Hamilton considers utility rate changes starting April 1

City staff proposes a decrease in electric rates, increase in natural gas rates.

Hamilton gas and electric customers could see some changes to their bills on April 1, if City Council approves of some proposed rate changes.

City staff is recommending a one-year rate reduction for electric service and a five-year rate increase for natural gas. The recommendations follow a cost-of-service study for each utility. Edwin Porter, Hamilton’s executive director of Infrastructure, said the changes “would contribute to reliability, safety and financial health of these essential utilities for the Hamilton community.”

Council will entertain the request at its March 13 and 27 meetings, with a vote on the measure on March 27. The legislation has been requested by staff to be enacted as an emergency, so rates could go into effect five days later.

Porter said there are several utility rate class types for natural gas and electric, and as they adjust rates toward the cost of service study results, each class will be adjusted differently.

The one-year electric rate plan would be a 3.7% decrease on average across the system. The five-year rate plan will see increases every April 1 starting this year and running through 2028. The annual rate increases are averages across the system, and are, respectively, 5.5%, 3.6%, 3.5%, 3.4%, and 3.3%.

“With both of these plans, we will continually monitor them, comparing actual results to our projections,” said Christine Carr, Hamilton’s director of Business Services. “Everything we know right now, all the information that we have, we don’t feel like we’ll need to make any changes to these plans through 2028. However, it is something we will monitor very closely.”

Carr said everyone uses energy differently, but the average consumption for a residential user is 56 cubic feet of natural gas a month and 750 kWh a month. This average user would see a decrease of $5.64 a month in 2024 for electric and an increase of $3.11 in natural gas. Combined, the net is a $ 2.53-a-month decrease for 2024.

However, the rate increases for this hypothetical average user would see a $7.19 a month increase through the end of the five-year natural gas rate plan, barring any additional changes to the system.

Carr could not provide a monthly estimated impact for commercial customers given the variability of the usage among the city’s business customers. She said, though, they do have a Key Accounts Program that includes the city’s top 25 utility users and would communicate the rate impacts individually. Carr also invites other business customers to call the city with specific questions.

Rate plans are based on numerous factors, including increased operating and maintenance of the two systems and capital projects designed to improve the system. Porter said increased costs on the city’s end are not automatically passed on to the consumer.

“When we see increased costs in our system, we try to do everything we can to try to absorb those increases,” he said, adding they work to proactively maintain equipment and train staff to execute maintenance projects to reduce the need to contract large projects.

These rate adjustments are necessary in large part to inflation, officials said. Items required to maintain the systems, such as costs of materials, supplies and the city’s labor, have increased. If approved, the proposed natural gas base rate increases would be the first since December 2018.

Porter said inflation, coupled with no base rate adjustments over the past several years, has degraded the city’s availability for capital investment. In 2019, the city had budgeted nearly $2.2 million to invest into the system. But for 2024, that amount is approximately $250,000.

Having warmer winters also doesn’t help, noting the city saw “abnormally low usage” in the winter of 2023 that resulted in lower-than-anticipated revenues.

The last electric rate adjustment was in February 2023, which was the end of a five-year rate plan. The reason for the new one-year decrease is for a number of factors, including the electric rate fund performed more favorably than anticipated, lower-than-expected transportation costs, reimbursed grant funds, and system load growth from large users like 80 Acres Farms, Arthur Data Mining and Saica.

Hamilton is the only municipality in Ohio that manages and operates all four major utilities ― water, wastewater, natural gas and electric. City Council in 2022 approved five-year rate increases for water and wastewater that started in January 2023.

About the Author