Electric concerns spark trip

Painesville city leaders recently joined representatives from American Municipal Power, the wholesale power supplier that Painesville buys its electricity through, in Washington D.C. to participate in the American Public Power Association Legislative Rally.

City Manager Monica Irelan Dupee, Council President Paul Hach, and AMP representatives met with lawmakers including Sens. Rob Portman and Sherrod Brown, as well as Rep. David Joyce, R-14, in an effort to free up related bond repayments that are tied up in prolonged sequestration.

Originally, AMP Ohio took advantage of Build America Bonds which were part of the Obama Administration’s American Recovery and Reinvestment Act. This featured taxable municipal bonds with tax credits and/or federal subsidies for bondholders.

These bonds were then used by AMP Ohio to build hydroelectric plants along the Ohio River, according to Dupee.

However, tax credits promised to bond holders, including AMP customers like Painesville Municipal Electric, have been sequestered following the Budget Control Act of 2011. Originally, slated to end in 2021, the sequestration has since been extended four times and now stretches until 2027.

Dupee said the sequestration played a direct factor in increasing electric costs.

She said that the withheld tax credits have resulted in a $594,869 loss for electric customers through 2018. This total is slated to reach $1.3 million in losses for the city by the end of the sequestration in 2027.

These numbers reflect larger AMP figures that show participating AMP communities have lost out on $31 million to date in withheld bond repayments due to the ongoing sequestration.

“It was important for

lawmakers to speak with the public power communities they represent and understand the challenges we face,” Dupee said of the trip.

Dupee also expressed concerns with PJM Interconnection, the city’s regional transmission organization which is responsible for carrying the electricity that they have purchased. She explained, unlike PJM’s baseline projects which have oversight and are deemed necessary for reliability, there were $4 billion in self-designated baseline projects and $9.8 billion in supplemental projects which require no oversight or transparency.

Because PJM projects all promise an 8 percent to 12 percent return investment,

Dupee and others have urged the Federal Energy Regulation Commission to review their return on equity rates because, according to Dupee, “we believe the current rate of return encourages transmission owners to overbuild the system in order to receive the promised, above market, return.”

“The effect of transmission projects has contributed to the increase in electric costs for our customers,” she added. “In 2013, our transmission cost was 5.2 percent of our energy bill.”

By 2018 that number has ballooned to 15.7 percent of a customer’s electric costs. Dupee stated this figure will continue to increase without

action.

Painesville’s city manager has received pressure in the past from neighboring Painesville Township, also customers of Painesville Municipal Electric, for increased rates of service.

Dupee spoke on the 15 percent rate discrepancy for “outside customers” in a recent statement.

“Our outside customers feel this to be unfair; therefore, we will be analyzing this concern as well,” she said.

Painesville has stated they will not be considering rate changes until a 2020 restructuring process at the earliest, but their D.C. efforts could pose an alternative method to alleviate customer costs if successful.