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Tuesday, May 20, 2014

Cleveland Public Power Trying Really Hard to Reset Business, Retain Customers

Posted By on Tue, May 20, 2014 at 11:25 AM

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Fresh off the unequivocal endorsement of the Sin Tax, Cleveland City Council has returned to advocating for its citizens and its public utilities. In a boring meeting Monday afternoon, Council’s finance committee approved two ordinances intended to increase Cleveland Public Power’s competitiveness with regional private-sector behemoth FirstEnergy Corp.

Right now, CPP enjoys roughly a 10 percent price advantage over FirstEnergy, though even that may be a generous estimate, if you compare bills as closely as Councilman Brian Cummins did. At any rate, that’s evidently nowhere near competitive enough in a landscape where power supply is becoming more expensive, and the ability to negotiate with major commercial customers is key.

With Council’s thumbs up, CPP will now be allowed to “levelize” something called the energy adjustment cost (EAC), which is dependent on the aggregate price of the power supply.

Garrett Cole, an engineering consultant for CPP from Georgia-based GDS Associates, said stabilization is important because it makes pricing more reliable for consumers. Plus it’s consistent with municipalities around the country. GDS, after six months of concerted, on-the-ground analysis and consumer outreach, determined that the two biggest factors that influence customer decision-making are pricing and reliability. Gotta love consultants.

Councilman Matt Zone, the only real interrogator at Monday’s meeting, verified that consumption was a lot more indicative of people’s energy bills than fluctuations in the EAC. The CPP folks nodded alon—snoooooore. God, this is so boring. Scene goes to these meetings so you guys don’t have to.

Anyway, CPP will also now be able to provide flexible pricing for their biggest clients, presumably so they can offer better deals than competitors and retain what remains of their fickle corporate customer base. Another ordinance will allow CPP to refinance some of their debt obligation. Council Prez Kevin Kelley, after the meeting, said that Cleveland refinances bond issues all the time, so this isn’t really a big deal.

Cleveland Public Power (formerly Muny Light) has squandered valuable resources lately — read the PD's Leila Atassi's terrific primer here — and it’s unclear what effect these new ordinances will have. The city utilities people repeated multiple times that this business reset would hardly be a “panacea” or “silver bullet.”

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