Painesville Electric Rates Info Session

Painesville City Manager Monica Irelan and staff will be hosting an Info Session on resident questions and concerns regarding electric rates on Tuesday, August 14 at 7:00 p.m. in Courtroom #1 at Painesville City Hall (7 Richmond Street).

 

Painesville Electric Q&A

Response to Painesville Township Residents Petition, August 2018

 

The City of Painesville is aware of a change.org petition urging Painesville Township residents to ask Painesville Township Trustees to switch from Painesville Electric to First Energy services. Below are answers to some of the questions raised with the intent of informing the public with accurate information.

 

Q1: Where does Painesville power come from?

 A: For over 125 years Painesville generated all the power its customers needed at the coal-fired plant located off Richmond Street in Painesville. As the system expanded and the customer base grew, it became necessary to supplement the electric plant with outside power from the energy market. The market purchases were handled through Painesville’s membership in American Municipal Power, Inc. (AMP), who served as the city’s power broker. AMP is a non-profit, member-based organization serving more than 135 communities in nine states.

• Today, the city buys all its base and intermediate power needs through energy market agreements and participation in power projects. Our portfolio is becoming more diverse to allow for a sustainable source of power for our customers.
• We still run our coal-fired plant for peaking and demand response needs.

 

Q2: Why do electric rates look different in the summer vs. the winter?

 A: Seasonal rates are something that has been part of the rate structure for several decades. This structure covers the market difference in pricing that occurs because of the higher demand for power in the summer compared to the lower demand in the winter.

• There is an ability to change this type of rate structure through legislation and has been discussed by Painesville City Council in the past. No formal action has been taken.

 

Q3: Why are my electric rates different this year compared to last year?

A: The new rate structure went into effect on June 1, 2018. This new rate structure is a revenue-neutral change that allows customers to be charged more accurately for the service provided. Some residents and township customers saw an increase in their overall cost because the structure reallocated the costs to the centers that were previously not paying their fair share. On the other end, some electric users saw a slight decrease because they were previously subsidizing residential customers.

 

Q4: Why was this decision made?

A: The old structure basically had two “buckets,” the kWh charge and the power cost adjustment (PCA). The new structure incorporates a customer charge to cover the cost of distributing the power, the kWh charge to cover the costs of purchasing the power and a PCA. This allows fixed and variable costs to be allocated fairly among all the users of the system.

• The customer charge is a straightforward, fixed fee for all.
• The kWh charge is the price of the power each customer used that month.
• The PCA charge is the variable charge that can change month to month due to the market or major events out of city control.

Although the kWh charge has increased, you will notice that the PCA has decreased. City Council decided to make this change after several town hall meetings, work sessions and City Council meetings because it enables us to cover our costs more effectively and present those costs to our customers in a more transparent fashion.

 

Q5: Why do the rates of First Energy or a discount supplier look different than Painesville Electric?

A: Painesville Electric is a local, customer-owned, not-for-profit utility whose goal is “to provide adequate, reliable and economical power to our customers in an efficient and professional manner.”

• Securing diverse and sustainable long-term power supply options and offering reliable service are the foundation of our business plan.
• Municipal electric systems are locally-owned and governed. Our crews are local and care about the community they serve.
• We invest money back into the electric system to maintain and provide reliable service to our customers. Painesville is a recipient of the prestigious American Public Power Association (APPA) RP3 Gold designation, which recognizes utilities that demonstrate high proficiency in reliability, safety, workforce development and system improvement.
• Our bills, process, procedures and decisions are made in the light of day at public meetings.
• We are subject to open meetings requirements, freedom of information requests and other process that allow us to be open and honest with our customers.
• In a municipal electric community like Painesville, the customers effectively own the electric system:
• In the City of Painesville, there is an Electric Committee that was put into place in 2017. We are looking for customers to sit on this advisory board to recommend to City Council direction on the major responsibilities of a locally-owned electric system.
• First Energy is a for-profit, investor-owned utility (IOU):
• The IOU business model focuses on shareholder returns.
• Reliability and customer support at the distribution level are not typically the main priority.
• Investments in the system may lack due to priorities of profit.

• Discount suppliers sell power without a way to distribute that power:
• You still need to pay for distribution in order to get the power to your home.
• These are short-term focused companies, which means a long-term supply of reliable, sustainable power is not typically their top priority.

 

Q6: Is there a rate difference between Painesville City residents and Painesville Township residents?

A: Yes, there is a rate difference between Painesville City residents and Painesville Township residents, just as there is a rate difference between a resident and industrial customer.

• As stated earlier, we focus on what it costs to provide a service to the customer. Then each customer is charged according to the costs.
• The difference in rate is a reflection on the costs to us to provide the infrastructure (poles, lines, transformers, wire, etc.) to get to the township and to maintain that infrastructure going forward.
• On top of the above, there is a higher risk with township customers because customers outside of corporation limits can leave the system. Any costs already incurred would go unrecovered.

 

Q7: Where do I find information about Painesville electric rates and any changes that may happen?

A: Agendas and minutes as well as videos of the town hall meetings, work sessions and city council meeting that were held on this topic can be accessed on the city website, painesville.com.

• The petition mentioned numerous media sources that covered our rate issues in 2016. The follow up meetings and decisions on this issue continued to be reported on by local news sources.
• If you are interested in getting more involved, we are always looking for qualified customers to sit on the Electric Committee. You can also sign up for email notifications of our City Council meetings in order to check the agenda for electric related issues.