Explanation
BACKGROUND
This ordinance authorizes an increase in electric rates effective January 1, 2027 for the Division of Power and amends Chapter 1163 of the Columbus City Codes, 1959.
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.
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 3 of this plan will begin in 2027; however due to commercial rates exceeding its local competitor, only residential rates will be increased for 2027. For residential customers, in 2027, depending on rate class, they will see a new monthly bill increase between $7.86 - $11.90 per month, or roughly $94.32 - $142.80 per year.
The proposed rate configuration for 2027 recognizes that power charges disproportionately affect lower income groups. Columbus Water and Power will continue the Power Income Qualified Program that discounts participant's power consumption charges. At its October 21, 2027 Utility Advisory Board meeting, the board recommended an increase to the power discount from 30% to 35%. Columbus Water and Power will also continue the power Senior Customer Discount that waives the monthly service billing charges. The income qualified program is also being amended to allow for automatic enrollment.
FISCAL IMPACT: The proposed rate adjustments will generate approximately $2 million in additional revenue in FY 2027 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, 2027; to authorize the Director of Columbus Water and Power to expand eligibility for income-qualified and eligible senior customer discount programs; 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, 2027; 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, 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 income qualified 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 income qualified residential customers from 30% to 35% 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 Columbus Water and Power to amend Sections 1163.04 and 1163.05 for the public health, safety and welfare; NOW, THEREFORE,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That 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, 2027, Section 1163.04 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.04.
SECTION 3. That effective January 1, 2027, Section 1163.05 is hereby amended to read as follows:
SEE ATTACHMENT 1 - SECTION 1163.05.
SECTION 4. That the existing Sections 1163.04 and 1163.05, are hereby repealed, effective January 1, 2027.
SECTION 5. That this ordinance shall take effect and be in force from and after the earliest period allowed by law.