not reflected in base rates), associated with clean energy and other federally-mandated environmental compliance projects that comply with provisions of Ind. Code 8-1-8.8 and Ind. Code 8-1-8.4 and that have been approved by the Commission pursuant to Ind. Code 8-1-8.8 and Ind. Code 8-1-8.4. For purposes of determining the value of such operating expenses for this rate mechanism, the Company shall use costs as recorded in its books of account in accordance with the Uniform System of Accounts prescribed for Public Utilities and Licensees by the Federal Energy Regulatory Commission.

3. "c" is the revenue conversion factor used to convert the applicable operating expenses to

operating revenues.

4. "d" is the individual rate group's jurisdictional production demand allocator used for allocation purposes in the cost of service study last approved by the IURC, as adjusted for migrations between HLF and LLF rate classes and migrations of AL and OL rate classes to the UOLS rate class.

5. "e" is the individual retail rate group’s adjusted billing cycle kilowatt-hour sales for the

applicable six month period for all retail rate groups other than industrial customers served under Rate HLF. The revenue adjustment for retail customers served under Rate HLF shall be based on demands within the HLF customer group such that “e” shall be the sum of kilowatts billed for the applicable six month period.

The factor shall be further modified to reflect the difference between estimated incremental operating costs billed and incremental operating costs actually experienced during the period such estimated operating costs were billed. The Environmental Compliance Operating Cost Adjustment Factor applicable to retail rate groups shall be as follows:





Page 2 of 4



ADJUSTMENT


Environmental

Environmental Compliance

Compliance Operating Cost

Operating Cost Revenue Adjustment

Line Revenue Adjustment Factor Per Line

No. Retail Rate Group Factor Per KWH Non-Coincident KW No.

(A) (B)

1 Rate RS $0.006580 1

2 Rates CS and FOC 0.007570 2

3 Rate LLF 1/0.005222 3

4 Rate HLF $2.891749 4

5 Customer L 0.003173 5

6 Customer D 0.000000 6

7 Customer O 0.004293 7

8 Rate WP 0.004220 8

9 Rate SL 0.001984 9

10 Rate MHLS 0.001955 10

11 Rates MOLS and UOLS 0.001700 11

12 Rates TS, FS and MS 0.007024 12


Issued: Effective:





Page 3 of 4

Revised Revised

KW Share Percent KW Share Percent

Line of Share Of Rate of System Share Of Line

No. Rate Groups System Peak System Peak Migrations Peak (12CP) System Peak No.

(A) (B) (C) (D) (E)

1 Rate RS 1,582,005 36.727% - 1,582,005 36.727% 1

2 Rates CS and FOC 224,244 5.206% - 224,244 5.206% 2

3 Rate LLF 2/636,012 14.765% 112,859 748,871 17.385% 3

4 Rate HLF 1,808,886 41.994% (112,859) 1,696,027 39.374% 4

5 Customer L 10,481 0.243% - 10,481 0.243% 5

6 Customer D 0 0.000% - - 0.000% 6

7 Customer O 19,045 0.442% - 19,045 0.442% 7

8 Rate WP 17,235 0.400% - 17,235 0.400% 8

9 Rate SL 2,185 0.051% - 2,185 0.051% 9

10 Rate MHLS 282 0.007% - 282 0.007% 10


12 Rates TS, FS and MS 1,893 0.044% - 1,893 0.044% 12

13 TOTAL RETAIL 4,307,464 100.000% - 4,307,464 100.000% 13


Issued: Effective:






ADJUSTMENT



Duke Energy Indiana, LLC Thirty-Second Revised Sheet No. 71

1000 East Main Street Cancels and Supersedes

Plainfield, Indiana 46168 Thirty-First Revised Sheet No. 71

Page 4 of 4

Sum Of Monthly



(A) (B)

