Posted: 12:33 p.m. Tuesday, Jan. 29, 2013

DP&L says it needs $600M to compete



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DPL meeting photo
Jim Witmer
Attorney Charlie Faruki representing Dayton, Power & Light questions Gene Krebs of Camden, a former State Representative who provided private citizen testimony during the first of two public hearings at Dayton City Hall Tuesday on two fees the Dayton Power and Light company wants to charge its residential customers. The fees are designed to ensure the utility remains viable as customers switch to other electric suppliers.

By Steve Bennish

Staff Writer

The Dayton Power & Light Co. got support and criticism at a public hearing Tuesday on its request to charge customers $600 million over five years to help it transition to a competitive market for electricity.

The utility has said the charge — which will amount to $5 a month for a typical household — is necessary because the company is losing customers and revenue. The charge is “critical” to the company’s financial health, a DP&L spokeswoman said last week.

DP&L serves more than 500,000 customers spread over 24 counties throughout the Miami Valley, including Montgomery, Preble, Greene, Clinton, Fayette, Darke, Mercer, and also parts of Auglaize, Butler, Clark, Madison, Shelby, Logan, Champaign, Union, Hardin, Van Wert, Ross and Warren.

DP&L’s request won’t be decided by the Ohio Public Utility Commission until sometime after March. The request has been criticized by industry and the Ohio Consumers’ Counsel.

The afternoon hearing at Dayton City Hall lasted just 32 minutes. Aside from DP&L representatives, attorneys representing DP&L, PUCO officials, and the Ohio Consumers’ Counsel, only a few others attended the first of two hearings Tuesday.

Gene Krebs, a former state legislator and Preble County Commisioner, complained that service in rural areas wasn’t up to par, adding that power restoration during blackouts takes too long.

“We rural people feel like we are second-class citizens subject to benign neglect,” he said.

Sampson Wright, 30, of Dayton, said he works two jobs to keep his household that includes small children intact. He said he didn’t believe the utility had made a good enough case for a rate change.

“My experience overall has been great,” he said “My only complaint is the justification of the rate going up.”

During evening testimony, single mother of two Clair Thompson, 42, of Dayton, asked the utility to look more deeply at possible cuts before reqesting higher contributions from ratepayers. “I’m seeing dollar signs I don’t have,” she said.

Sanford Holmes, 59, of Dayton, a volunteer community advocate for AARP Ohio, said residents in his age group can’t afford increases in utility bills. “Too many people are struggling with their health care costs,” he said. “They find themselves either unemployed or with their hours cut back.”

The Dayton Art Institute’s executive director, Michael R. Roediger, praised the utility for its steadfast support of the arts through the DP&L Foundation even during tough economic times. A similar endorsement came from Ted Bucaro, government relations director at the University of Dayton.

The utility and foundation, which provides $1 million to the community annually, are financially separate, said DP&L spokeswoman Lesley Sprigg. Ratepayers do not bear any costs of foundation activities.

Sprigg said before the hearing that DP&L has worked to reach a settlement on the rate changes since March with the PUCO and the more than 25 intervening parties.

“We are facing the same challenge as other utilities in Ohio — lower energy prices coupled with an increase in customers switching” energy providers. “This significantly affects the company’s ability to attract capital and maintain financial integrity during the transition to a competitive market.”

She said a drop in energy prices since 2008 has significantly reduced company earnings and an increase in customers switching from the utility to other suppliers causes a revenue decline, but the utility still has fixed costs to meet required generation availability, reliability and service levels. Other anticpated costs will be in the required legal separation of generating plants from the utility.

“DP&L is seeking an orderly transition to a competitive market to ensure its future financial viability,” Sprigg said. The rate change, known as a service stability rider, “is critical because it will maintain DP&L’s financial health which will enable DP&L to meet its obligations to satisfy the electricity demands —availability, reliability and service levels — for all in the region.”

Today, with market-based service, customers are free to choose among utilities providing electricity. Ratepayers will continue to pay a portion of their bills to use the delivery system provided by DP&L.

The company said in filings that the charge would generate $600 million over five years, or $120 million annually.

It’s unavoidable by customers, regardless of whether they’ve signed up with a competing electricity provider. If approved, it would be effective through December 2017.

Even with the charge, DP&L said, other parts of the rates would decrease. Residential customers using more than a household average would see a decrease. Commercial and industrial customers who remain with DP&L as their electricity supplier should see a decrease of 2 percent to 6 percent.

The Consumers’ Counsel has said the office doesn’t consider the charge reasonable because it allows utilities to insulate themselves from competition.

On Nov. 1, DPL’s parent company and acquirer AES Corp. said in a filing with the Securities and Exchange Commission that it would take a write-off on the value of its DPL assets in the range of $1.7 to $2 billion.

  • To file an online public comment about the case, consumers can visit PUCO’s website Docketing Information System located at http://dis.puc.state.oh.us/. Type in case number 12-0426 in the upper right-hand corner to access the case docket.
  • The Ohio Consumers’ Counsel has put together a chart to show the various electric service offers being made to DP&L customers: http://pickocc.org/electric/choice.shtml

 
 

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