Duke: Requests for rate increases not linked to streetcar

Opponents say provision gives too much leeway

CINCINNATI - Duke Energy’s request to increase local electric and gas rates has nothing to do with Cincinnati’s streetcar project, company officials insist.

Despite recent statements from anti-streetcar groups, Duke officials said the rate hikes they want are to help recoup improvements made to the system in recent years.

“The streetcar is really a non-factor in these rate increases,” said Blair Schroeder, a Duke spokesman.

“A rate request looks backward in time,” he added. “The money we’re seeking is for improvements that already have been done … that’s how the rate increase approval process works in Ohio.”

Duke is asking the Public Utilities Commission of Ohio (PUCO) for an electric rate increase that amounts to about 7 percent for most residential customers, along with a natural gas rate increase of about 9 percent.

PUCO likely will make a decision in late March or early April.

Some streetcar opponents – including the Coalition Opposed to Additional Spending and Taxes (COAST) – are urging people to opposed the rate increases, calling it “a streetcar tax.”

Schroeder noted the only aspect of Duke’s pending rate hikes that involve the streetcar is a provision sought by Duke, not city officials.

The provision would allow Cincinnati officials to impose a tariff on city residents and business owners to recoup the cost for relocating utilities along the streetcar route.

Duke and the city are in a legal battle about who should pay the relocation costs.

The city is willing to pay $6 million to relocate Duke’s utility lines, but Duke insists it will cost at least $18.7 million and possibly more.

City officials call that estimate inflated, and think it includes improvements not related to the project.

Earlier this month, Duke and the city reached a deal to move forward with the project while a court decides the dispute.

The two sides have agreed to seek a declaratory judgment in Hamilton County Common Pleas Court, and agreed to abide by the ruling after any appeals are exhausted.

Mayor Mark Mallory wants the $125 million streetcar system completed and operational by the time Cincinnati hosts the All-Star Game in July 2015.

Schroeder said the tariff was sought to limit liability for the relocation costs. He is “mystified” that groups like COAST would oppose the provision, because it seeks to contain the project’s cost to the jurisdiction pushing it.

“We don’t feel this cost should be borne by all the ratepayers in Southwest Ohio,” Schroeder said.

Even if PUCO approves the provision, it can only be used upon action by Cincinnati City Council.

“It provides a framework that could be used for the streetcar, but it is not automatically applied to it,” Schroeder said.

But COAST opposes the provision because it would create a “hidden tax,” the group alleges, and allow elected officials to shift the cost of economic development projects onto electric bills rather than being paid for with tax receipts.

Also, COAST said the provision blurs the line between government and utilities, which creates an incentive for “irresponsible and unaccountable votes” by elected officials.

“It’s the first time something like this has been asked for in the state of Ohio,” said Tom Brinkman Jr. of Mount Lookout, a COAST leader. “This would be a dangerous precedent for badly run, poorly governed entities in Ohio as a way to get revenue.”

If the provision is approved, COAST envisions every cash-strapped local government will allege a growing list of purposes qualify as economic development, so they can generate money.

“Now that the Pandora’s Box is open with the streetcar, they can go ahead and do it,” Brinkman said. “So, whether it’s City Council or Duke that decides, I don’t want it to happen regardless.”

PUCO will hold four public hearings this month on Duke’s rate requests.

They are Feb. 19 in Fairfield Township, Butler County; Feb. 20 in Union Township, Clermont County; Feb. 25 in Middletown; and Feb. 28 in downtown Cincinnati.

The Ohio Consumers' Counsel also opposes the tariff provision sought by Duke.

“Utility company (rate increases) should not be used as a means for governmental entities to fund public works projects, as governmental bodies have other means for paying the costs of relocating facilities,” the counsel’s objection states.

Additionally, the OCC dislikes a little-known provision that also allows Duke to cover the cost of “uncollectible bills” – those bills not paid by a customer – by spreading the cost throughout an entire region.

Streetcar opponents have been defeated twice in their attempts to stop the project at the ballot box.

In November 2011, Cincinnati voters rejected a charter amendment that would’ve prohibited city officials from spending money on anything related to preparing any type of passenger rail transit through 2020. It was rejected 52-48 percent.

In November 2009, voters rejected a charter amendment that would’ve required a public vote before taxpayer money was used for any rail-related project within Cincinnati. It was rejected 56-44 percent.

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