1 Rate RS 4,284,496,454 1

2 Rates CS and FOC 527,907,294 2

3 Rate LLF 1/2,555,319,272 3

4 Rate HLF 5,545,195,509 10,451,343 4

5 Customer L 58,774,914 5

6 Customer D 0 6

7 Customer O 79,021,083 7

8 Rate WP 72,761,176 8

9 Rate SL 19,734,598 9

10 Rate MHLS 2,748,853 10



13 TOTAL RETAIL 13,205,413,279 13


Issued: Effective:

ON THE SIX MONTH PERIOD ENDED DECEMBER 31, 2017



ADJUSTMENT




Attachment C-3

Assumptions and Methodologies – Base

Rate or Special Contract Related

Changes to Rate Adjustment Riders

A. List of All Assumptions

B. Actual or Estimated

C. Sources of Data

D. Explain Models or Methodologies Used

Attachment C-3

1

ASSUMPTIONS & METHODOLOGIES Base Rate or Special Contract Related Changes to Rate Adjustment

Riders 62, 66-A and 71

A. List all assumptions

1. Rider 66-A Energy Efficiency was updated to reflect the change in the Lost Revenue

calculations resulting from the reduction in base rates due to the change in the

Federal income tax rate.

2. Rider 62 – Environmental Compliance Investment was updated for the impacts of

the change in the Federal tax rate on the calculated return revenues from both

Wabash River Unit 1 and the Wheatland generating station used in the Wheatland

Credit. Rider 62, ECR-30 and ECR-31, already reflects the updated for tax rate

reduction gross-up changes effective March 1, 2018 and August 9, 2018 respectively.

3. Rider 71 – Environmental Compliance Costs was updated for the impacts on the

credits (Nucor and International Paper) related to the change of the Federal income

tax rate from 35% to 21% related to the special contract rates. Rider 71, ECR-30 and

ECR-31, already reflects the updated for tax rate reduction gross-up changes

effective March 1, 2018 and August 9, 2018 respectively.

4. No other items besides those listed above were updated in these rider filings with

approved rates (Riders 62, 66A and 71).

B. State if data is actual or estimated:

Both actual and estimated data was used.

If estimated, please explain the following:

a) Why were estimated amounts used?

As ordered in IURC Cause No. 45032, as part of Phase 1: “…on or before March 25, 2018, each Respondent shall submit for Commission approval revised tariff sheets reflecting the new tax rate applicable to Respondent as a result of the Act, for all affected rates and charges, including base rates, riders, trackers, and miscellaneous charges.”

Attachment C-3

2

In order to comply with the Commission’s order, the current approved rider rates must be adjusted for the tax rate change. These approved rider rates (Riders: 66-A-EE, and 71-ECOC) include projected lost revenues and operating expenses in the development of the rates.

b) How were the estimated amounts derived.

See the respective IURC Cause numbers for descriptions of the methods used to

develop the estimates used in each filing:

Cause No. 43955 DSM-5 for Rider 66-A

Cause No. 42061 ECR-31 for Rider 71

c) Why estimated data should be used.

To comply with the Commission’s order in IURC 45032 dated February 16, 2018, the

Company started with the currently approved rider rates which included the use of

estimated data. Failure to use the estimated data in the various riders would have

violated the Commission’s order.

C. State the source(s) of the data.

1. Rider 62 – Environmental Compliance Investment:

a. ECR-31 Exhibits and workpapers as filed on April 27, 2018, and rates approved August 8, 2018.

b. 21% Federal Income Tax rate per the Tax Cuts and Jobs Act of 2017 signed December 22, 2017 and effective January 1, 2018.

2. Rider 66-A – Energy Efficiency: a. Updated retail base rate tariffs (see Attachment B) b. DSM-5 Exhibits and workpapers as filed on February 5, 2018 and rates approved

July 25, 2018. c. 21% Federal Income Tax rate per the Tax Cuts and Jobs Act of 2017 signed

December 22, 2017 and effective January 1, 2018. 3. Rider 71 – Environmental Compliance Operating Costs:

a. ECR-31 Exhibits and workpapers as filed April 27, 2018, and rates approved August 8, 2018.

b. HLF-Primary rates and special contract rates updated for tax rate change (see Attachment B).

c. 21% Federal Income Tax rate per the Tax Cuts and Jobs Act of 2017 signed December 22, 2017 and effective January 1, 2018.

