Explanation
BACKGROUND
This ordinance authorizes an increase in electric rates effective January 1, 2026 for the Division of Power and amends Chapter 1163 of the Columbus City Codes, 1959. This ordinance also establishes a new cogeneration rate that will be charged to the City's Wastewater Treatment Plants to fully recover the Division's cost of service once cogeneration facilities are operational.
The Division of Power provides electricity services to approximately 19,000 customers, and maintains approximately 60,000 street lights throughout the City. The Division of Power purchases wholesale power for its customers; the Division does not generate any electricity. The Division of Power’s closest local competitor is American Electric Power (AEP).
Since 2024, the Division of Power had not raised rates for the majority of their customers for over ten years. In 2024, the Department of Public Utilities conducted a financial study that included a revenue needs assessment, a rate competitiveness assessment, cash reserve level evaluation, and a capital investment needs analysis. The study found that existing revenues are not sufficient to fund future costs. The adjustments in rates are from the study's findings and result in electric service rate increases across all residential and commercial customer classes. The ordinance makes adjustments to monthly service charges, and monthly energy and demand charges. Such changes to customer classes will allow the Division of Power to remain competitive with other public and private utilities and provide the additional revenue to invest in its infrastructure. In 2024, the Department of Public Utilities and City Council felt that to relieve rate increase pressure on residents and businesses that residential rates could be phased in over 5 years and commercial rate increases could be phased in over 3 years. Year 2 of this plan will begin in 2026.
For residential customers, in 2026, depending on rate class, they will see a new monthly bill increase between $7 - $11 per month, or roughly $81 - $126 per year. For small to mid-size commercial class customers, depending on rate class, they will see a new monthly bill increase estimated between $9 - $143 per month, or roughly $104 - $1,718 per year. Large commercial customers, depending on rate class, will see a new monthly bill increase between $1,330 - $7,956 per month or between $15,962 - $85,474 per year. Very large commercial customers, such as the City's water and wastewater treatment plants, will see a new monthly bill increase of $37,258 per month or $447,099 per year.
The ordinance also creates a new cogeneration rate. The current 23PP rate was not designed for cogeneration sites and will not adequately recover DOP's costs once the cogeneration facilities are operational. Cogeneration is the process of turning biogas, a by-product of the wastewater treatment plant, into useable energy at the Plant. The plant expects close to 50% of its current energy needs will be supplied by the cogeneration engine. The Division of Water Reclamation (DOWR) will still rely on DOP's distribution grid if the cogeneration systems are down for maintenance or fail. DOP must reserve the distribution lines for DOWR and cannot add more customers to those lines. Therefore, it is recommended that DOWR should continue to pay an amount for distribution service (i.e. the costs to administer, operate, and maintain this distribution grid service). If DOWR were to stay under the K23PP rate and cogeneration is down and power is needed, DOWR would pay significantly less for distribution service and thus DOP would not recovery its cost of service.
The proposed rate configuration for 2026 recognizes that power charges disproportionately affect lower income groups. The Department of Public Utilities will continue the Power Low Income Discount Program that discounts participant's power consumption charges. The Department is also rename the program the income-qualified discount program. At its October 29, 2025 Utility Advisory Board meeting, the board recommended an increase to the power discount from 25% to 30%. The Department of Public Utilities will also continue the power Senior Customer Discount that waives the monthly service billing charges.
FISCAL IMPACT: The proposed rate adjustments will generate approximately $17 million in additional revenue in FY 2026 for the Division of Power.
Title
To amend Chapter 1163 of the Columbus City Codes to enact new electric service rates for the year beginning January 1, 2026; to authorize the Director of the Department of Public Utilities to increase the power low income discount, to enact a new cogeneration rate, and to repeal the existing sections being amended.
Body
WHEREAS, it is necessary for the Division of Power to update electric rates, effective January 1, 2026; and
WHEREAS, a rate study concluded that the City is not competitive with other utilities in regard to its service charge, energy charge, and demand changes, and that additional capital investments are needed at the Division; and
WHEREAS, the adjustments to the Division of Power's customer rates and charges will result in additional revenue to support capital investments; and
WHEREAS, a new cogeneration rate is needed to charge the City's wastewater treatment facilities for the potential losses from cogeneration facilities that turn biogas into energy; and
WHEREAS, increased power rates disproportionately impact low income residents, including senior citizens. Low income residents already pay a higher percentage of their household income in utility bills, and this percentage would increase with higher rates; and
WHEREAS, past rate increases in the City have demonstrated that increasing rates leads to increased delinquencies among the City's customers; delinquency rates are higher among low income residents. It is well recognized that increased delinquencies are expensive for the City and its customers; and
WHEREAS, adopting a discounted rate for low income users is a recognized method for helping to alleviate the impacts of increased utility rates; and
WHEREAS, it is appropriate to increase the current discount rate for Division of Power low income residential customers from 25% to 30% to assist those least able to manage the impacts of increased electric rates; and
WHEREAS, the Division of Power is planning to periodically evaluate the need for rate increases going forward; and
WHEREAS, it has become necessary in the usual daily operation of the Department of Public Utilities to amend Sections 1163.01, 1163.04, 1163.05, 1163.06, 1163.065, 1163.07, 1163.075, 1163.077, and enact Section 1163.078 for the public health, safety and welfare; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. City Council finds that the requested changes in power rates and charges are equitable and in accordance with cost of service.
SECTION 2. That effective January 1, 2026, Section 1163.01 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.01.
SECTION 3. That effective January 1, 2026, Section 1163.04 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.04.
SECTION 4. That effective January 1, 2026, Section 1163.05 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.05.
SECTION 5. That effective January 1, 2026, Section 1163.06 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.06.
SECTION 6. That effective January 1, 2026, Section 1163.065 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.065.
SECTION 7. That effective January 1, 2026, Section 1163.07 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.07.
SECTION 8. That effective January 1, 2026, Section 1163.075 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.075.
SECTION 9. That effective January 1, 2026, Section 1163.077 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.077.
SECTION 10. That effective January 1, 2026, Section 1163.078 is hereby created to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.078
SECTION 11. That the existing Sections 1163.01, 1163.04, 1163.05, 1163.06, 1163.065, 1163.07, 1163.075 and 1163.077 are hereby repealed.
SECTION 12. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.