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Cleveland Public Power To Study Infrastructure Before Changing Rates

Cleveland Public Power isn’t raising its rates — yet, officials say.

The heads of Mayor Frank Jackson’s public utilities department on Tuesday briefed city council members on a scathing consultant review of CPP’s operations, a discussion that kicked off a series of hearings on the electric service.

CPP won’t change electric rates until a pair of consultants’ reports on the municipal utility’s infrastructure and pricing are complete, officials told city council Tuesday. There was no clarity on exactly when rate adjustments could come, or whether the utility would seek to increase customers’ prices.

“CPP is at a crossroad,” Public Utilities Director Robert Davis said. “The next two years are very, very critical, and in order to be a viable, reliable, sustainable and competitive utility, we know that there is a sense of urgency.”

The initial report, prepared by NewGen Strategies and Solutions, found CPP “mired in systemic, performance and financial issues.” Although an unredacted version proposed a rate increase, Davis characterized those findings as incomplete and confidential.

Before NewGen can complete a full study of rates, a different consultant must first finish examining CPP’s facilities, Davis said. The administration wants to demonstrate that it has reduced expenses, increased revenue and dealt with maintenance issues before asking council for a rate change, he said.

“We have to show that we’ve done everything in our power to operate and maintain this utility,” he said. “This is an asset that is worth preserving.”

The NewGen report also concluded that CPP made short-term fixes that failed to solve long-term problems, which Davis echoed in his remarks Tuesday. CPP is doing what is has to do in order to keep its system running, he said, but maintenance alone is not a long-term strategy.

“It is no secret that our system is aging,” he said. “Our system is in need, and that’s why we’re doing this condition assessment.”

The Jackson administration wasn’t confident in the estimated cost of infrastructure improvements provided by NewGen, Deputy Public Utilities Director Martin Keane said. The upcoming facilities report, which could take 12 to 18 months to complete, will inform NewGen’s final rate study, he said.

The city would not ask for rate adjustments until the facilities review is complete, Davis said. But he stopped short of nailing down a specific date for a possible request, saying city officials don’t know what the study will find.

“There’s a rumor out there that CPP is raising the rates,” Public Utilities Committee Chairman Brian Kazy (Ward 16) said. “And I can emphatically say, as I’m sitting here right now, that rates will not increase at all in 2020 or 2021, just because we won’t have enough information to even consider it.”

“I have no comment to that, Mr. Chairman,” Davis replied, laughing. “You’ve been clear.”

The administration provided council with redacted versions of the NewGen report, which obscure consultant estimates of revenues under new rates, photographs of some CPP equipment and “tactical plan recommendations.”

At the hearing, council members requested unredacted versions — which some news outlets, including ideastream, have already obtained.

Subsequent hearings will examine CPP’s history, finances, customer service, purchase power, operations and capital projects, Kazy said.

In addition to discussion solutions to CPP’s issues, Councilman Kerry McCormack (Ward 3) said he wanted to examine how those problems developed.

“I understand that we want to look forward, and I support that,” he said. “But I do think it’s important to understand, in order to move forward, in order to improve this system, we understand why it was allowed to get like this in the first place.”

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