Attachment C-3

3

D. Explain models or methodologies used.

See the respective IURC Cause numbers for descriptions of the methodologies used to

develop the rates used in each rider filing:


Cause No. 43955 DSM-5 for Rider 66-A


The same methodologies used in each of the above rider filings were used for each of

these riders in the IURC Cause No. 45032 Phase I 30-day filing with the following

modifications.

1. Rider 62 – Environmental Compliance Investment (see Attachment C-4 Schedule 1)

a) Replace the revenue conversion factor from IURC Cause No. 42359 which

included a 35% Federal tax rate with a revised revenue conversion factor that

uses a 21% Federal tax rate in the calculation of Wabash River Unit 1 and

Wheatland revenue requirements on Workpaper 2-E-62 (MTD) page 2 of 3.

b) Carry the changes on Workpaper 2-E-62 (MTD) page 2 of 3 resulting from the

Federal tax rate change forward to Workpaper 2-E-62 (MTD) page 1 of 3.

c) Carry the changes on Workpaper 2-E-62 (MTD) page 1 of 3 forward to Exhibit 2-B

(MTD) page 16 of 18.

d) Carry the changes on Exhibit 2-B (MTD) page 16 of 18 forward to Exhibit 2-A

(MTD) page 2 of 4.

2. Rider 66-A – Energy Efficiency (see Attachment C-4 Schedule 2)

a) Utilized revised Energy and Demand rates (See Attachment B) to calculate 2015

Lost Revenue rates which are used to develop an implicit rate for the estimated

Lost Revenues to be billed in 2018. (Schedule 2, pp. 12-18)

b) Implicit rate was used to update persisting Lost Revenue estimated amounts for

2018. (Schedule 2, pp. 5-11)

c) Revised persisting Lost Revenue estimates were used to calculate estimated

energy efficiency costs for 2018. These updated costs were then applied to the

Revenue Requirement calculation for both residential and non-residential

customers. (Schedule 2, pp. 1-4)

Attachment C-3

4

3. Rider 71 – Environmental Compliance Investment (see Attachment C-4 Schedule 3)

a) On Confidential Workpaper 2-M-71 (MTD) replace the base demand charge (line

1) with the updated rate reflecting the 21% Federal tax rate (See CONFIDENTIAL

Attachment C)

b) Carry the changes on Confidential Workpaper 2-M-71 forward to Exhibit 2-E


c) Carry the changes on Exhibit 2-E page 11 of 12 (MTD) forward to Exhibit 2-E


d) On Confidential Workpaper 2-L-71 (MTD) replace the Firm Production Demand

(line 1) and New Demand Charge (line 12) with the updated rate reflecting the

21% Federal tax rate (See CONFIDENTIAL Attachment C).

e) Carry the changes on Confidential Workpaper 2-L-71forward to Exhibit 2-E (MTD)

page 10 of 12.

f) Carry the changes on Exhibit 2-E page 10 of 12 (MTD) forward to Exhibit 2-E


g) Carry the changes on Exhibit 2-E (MTD) page 12 of 12 forward to Exhibit 2-D

(MTD) page 2 of 4.

Attachment C-4

Supporting Schedules

Revised Schedule 1 - Rider 62 – ENVIRONMENTAL COMPLIANCE INVESTMENT

ADJUSTMENT

Revised Schedule 3 - Rider 71 – ENVIRONMENTAL COMPLIANCE OPERATING

COST ADJUSTMENT

Revised Schedule 1 - Rider 62


ADJUSTMENT

PETITIONER'S EXHIBIT 2-B (MTD)

PAGE 16 OF 18

DUKE ENERGY INDIANA, LLC

DETERMINATION OF ENVIRONMENTAL COMPLIANCE INVESTMENT

ADJUSTMENT FACTORS BY RATE SCHEDULE TO BE APPLIED TO CUSTOMERS'

