Colerain profitted by padding residents' electric bills; Is it an illegal tax, a fee, or donation?

Colerain Township padded residents' electrical bills to get a "civic grant" from energy supplier.Photo byColerain Talks, February 2024

Article Summary:

Colerain Township had an "adder" put on their electrical aggregation contract with Dynegy from 2020 - 2023 that increased residents' bills in order to get a "civic grant" kickback of up to $200K over 3 years while citizens struggled to pay utility costs.

From May 2020 through May 2023, Colerain Township padded their residents’ electric bills every month to profit from their residents’ energy usage. Residents are unclear if the money buried in their electric rate charge is an illegal tax, a service fee, or just a donation to the township without their consent. The extra charges amounted to an estimated $70K per year and $200K over the 3-year contract term, however, the township administration failed to return multiple calls to confirm these estimates.

The township calls it a “civic grant.”

The extra charge was put into the electrical aggregation contract with Dynegy Energy Services (East) LLC, DESE, on January 18, 2018. “Attachment C” is a unique rider within the Amendment to the Master Agreement to Provide Electric Generation Supply and Related Services between Colerain Township and DESE. It specifies that Colerain residents will have an “adder” of .0005/kWh to the best bid rate. That money goes to the township. The adder is labeled, “CIVIC GRANT”. It provides that the DESE will “remit payment to Colerain Township” quarterly based on, and paid for by, Colerain residents who participate in the township’s electric aggregation plan.

"Attachment C" of Colerain's electrical aggregation contract that upcharges resident consumers in order to profit off their electric usagePhoto byThe Cincinnati Post, February 2024

Up to 20K residences were paying into the fund without their knowledge.

One resident, who chooses to remain anonymous for fear of reprisals by government officials, discovered the “adder” and brought it to the attention of a group called the Council of Neighborhoods, (CCN) to figure it out.

CCN seeks to improve the township by summarizing the township’s agenda, achievements, and issues through a newsletter jointly created by their membership of neighborhood representatives and nonprofits that serve the community. Their first newsletter was confiscated by the township.

Neither Lawrence Greenfield of the Federal Energy Regulatory Commission nor Barbara Brossart, Chief Reliability and Service Analysis at the Public Utilities Commission of Ohio (PUCO), had ever heard of these "civic grants." It was a mystery to them.

However, Energy Alliance, an expert in aggregation management, identified the "civic grants". Rich Surace of Energy Alliance, the broker for Colerain Township and most other jurisdictions across Hamilton County, explained that the practice of having “civic grants” paid to some jurisdictions, recently stopped. He did not know why. While Energy Alliance has no control over the contracts negotiated between suppliers, like Dynegy, and Colerain officials, he was able to confirm that the grant was being paid through the electric rate, by residents, and that the billing does not disclose these “adders” on customers’ bills.

Residents received no additional services from either the township or from Dynegy for the upcharge on their rates. The “civic grants” served only as an inducement paid to jurisdictions to land the contracts with the township. There is no way of knowing how offering these civic grants impacted the rate negotiations for Colerain residents, except that residents were paying an upcharge themselves.

Surace provided a side-by-side comparison of the bills received by Duke customers versus those using the same amount of electricity under the aggregation plan Energy Alliance manages. Surace demonstrated that Colerain residents still saved money using the township aggregation plan despite the upcharge. He explained the difference between getting services directly from a supplier (like Duke), an aggregator (township), and an independent service. He explained that customers are easily confused and gave 3 red flags to alert consumers to independent services that often charge cancellation fees and whose rates are variable:

1) The rates are not locked in for the entire term of the contract;

2) There are cancellation fees if you want to switch to another provider; and

3) Customers need to sign a contract for a specific period of time.

Legitimate aggregators are highly regulated and are not permitted to change the terms of their agreements within the contract period.

Energy Alliance compares billing for energy aggregators versus suppliers. This chart shows the savings by switching to a local aggregator.Photo byCourtesy of Energy Alliance, February 2024

PUCO provides an “apples to apples” comparison chart for independent suppliers, but PUCO does not include aggregation rates in their chart so customers can compare their aggregation deals with competitors. Customers tempted by low introductory rates of independent suppliers must be keen to read the fine print.

There are no red flags or fine print to alert residents if their jurisdiction is giving residents the best rate possible on their electric bills or upcharging them, and there is no law that requires Colerain Township to disclose “adder” fees now, then, or in the future.

The only red flag available to residents is groups of concerned citizens like the Council of Neighborhoods to keep residents informed – if Colerain Township lets them.