(Richmond, IN)--The Wayne County Area Chamber of Commerce issued a position statement Monday on RP&L rates. The chamber said that the volatility of rates "makes budgeting virtually impossible and causes costs to be very unpredictable." The Chamber is calling on the board and new GM Randy Baker to find ways to smooth out rates and reduce fluctuation. The RP&L Board did not discuss the Chamber’s statement at its meeting Monday night. Following is the statement in its entirety.
Wayne County Area Chamber of Commerce Position Statement
The cost of electricity provided by RP&L has too much variability and makes it very difficult for businesses and enterprises in Richmond to effectively manage utility costs.
The ECA (Energy Cost Adjustment) component of the electricity cost causes the overall price of electricity for RP&L customers to swing wildly, causing many issues for Richmond businesses. Many of the Chamber’s constituents have electricity invoices changing by tens of thousands of dollars each month, a significant percentage of utility cost for even the largest customers. This makes budgeting virtually impossible and causes costs to be very unpredictable. The large changes in the ECA will also affect the ability of the community to attract new businesses. The Chamber was under the impression that one of the most compelling reasons to eliminate power generation by RP&L was to smooth out the ECA swings; this does not appear to be the case.
There are viable solutions to smooth out the short term effects of the ECA, which need to be explored by RP&L. Many of the communities in Indiana have the same issues with the ECA, but have determined solutions to reduce the variability to the final user. Different solutions need to be explored, possibly by gathering information from other fellow IMPA members. One idea that needs to be explored is to put a cap and floor on the short term cost to the user, with RP&L using its balance sheet to cover the highs and lows, with the overall cost to be the same over the long term.
The rate class structure of RP&L rates needs to be evaluated. Currently, RP&L customers can switch rate classes every 12 months at their discretion. This potentially causes amplification in rate swings as users move from more expensive to less expensive rate classes in the short term, only to have the rates swing back quickly with no ability to move for a year. What is the purpose of the four classes? Should the number of classes be reduced? Should standards be set to only allow certain criteria in order to move in/out of a class (demand, peak usage capacity, etc.)?
A 3-5 year strategic plan needs to be created by the RP&L Board. Now that RP&L has significantly shifted its strategy from a producer to distributor of electricity, its overall strategy needs to be updated to assure its competitive position and plan long term. The choice of Randy Baker as General Manager of RP&L was a sound decision by the RP&L Board. Randy is a life-long resident of Richmond and we believe he has the best long-term interests of the community at heart. Randy is bright, knowledgeable about his industry and has a lot of experience with different facets of the RP&L operation. The Chamber has been impressed with his willingness to work with other community stakeholders to find mutually beneficial solutions, and has the potential to serve as an excellent ambassador for our community. Choosing Randy to lead RP&L is strongly supported by the Chamber and we look forward to working with him.
In summary, RP&L has to re-evaluate its position now that it has changed from a generating utility to one of distribution only. This will take significant leadership from its Board and its new General Manager, Randy Baker. The industries and large businesses in Richmond simply will not be able to accept large swings in its power costs long term, and RP&L has the ability to smooth out those swings with careful planning and execution. The Chamber looks toward the Board to provide this leadership and vision in order to assure long-term success of RP&L, and ultimately the competitiveness of the community as a whole.