BILLS BEGINNING WITH THE EFFECTIVE DATE OF THE COMMISSION'S FINAL ORDER

Coincidental Kilowatt-Hour Sum Of Monthly

Peak Demand CWIP Revenue Requirement Credit for the Differential Sales For The Environmental Non-Coincident Peak Environmental

Allocators From Prior Additional Total Between Wabash River Unit 1 Total Twelve Months Compliance Investment Demands For The Compliance Investment

Line IURC Cause Revenue Revenue Revenue Costs Included in Rates and Revenue Ended Adjustment Twelve Months Ended Adjustment Line

No. Description No. 42359 1/ Requirement Requirement Requirement Wheatland Plant Costs Requirement December 31, 2017 Factors Per KWH December 31, 2017 Factor Per KW No.

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)

1 Rate RS 36.727% $31,360,451 $859,411 $32,219,862 ($2,774,724) $29,445,138 8,550,451,744 $0.003444 1

2 Rates CS and FOC 5.206% 4,445,299 121,821 4,567,120 (393,313) 4,173,807 1,031,536,000 0.004046 2

3 Rate LLF 17.385% 14,844,704 406,809 15,251,513 (1,313,437) 13,938,076 4,894,460,675 0.002848 3

4 Rate HLF 39.374% 33,620,671 921,352 34,542,023 (2,974,706) 31,567,317 10,906,590,756 20,597,913 $1.532549 4

5 Customer L 0.243% 207,493 5,686 213,179 (18,359) 194,820 114,806,810 0.001697 5

6 Customer D 0.000% 0 0 0 0 0 0 0.000000 6

7 Customer O 0.442% 377,415 10,343 387,758 (33,393) 354,365 157,645,853 0.002248 7

8 Rate WP 0.400% 341,552 9,360 350,912 (30,220) 320,692 147,089,202 0.002180 8

9 Rate SL 0.051% 43,548 1,193 44,741 (3,853) 40,888 39,648,920 0.001031 9

10 Rate MHLS 0.007% 5,977 164 6,141 (529) 5,612 5,624,930 0.000998 10

11 Rates MOLS and UOLS 0.121% 103,319 2,832 106,151 (9,142) 97,009 109,646,147 0.000885 11

12 Rates TS, FS and MS 0.044% 37,571 1,029 38,600 (3,324) 35,276 9,607,314 0.003672 12

13 Total Retail 100.000% $85,388,000 $2,340,000 $87,728,000 ($7,555,000) $80,173,000 25,967,108,351 13

1/ As adjusted for migrations between HLF and LLF rate classes, migrations of AL and OL rate classes to UOLS rate class and Customer D moved to LLF Rate Class.

Workpaper 2-E-62 (MTD)

Page 1 of 3

Line No. Description Line No.

1 Deferred Wheatland Plant Costs at 12/31/2007 25,858,549.17$ 1

Carrying Cost Accrual during the Wheatland

2 Plant Amortization Period 3,634,030.00 2

3 Amortization (29,492,579.17) 3

4 Balance at 12/31/2011 -$ 4

Wabash River

Wheatland Unit 1 (1) Difference

5 Return on Investment 6,463,000$ (2) 6,548,000$ (85,000)$ 5

6 Depreciation Expense 3,096,000 (3) 6,434,000 (3,338,000) 6

7 Non-fuel O&M 1,231,000 (4) 5,183,000 (3,952,000) 7

8 Total Annual Costs (Retail) 10,790,000 18,165,000 (7,375,000) 8

9 Retail Revenue Requirement (5) 12,684,000$ 20,239,000$ (7,555,000)$ 9

(1) Retail jurisdictional amounts included in base rates approved in Cause No. 42359.

(2) 12/31/2007 Wheatland retail jurisdictional rate base times 7.30% weighted average cost of capital

from Cause No. 42359.

(3) 12/31/2007 retail jurisdictional annual depreciation amount.

(4) 12/31/2007 retail jurisdictional estimated amount.

(5) Uses revenue conversion factors from Cause No. 42359.

