Electricity will almost certainly get more expensive, driven by a host of factors, including government regulations and consumer expectations for reliability, Tom Raga, president and chief executive of Dayton Power & Light, said Thursday.
DP&L today has two proposed rate increases before the Public Utilities Commission of Ohio (PUCO), one for base distribution and another proposed as an electric “security” plan meant to help DP&L deal with unexpected changes in the market.
“We hired an independent firm to project prices into the future,” Raga said in an interview at Cox Media Group Ohio offices. That firm expects higher prices, he said.
President Obama’s administration last August proposed a “clean power plan” to move states away from reliance on coal-fired power generation, which emits more carbon than natural gas electricity generation.
The administration’s plan is meant to cut emissions of carbon dioxide and other “greenhouse gases” by 33 percent below 2005 emission levels by the year 2030. Natural gas releases about half of the carbon that coal does when burning.
On Feb. 9, however, the U.S. Supreme Court stayed implementation of the plan as it undergoes judicial review.
DP&L’s proposed security charge, announced Monday, would increase the bill of an average DP&L residential customer, using using 1,000 kilowatt hours per month, by $1.21. If approved by the PUCO, that increase would start next year.
Another hike was proposed late last year for a higher base distribution rate that would raise the total monthly bill for the average residential customer using 1,000 kilowatt-hours by $4.07. (One kilowatt hour is enough power to watch TV for 10 hours.)
Power utilities are increasingly expected to use an array of fuel sources — including coal, natural gas and alternative sources, like wind and solar. But there’s a price attached to that “diversity,” Raga said.
“There’s a small charge to keep reliability, keep the fuel diversity, since prices won’t be as volatile, it keeps price stability in there,” Raga said.
If the new security charge is approved, and more revenue than expected is made, then that money will be “returned” to customers in the form of lower charges, Raga said.
“The bill would go down,” he said. “And we’re proposing, DP&L is proposing … complete PUCO oversight.”
This week, AARP of Ohio asked the PUCO to reject the newest proposed hike.
Trey Addison, an AARP Ohio government relations spokesman, said AARP represents 1.7 million Ohioans who are 50 and older, including people living on Social Security payments.
Many of those people can’t afford higher utility payments, Addison said. And he contends that the proposed charges as presented aren’t “transparent.”
“They may say, ‘Oh, OK, it’s for overhead. Or OK, it’s for making sure there’s reliability,’” he said. “Well, Ohio doesn’t really have a reliability issue. Ohio doesn’t have a power issue.”
Addison thinks the new DP&L charge is an attempt to match the power-purchase agreements that Ohio utilities American Electric Power and First Energy have struck with PUCO to help operate increasingly expensive coal plants.
“Unfortunately, we have a problem with both of those cases, so we’re going to have a problem with the DP&L case,” Addison said.
DP&L co-owns with other utilities five plants that are coal-fired. About two-third of its power generation is coal-fired and a third is natural gas-generated, Raga said.
“The market controls the price of electricity,” Raga said. “The pressure on coal assets is multi-fold.”
In general, demand for power is slowly increasing, he said. And “external factors” like government regulations are making coal more expensive.
“Those (regulations) could potentially — because they’re not final yet — they could potentially add significant costs to all carbon generation,” Raga said.
Moving away from coal-fired generation can’t be done quickly or cheaply, he said.
“There’s nothing to replace it (coal) today,” he said.
While political leaders have urged using an “all-of-the-above” approach to power generation, Raga said that makes sense for a “transition” away from coal. But in the meantime, power utilities are tasked with ensuring reliability.
DP&L supplies power to 515,000 customers in 24 counties in west central Ohio, including Champaign and parts of Clark counties.
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