Electric rate study recommends no increases


PIQUA — A rate study recently conducted by Sawvel and Associates, Inc. on behalf of the city of Piqua has recommended no rate increases to the electric rates for the Piqua Power System at this time, finding existing rates should be “sufficient” through the end of 2023.

“We do not see a need to adjust electric rates at this time. We recommend the city continue to monitor rate revenue adequacy to determine if a rate adjustment is needed prior to 2024,” Sawvel and Associates, Inc. wrote at the end of its report.

The study concluded existing rates “are sufficient to maintain the minimum fund balance guideline through 2023” and “are not substantially out of line with cost of service.”

The study looked at existing rates and the city’s budget to see if the current rate structure would be able to keep the Piqua Power System’s budget above its minimum fund balance guidelines, which the report stated the city follows in order “to be financially stable,” as well as “flexible to use funds as capital improvements and power supply costs change.” The fund balance guidelines include a contingency for a number of items, such as operating expenses, unplanned capital expenditures, an emergency fund, and more.

For this study, the Piqua Power System provided Sawvel and Associates, Inc. with billing data from 2018 and 2019, as well as the rate schedules, 2019 and 2020 budget information, and other related data. Revenue requirements for the city were projected through 2024 using the 2020 budget and adjusted for “known changes in the future,” and revenues from customer sales were projected through 2024 “based on existing rates and projected energy sales.”

The Piqua Power System’s power supply is the largest expense for the city of Piqua, and the report noted the city “is projected to purchase more than 90 percent of its annual energy requirement through ownership or long-term power purchase agreements in 2020.”

The report notes where the city of Piqua purchases power through its membership in American Municipal Power (AMP), and those include the Prairie State project in Illinois, three of the AMP Hydroelectric projects on the Ohio River, the Meldahl and Greenup Hydroelectric projects on the Ohio River, and the AMP solar projects located in the city.

The study explained AMP’s credit scoring policy “encourages members to prepare a cost of service or revenue requirements study once every five years and implement the recommendations of the study.” The last cost of service study was completed in 2014 and implemented in 2015.

By Sam Wildow

Miami Valley Sunday News

Reach the writer at [email protected]. © 2020 Miami Valley Sunday News, all rights reserved.

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