Duke Energy Indiana, LLC

Actual Deferred Wheatland Plant Costs Amortized and

Differential Between Wabash River Unit 1 Costs Included in Base Rates

and Wheatland Plant Costs

Net Reduction in Annual Retail Revenue Requirement Reflecting the

Workpaper 2-E-62 (MTD)

Page 2 of 3


SUMMARY OF THE CHANGE IN ANNUAL RETAIL REVENUE

REQUIREMENT REFLECTING THE NET REDUCTION IN COSTS RESULTING FROM THE SALE

OF WABASH RIVER UNIT NO. 1 AND THE INCLUSION OF WHEATLAND PLANT COSTS

(Dollars In Thousands)

Annual Retail

Return Net

Reflecting Reduction

Materials & The ROR Annual Annual In Annual

OCD Investment Supplies Net Rate Base Approved In Annual Retail Retail Retail

Line Total Applicable Applicable Applicable Cause No. Depreciation Depreciation Non-Fuel Revenue Line

No. Description Company To Retail To Retail To Retail 42359 Rate Expense O&M Expense Requirement No.

(A) (B) (C) (D) (E) (F) (G) (H) (I) (J)

1 Wheatland OCD Investment

As Of 12-31-07 (1) $94,032 $86,313 $2,223 $88,536 $6,463 (2) 3.38% (3) $3,096 $1,231 $12,684 (2) 1

2 Wabash River Unit 1

From Cause No. 42359 (1) $97,392 $89,397 $303 $89,700 $6,548 (2) 5.18% and 5.12% (4) $6,434 $5,183 $20,239 (2) 2

3 Net Reduction In Annual

Retail Revenue Requirement ($7,555) 3

(1) Wheatland

@

12-31-07 Wabash River Unit 1 (From Cause No. 42359)

Original Cost Plant In Service At 12-31-07 $101,791 WR Unit 1 Old WR Unit 1 New Total

Less: Accumulated Depreciation Original Cost Plant In Service $13,363 $122,096 $135,459

- Per Books At 12-31-07 7,759 Less: Accumulated Depreciation 6,195 31,872 38,067

OCD Investment $7,168 $90,224 $97,392

OCD Investment At 12-31-07 94,032

Retail Allocation Factor from Cause No. 42359 91.791%

Retail Allocation Factor from Cause No. 42359 91.791%

Total OCD Investment Applicable To Retail $89,397

OCD Investment Applicable To Retail $86,313

(2) Reflects the 7.3% after tax weighted average cost of capital and revenue conversion factors approved in Cause No. 42359.

Wheatland Wabash River Unit 1

Annual Retail Return (column F) $6,463 $6,548

Revenue Conversion Factor 1.27884 1.27884

Revenue Requirement 8,265 8,374

Annual Retail Depreciation Expense (column H) 3,096 6,434

Annual Retail Non-Fuel O&M Expense (column I) 1,231 5,183

4,327 11,617

Revenue Conversion Factor 1.02135 1.02135

Revenue Requirement 4,419 11,865

Total Revenue Requirement $12,684 $20,239

(3) Depreciation rate per books.

(4) Wabash River Unit 1 depreciation rates from Cause No. 42359.

Revised Schedule 3 - Rider 71

ENVIRONMENTAL COMPLIANCE OPERATING

COST ADJUSTMENT

PETITIONER'S EXHIBIT 2-E (MTD)

PAGE 10 OF 12

Line Line

No. Description Amount Amount Amount No.

(A) (B) (C)

1 Demand Revenue Credit Applicable to July - December 2018 ($3,527,441) 1

Reconciliation of Demand Revenue Credit Applicable to July - December 2017

2 Demand Revenue Credit (ECR-29) ($3,745,425) 2

3 Revenue Returned to Retail Customers ($3,640,304) 3

4 Prior Reconciliation Variance (ECR-29) 225,823 4

5 Total Recovered for Demand Revenue Credit (Line 3 - Line 4) (3,866,127) 5

6 Demand Revenue Credit Reconciliation Amount (Line 2 - Line 5) 120,702 6

7 Total Demand Revenue Credit (Line 1 + Line 6) ($3,406,739) 7

OF DEMAND REVENUE CREDIT FROM PREVIOUS FILINGS

NUCOR DEMAND REVENUE CREDIT INCLUDING RECONCILIATION



PAGE 11 OF 12

Line Line

No. Description Amount Amount Amount No.

