Perhaps something good can come from Monday’s meeting of the Danville Utilities Commission, when more than 100 power customers — large and small — spoke out in frustration over high bills from the January cold snap and the high rates the city-owned provider charges its customers.
And perhaps this episode will prompt Danville’s elected leaders to study the fundamental question of whether, in 2018, a municipality should be in the electrical business at all.
It was heart-wrenching both to view the video of customers telling utilities commission members of bills that reached into the high triple digits, much less read coverage of the meeting and public comments in the Register & Bee. People are hurting, and city leaders must figure out a way to address both the short-term problem of customers’ high bills and the long-term structural problems centered around high rates.
Sheila Baynes, a Danville resident who’s running for City Council in the May elections, told utilities commission members of two women, two mothers, she knows personally who have had to face almost impossible choices after getting their power bills. One, a young mother who’s going to college and raising two children, saw her bill jump more than $120. Another had a one-month bill of $880, leaving her with just $70 for gas to get to work and groceries for the entire month. Paying the electric bill or buying food for your children should never be a choice society should force a working parent to make.
Resident Shirley Cook told the commission members of her $768 bill, adding that over the course of four months, she’s paid more than $2,000 in utilities bills. “I’ve heard so many people say they’re ready to move out of the city,” she said. “It’s a crying shame.”
We would interject here that high power rates also drive away industrial prospects, too, both existing business residents and new companies considering the region for expansion.
As we have noted on this page before, Danville Utilities has the highest rates of all 14 municipally owned power companies in Virginia and the second-highest of all utilities in the commonwealth — $142 per 1,000 kilowatt hours. The utility serves customers in Danville, the southern half of Pittsylvania County and small portions of Halifax and Henry counties.
How Danville Utilities got into this predicament essentially boils down to an issue of bad timing.
In 2006 and 2007, the national economy was hitting on all cylinders and then some. The price of a barrel of oil was at an all-time high. Gasoline prices were more than $2 higher per gallon than now. Most experts looked at electricity costs and projected even higher rates in the coming years. Danville Utilities entered into a long-term contract with American Municipal Power-Ohio, a producer that sells electricity to many municipal utilities in the Midwest and Mid-Atlantic. The aim was to lock in at a rate which, at the time, looked reasonable compared to projections.
But it was a gamble that didn’t pay off. The Great Recession and the financial meltdown of August and September 2008 hit. The national economy screeched to a halt, shedding jobs by the millions, which had the ripple effect of ratcheting back demand for electricity, driving down the price of power.
But Danville Utilities had that brand-new, long-term contract with AMP-Ohio, based on pre-recession rates. When you factor in American Electric Power’s raising power delivery charges by 30 percent in 2017 and again this year, the rate picture comes into sharp focus for Danville Utilities customers.
At Monday’s commission meeting, many people suggested the city undertake an audit of the utilities department to determine proper staffing levels and whether there’s any fiscal fat that could be trimmed to save costs.
That’s a good jumping off point, we would suggest, to a discussion of a much more fundamental question for city leaders: Should the city still be in the power reselling business at all?
Municipal power companies, like rural electric co-operatives, date to the 1930s, when electricity was unavailable in much of America outside major metropolitan areas. As part of greater efforts to pull the nation out of the Great Depression, the federal government helped set up these entities to electrify small cities and vast rural regions. Is a municipal power company still needed in 2018? Would a sale of Danville Utilities’ distribution network to a publicly held company like Dominion Virginia Power or Appalachian Power Co. be in customers’ best long-term interests? What advantages are there to still maintaining a municipal power company; what can a municipality accomplish through its own power company that, perhaps, we’re not doing now?
It’s time to ask hard questions, Danville.