|
Hamilton, Ohio - Beginning in December 2014, the City of Hamilton, Electric System, is planning to implement a new electric rate structure for all Hamilton electric utility customers, contingent upon the adoption of a new electric rate ordinance by Hamilton City Council.
This proposed new electric rate structure is based on the results of a comprehensive "cost of service" study that was undertaken and completed by the Electric System over the last couple of years. The American Public Power Association (APPA) recommends that public utilities, as a best practice, complete a "cost of service" study every five years, in order to ensure that the electric rates being charged to various customer types (e.g., residential, small commercial, large commercial, etc.) accurately reflect the cost to provide electric service to those broad customer categories. The City has not completed a comprehensive "cost of service" study on the Electric System since 2005.
One of the major reasons that the Electric System initiated a "cost of service" study, besides being a best practice, is due to the significant changes in the System's power supply portfolio and resources. (See pie charts in Attachment 1.) Over the last several years, the City has invested in a number of new electric generating assets that have decreased the environmental risk and reliance on cost-volatile fuels, such as coal, while placing a heavier reliance on more stable cost and plentiful natural gas. Additionally, the System has placed an even greater reliance on hydroelectric generating assets, with no fuel cost component and low variable costs; however, hydroelectric power places a greater emphasis on fixed costs, due to the large capital investments associated with such projects.
Kevin Maynard, Director of Electric stated, "The implementation of these new electric rates is intended to be revenue neutral for the Electric System. In other words, this is not a rate increase, but a rate adjustment of the current electric rate structure to more accurately reflect the actual cost of electric service that is being provided to various customers and customer types."
Maynard continued, "For example, residential electric customers and low electric demand commercial customers are some of the most expensive customers to which to provide electric service, and alternatively, large industrial customers, who have a high and consistent electric usage pattern, are some of the least expensive customers to which to provide electric service."
Doug Childs, Director of Public Utilities/General Manager, stated, "The Electric System stands at the ready to assist all of our valued customers in their efforts to manage and reduce their utility costs. The City's public utilities are an important asset to the community and these types of rate changes are necessary to protect the long-term vitality of these utility operations for all of our citizens and customers."
Maynard continued further, "While some of our customers will experience an increase in their monthly cost of electric service, we are planning to provide direct assistance to customers relative to energy efficiency and energy conservation programs, that will help them save money in the future. Additionally, we are implementing these new rates over a four-year period, to allow our customers time to put these energy efficiency and energy conservation programs into practice."
Jody Gunderson, Economic Development Director, stated, "These new electric rates and rate structures are critical to the City's ability to create and retain jobs for all of our community. These new rates have a pro-business impact, being competitive, stable and predictable. They will go a long way in assisting in our efforts to retain and attract quality businesses and jobs in Hamilton."
The four-year implementation plan for these new rates is also an attempt to minimize the annual rate impact on various customer groups, especially those customers, such as our residential customers, that will experience an increase in their rates over time. (See electric rate trend graph in Attachment 2.) And, while the City residential customers will see a small increase in their electric bills with these new rates (estimated at approximately $4 per month, for a residence using on average 750 kWh per month), Hamilton residential electric customers will continue to pay less than their neighbors in southwest Ohio that are being served by Duke and DP&L. (See electric rate comparison and projected monthly electric bill estimates in tables shown in Attachment 3. For a comparison of the estimated total residential monthly utility for 2014 to 2015 and the City vs. other southwest Ohio communities, see Attachment 4.)
Coincidentally, the Departments of Underground Utilities and Energy Management are projecting a decrease in the Gas Cost Recovery Rate, from $0.510/Ccf to $0.450/Ccf, this fall, saving Hamilton gas customers, using an average of 65 Ccf per month, approximately $4 per month or $48 annually. This decrease in gas rates will help to offset the increase in electric costs that residents with both electric and gas service from the City might experience.
Hamilton City Council will be considering these new rates for adoption in the coming weeks. Citizens/customers will be provided the opportunity for public comment on the new rates at those City Council meetings, during audience of citizens and when the ordinances are being considered. Additionally, the Departments of Electric and Energy Management plan to hold a public hearing, separate from the regular City Council meeting, where the staff will make a presentation on the new COS rates to the public and welcome questions from the public. The date of this public presentation is set for Wednesday, October 1, 2014, at 10:00 a.m., in the City Council Chambers.
The City of Hamilton owns and operates all four of the primary utilities in the City, including electric (generation, transmission and distribution), natural gas (distribution), water (treatment and distribution) and water reclamation (collection and treatment) systems. The City continues to be one of the lowest cost providers of all utility services in the region and the state.
   
|
