Toledo plugs in public power

OmniSource becomes city's 1st electric-utility customer

8/2/2012

After 16 years of talk, four mayoral administrations, and a couple of studies, a municipal electric utility operated by the city of Toledo finally became reality Wednesday with the start-up of Toledo Public Power Co.

"We're electrified!" David Welch, Toledo director of public utilities, joked when asked to describe how the first day of operations went.

The new municipal electric utility, which was created on paper in 2006 but took six years to get established, went live at 10 a.m. Wednesday.

For the near term, Toledo Public Power will have just one customer, metals recycler OmniSource Corp., of 5130 North Detroit Ave. in North Toledo.

OmniSource is buying six megawatts of power from Toledo Public Power, which buys electricity wholesale from American Municipal Power-Ohio, a nonprofit municipal utilities group. Toledo joined AMP-Ohio in 2009, giving the city the right to buy power at wholesale rates.

The city bought an electric substation and distribution lines at OmniSource to supply the firm. The contract helps OmniSource preserve 200 jobs while the company pays the city about $40,000 annually for the power.

Mr. Welch said Toledo Public Power had been stalled but this year became a priority. "We have really focused on getting things going here."

The city will learn how to run its municipal utility efficiently before seeking more customers, he added.

"It took us quite a while just to get this one going. We want to get our feet set and feel a little comfortable, and then look at maybe helping other customers," Mr. Welch said.

"We're treading new territory here," he added.

One thing the municipal utility doesn't plan to do is establish a grid to serve residential customers.

Such a project for a city Toledo's size would be cost-prohibitive, the public utilities director said. "There hasn't been a municipal power grid created in the last half century," he said.

However, the utility likely will generate some of its own power.

Toledo is developing a $28 million landfill gas generation project that will use methane from the Hoffman Road landfill to power turbines.

Also, the solar field and wind turbines at Collins Park could produce a limited amount of "green" electric power.

But none of that is online yet.

Toledo Public Power is only a power purchaser with the ability to buy more from AMP if needed.

While the utility could become a power generator and one day sell power back to the grid, city officials see its role as an economic development tool to help reduce electric costs for businesses.

"It's going to be a great tool going forward. … But the city isn't going to jump into this until it knows more," said Leslie Kovacik, a senior attorney for the city law department and chief counsel for Toledo Public Power.

Future customers, she added, likely would be small or medium-size businesses. Large firms with heavy power usage, like Chrysler Group LLC get discounts from FirstEnergy Corp., the area's primary electric provider.

"Those big boys get their own special contracts," Ms. Kovacik said. The city cannot compete with those contracts, she added.

But firms like OmniSource aren't big enough to receive special rates, though they need help with electric costs, Ms. Kovacik said. "I would hope Toledo pursues that next tier down of companies like OmniSource," she said.

One person thrilled to hear Toledo Public Power had gone online Wednesday was Lucas County Commissioner Pete Gerken, who as a city councilman in 1996 proposed Toledo start an electric utility.

"Finally! I feel like the grandfather of this thing," he said.

Mr. Gerken envisioned a city electric utility that served both commercial and residential customers. Toledo Public Power isn't designed to serve residents, but Mr. Gerken said anything is possible in the future.

"You take baby steps in this. But hopefully it will become another choice one day for the consumer to make," Mr. Gerken said.

"I think what this does prove is that governments know how to run utilities. We may not know how to run some things, but we run water departments, sewer departments, and now we run electric departments," he said.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.