Galion in compliance with electric rate procedure

I was amazed to read the recent opinion column by Roberta Wade. I was amazed because Mrs. Wade was at the same Financial Planning & Supervision Commission meeting that I attended and we apparently didn’t hear the same answers given by members of this Commission or by officials at earlier meetings.

There has not been an overcharge of the citizens of Galion. The city has been in compliance with the ordinance and has charged the rates set by council and earlier administrations. From the meeting of the Financial Planning & Supervision Commission held Thursday, July 16, 2015 Belinda Miller, the state auditor’s representative, is quoted in the Galion Inquirer of July 18, 2015 as saying “In our evaluation, the city followed the procedure and the PCA was evaluated and applied properly.”

At this same meeting, when asked about the audit of the electric fund, Ms. Miller said that the electric fund is audited as part of the annual financial audit. This was also stated in the Inquirer on July 18, 2015. These audits are available online through the state auditor website.

So, according to the representative of the State of Ohio, the rates have been calculated correctly and the audits have been done. The cost of the oversight the City of Galion is paying each year is now $35,000 and the cost of the annual mandatory audit is another $25,000. Why should the City of Galion pay for yet another audit?

Mrs. Wade wonders how the fund grew to the current $6,600,000 amount. She apparently doesn’t remember that the state auditors have recommended that the fund balance for the electric fund be maintained between three and six months of operating costs. Given the costs so far this year, the range of the fund balance would be $3,457,000 and $6,915,000. This balance is intended to allow the city to withstand the impact of unexpected costs, ranging from blown transformers to larger disasters. It also allows for the modernization and updates needed for the system that serves our city. The fund is not a result of overcharging or miscalculation but rather a part of a plan to maintain the fiscal stability of the city. Take $4,000,000 from this fund, as suggested by Mrs. Wade, and the City is below the minimum established by the State of Ohio. Any amount taken from fund places the City below the minimum within the five year forecast and undermines the recovery plan.

The city council has passed a comprehensive rate structure, the first in over twenty years. Council tackled this complex issue and worked very hard to develop a rate structure that would ensure financial stability and a competitive environment for industry. This electric rate study was done as well as a review of the rate structure for water and sewer. Water and sewer rates were lowered at the beginning of this year. The entire rate structure of all city enterprise funds was evaluated to lessen any needed rate increase.

Mrs. Wade is correct, the percentages she used are correct. Percentages are wonderful, but you don’t spend or save percentages, you use dollars. The dollar increase for the 500 kWh user is roughly $4 and the increase for the 700 kWh user is roughly $7. When combined with the lower water and sewer bill, the 500 kWh user will see an overall $1 increase and the 700 kWh user less than $3.

The accusation was made that the new rates are “teaser rates.” The rate study looked out five years and developed rates to be used over time. The City has shared these projections and will use them. Any estimate beyond five years is at best a guess. The City is bound by the new PCA ordinance to review costs and report back to council for any change.

The reliability of the City system has been questioned. I cannot speak to brief outages, but I will gladly compare the Galion Electric Department’s service to avoid long-lasting outages. Efforts have been made to reduce these short duration outages by rerouting lines servicing industrial customers on Portland Way and on South Street and reducing residential outages by an aggressive tree trimming program.

No one likes paying utility bills. But rate payers were not overcharged. Audits were and will continue to be done. The interests of all utility customers will be considered. Mrs. Wade and the proponents of this outlandish and counterproductive initiative have refused to accept the facts given them by the city and the statements by representatives of the State of Ohio.

By Brian Treisch

Galion Auditor


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