Wednesday, July 21, 1999
Hamilton splitting utilities into four
Electric service faces big debt
BY JANICE MORSE
The Cincinnati Enquirer
HAMILTON — Faced with a $200 million debt for its electric system, the city is changing the way it does business — partly to ensure its utilities stay solvent, Mayor Tom Nye said Tuesday.
“We're trying to run more like a business,” he said. “And as far as the utilities are concerned, it's simply that times are changing, markets are changing (and) if we were to continue on the same course that we are right now, we'd be in trouble a few years down the road.”
At a special meeting Monday, city council approved a reorganization plan that is designed to streamline city operations and save money.
The plan, which will take several months to implement, will split the Department of Public Utilities into four separate departments — electricity, water, sewer and gas — and each will be required to generate enough money to support itself, City Manager Steve Sorrell said.
While the overall health of the other three utilities is good, officials say they're concerned about the electric utility.
“There's a song that says, "You've got to know when to hold 'em, know when to fold 'em' — and we didn't know when to fold 'em,” said Councilman George McNally. “We're a quarter of a billion dollars in debt on our electric utility — and we couldn't give that utility away because no one would take it, with that kind of debt hanging on it.”
Much of the $200 million debt stems from the $180 million purchase of a hydroelectric power plant on the Ohio River near Greenup, Ky., in the mid-1980s, Mr. Sorrell said. Once that debt is retired in 2020, “that'll be free power,” he said.
The problem is making changes in the meantime to ensure the utility will remain viable.
The utility also faces rising costs of environmental regulations, which Mr. Nye protested before Congress last month.
Then there are the unknown consequences of deregulation. Approved by Ohio lawmakers last month, the plan for deregulating the state's $10 billion-a-year electric industry is designed to decrease customers' bills and allow electric companies to compete for customers beginning in 2001.
Hamilton is one of about 85 Ohio communities that run their own electric systems. These smaller systems worry about their ability to compete with larger, private companies, like Cinergy Corp. Hamilton's system serves 24,000 business and residential customers, mostly in the city limits.
Although city council last year approved electric rate increases totaling 4 percent, officials said customers still enjoy some of the lowest rates in the Tristate.
“We hope to remain competitive,” Mr. Sorrell said.
For customers, the bottom line is that they need not worry about getting electricity.
“It just may be that the methodology will be different,” Mr. Sorrell said. “It's uncertain as far as the city's participation.”
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