(A) (B) (C)

1 Demand Revenue Credit Applicable to July - December 2018 ($144,448) 1

Reconciliation of Demand Revenue Credit Applicable to July - December 2017

2 Demand Revenue Credit (ECR-29) ($138,625) 2

3 Revenue Returned to Retail Customers ($124,842) 3

4 Prior Reconciliation Variance (ECR-29) 12,087 4

5 Total Recovered for Demand Revenue Credit (Line 3 - Line 4) (136,929) 5

6 Demand Revenue Credit Reconciliation Amount (Line 2 - Line 5) (1,696) 6

7 Total Demand Revenue Credit (Line 1 + Line 6) ($146,144) 7

INTERNATIONAL PAPER (FORMERLY KNOWN AS TEMPLE-INLAND) DEMAND REVENUE CREDIT

INCLUDING RECONCILIATION OF DEMAND REVENUE CREDIT FROM PREVIOUS FILINGS



PAGE 12 OF 12


DETERMINATION OF ENVIRONMENTAL COMPLIANCE OPERATING COST

ADJUSTMENT FACTORS BY RATE SCHEDULE TO BE APPLIED TO CUSTOMER BILLS

Coincidental Revenue Revenue Kilowatt-Hour Environmental Non-Coincident Environmental

Peak Demand Operating Credit for Credit for Sales Compliance Peak Demand Compliance

Allocators from Expense Nucor International Total Six Months Operating Cost Six Months Operating Cost

Line IURC Cause Revenue Demand Paper Demand Revenue Ended Revenue Adjustment Ended Revenue Adjustment Line

No. Description No. 42359 1/ Requirement Revenues Revenues Requirement December 31, 2017 Factors Per KWH December 31, 2017 Factor Per KW No.

(A) (B) (C) (D) (E) (F) (G) (H) (I)

1 Rate RS 36.727% $29,495,750 ($1,251,193) ($53,674) $28,190,882 4,284,496,454 $0.006580 1

2 Rates CS and FOC 5.206% 4,180,981 (177,355) (7,608) 3,996,018 527,907,294 0.007570 2

3 Rate LLF 17.385% 13,962,034 (592,262) (25,407) 13,344,365 2,555,319,272 0.005222 3

4 Rate HLF 39.374% 31,621,578 (1,341,370) (57,543) 30,222,665 5,545,195,509 10,451,343 $2.891749 4

5 Customer L 0.243% 195,155 (8,278) (355) 186,522 58,774,914 0.003173 5

6 Customer D 0.000% 0 0 0 0 0 0.000000 6

7 Customer O 0.442% 354,974 (15,058) (646) 339,270 79,021,083 0.004293 7

8 Rate WP 0.400% 321,243 (13,627) (585) 307,031 72,761,176 0.004220 8

9 Rate SL 0.051% 40,959 (1,737) (75) 39,147 19,734,598 0.001984 9

10 Rate MHLS 0.007% 5,622 (238) (10) 5,374 2,748,853 0.001955 10

11 Rates MOLS and UOLS 0.121% 97,176 (4,122) (177) 92,877 54,645,638 0.001700 11

12 Rates TS, FS and MS 0.044% 35,337 (1,499) (64) 33,774 4,808,488 0.007024 12

13 Total Retail 100.000% $80,310,809 ($3,406,739) ($146,144) $76,757,925 13,205,413,279 13

1/ As adjusted for migrations between HLF and LLF rate classes, migrations of AL and OL rate classes to UOLS rate class, and Customer D moved to LLF Rate Class

(~duke diana l. douglas rates & regulatory planning

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