This article appeared in the February 28, 2015 edition of the Piqua Daily Call and is co-authored by Ed Krieger, Director of the Piqua Power System.
Several years ago, the City of Piqua, through the efforts of the Energy Board and the Piqua Power System, began planning the most efficient and economical way to provide and deliver electric to Piqua Power customers. The strategy was to move from a market driven purchase of energy to an asset driven. This was an important and beneficial decision because of the fluctuating costs of buying power on the open market. This is much like what we are facing currently with gas prices.
The most recent changes to electrical billing by the City of Piqua was a result of a rate study conducted to move costs from the mostly market driven to the asset driven approach. Any customers with a billing question are encouraged to contact the Utility Billing Office to have their accounts analyzed and explained. To date, over 500 customers have taken advantage of this service in the past week with only one error being found on a meter reading.
A number of issues have been raised about the new rate structure and the following information attempts to address these concerns.
Why don’t the numbers add up?
It is true that the base charges are increasing for Piqua’s residential, commercial and industrial customers. What is missing is the Power Cost Adjustment or PCA. When comparing the old rates to the new rates, the PCA has changed from a positive number of $0.0175 for all kilowatt-hours (kWh) consumed to a negative number of -$0.00731 for all kWh used. The current PCA value is listed under the special message section on your bill.
What about this 2% increase?
750 kWh is considered by many in the electric industry to be a typical monthly average residential consumer. Therefore, when you input 750 kWh into the new rate calculation (including the current PCA credit), the result will be an increase of $1.74 per month or 2% over the rates that were in place in December of 2014. However, cold January weather and extra billing days due to the Holidays have resulted in the majority of Piqua customers with energy consumption well over 750 kWh for January. The good news is that as your consumption increases, your percentage of rate change actually decreases. In fact, when you reach 1,029 kWh, you are actually saving money compared to electric costs under the old rates.
Why are electric rates changing now?
The cost-of-service study completed in 2014 identified the need to update existing rates. As Piqua has moved from purchasing the majority of our energy from the market to owning portions of generating assets through our relationship with American Municipal Power (AMP), our cost to serve our customers has changed. Piqua now has a diverse generation portfolio that includes clean-coal, natural gas and renewable (wind & hydro) resources. This long-term strategy should serve Piqua electric customers well for years to come with resulting stable and predictable generation costs.
How does this impact Piqua’s Commercial and Industrial Customers?
Many Piqua businesses will actually see a cost reduction with the new electric rates. Some may see a slight increase, but most will see a reduction of up to 3% or more. The cost-of-service study recommended rate re-alignment as Piqua’s large consistent users of electricity were helping to cover the cost of serving Piqua’s residential customers. On September 23, 2014, the Piqua Energy Board recommended City Commission approval of the revised electric rates. The Piqua City Commission formally adopted the new electric rates on December 16, 2014. It should be noted that the Piqua Energy Board is comprised of an equal representation of Piqua residential, commercial and industrial customers, to ensure all customer class interests are fairly considered.
How do the new rates compare to area electric suppliers?
Piqua electric customers continue to enjoy some of the lowest electric costs in the region. Current calculations show Piqua’s residential rates to be approximately 20% below The Dayton Power & Light Company’s filed tariff rates. Quite interestingly, that 20% margin is the same savings stated by Piqua leaders during the depression when the decision was made to build a competing electric system. Obviously, that decision continues to serve our residents and businesses well. On average, Piqua electric rates save residents hundreds of dollars annually, our commercial customers save thousands, while our largest industrial users save tens of thousands of dollars per year.
The Piqua Power System continues to be an asset to all Piqua customers.