The second meeting of a steering committee that will make recommendations on how best to cost-effectively serve Danville’s electric customers was held Monday in the City Council Chambers on the fourth floor of the Municipal Building.
The meeting was open to the public. It also was taped for later broadcast on River City TV.
At the meeting, City Manager Joe King and interim Utilities Director Jason Grey provided an explanation of general fund transfers, administrative fees and special project support payments. They also made a presentation on the long-term power cost stabilization strategy adopted in 2010.
The committee consists of three members from the Danville Utility Commission – Bill Donohue, Michael Nicholas and Phillip Smith – and three members of City Council – John Gilstrap, Gary Miller and Fred Shanks. Smith will chair the committee. The committee will meet the first and third Mondays of each month through February.
Recommendations will be provided to the full City Council on short- and long-term actions to reliably deliver electricity at competitive rates to all customer classes over the long term. The recommendations could involve adjusting service boundaries, offering customer choice of power suppliers, modifying rate structures, expanding privatization of operations, installing electric power generation facilities locally, using a combination of these and other measures, or selling the electric utility.
The committee’s initial meeting was held on Oct. 20. At that meeting, the assessment process was detailed.
Danville distributes electricity to approximately 42,000 customer locations in a 500-square-mile service territory covering Danville, the southern third of Pittsylvania County, and small portions of Henry and Halifax counties.
A variety of factors has increased Danville Utilities’ electric rates above those of surrounding utilities. In September, City Manager Joe King said the biennial rate study under way likely would not remedy this competitive disadvantage.
In August, Danville Utility Commission members listened to concerns from large industrial customers served by the city that the city’s rate was not competitive when compared to investor-owned utilities in Virginia and the national average. Commission members were asked to consider allowing industrial customers to purchase power elsewhere, offset the higher rates with tax incentives for job and tax retention, or sell the city’s power assets to another electric utility.
While the city’s electric rate for residential customers is competitive with other power utilities, City Council members expressed concerns on Sept. 16 during a work session about future costs associated with purchasing power and transmitting that power to Danville. Those costs could impact current rates.
At that work session, King suggested that a joint City Council/Utility Commission study group be formed and an outside consultant be hired to explore options.
The city also provides natural gas, water, wastewater and telecommunications services in Danville. Those services are not included in the study.