Mayor: Dover Chemical loss won't raise Dover residential electricity rates

DOVER ‒ Since Dover Chemical Corp. has made the switch from Dover Light & Power to AEP Ohio, Mayor Shane Gunnoe wants to assure the public that the loss of the city's largest electrical customer will not cause residential rates to increase.

"We will see no increase in electric costs," Gunnoe said following Monday's council meeting.

"The city has worked hard over the last year, year and a half, restructuring its purchase power agreements. We get a portion of our power we make locally, and then a portion of it comes from a variety of sources throughout the region and state. So we worked hard to restructure some of that so that essentially we won't be on the hook for them when Dover Chemical left. We've also been proactive in paying off municipal debt related to the plant."

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When Dover purchases power from other sources, there are transmission and capacity costs, he noted. The city pays additional costs based on how much electricity it buys and how far away the sources of that electricity are. With Dover Chemical's departure, the city will need to buy less electricity, and some of those transmission and capacity costs will go away.

Lawsuit over electricity use surcharge

The city and Dover Chemical have been locked in a legal battle for two years over an ordinance passed by council in 2021 that established a surcharge on any electricity the company used over 100,000 kilowatt hours per month.

City officials alleged that the company had improperly received about $2.2 million in benefits and services from Dover's Electric Field Department, and the surcharge was designed to help Dover recoup that money. Dover Chemical has denied that allegation.

The company has filed suit to block the surcharge, which is set to expire this year. The lawsuit has yet to be resolved.

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Money from the surcharge is going into an escrow account. The current amount is around $1.1 million. If the city prevails in the lawsuit, that money will go to the city.

Dover Chemical told city officials earlier this year that it intended to switch to AEP. The company gave Dover a final date for the transition last week, the mayor said. On Sunday, Dover's Electric Field Department ‒ at Dover Chemical's request ‒ assisted the company with the transition to AEP. The work by city employees was done at the company's expense.

Preparations for loss of business

Gunnoe told council Monday that the city had worked with its longtime partner, American Municipal Power (AMP), to prepare for the loss of Dover Chemical.

"AMP's power study experts have assured us that over the long run, there will be no increase in our purchase power rates," he said. "If anything, as a result of the work that we've down, we expect there to be a very, very subtle drop."

In March 2021, council heard a presentation from consulting firm Mesa Associates on the light plant. The company predicted that if Dover Chemical was to switch from Dover to AEP, residential electric rates in the city would increase about $400 a year.

Asked about that presentation, Gunnoe said that city officials had never heard from Mesa Associates before that and haven't heard from the firm since.

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City officials met with AMP again on Friday, and the message was the same ‒ rates will not increase, he said.

During his report to council, Gunnoe said that the average Dover power customer paid 14.4 cents per kWh. In contrast, the AEP residential rate was 15.3 per kWh, and those rates are projected to rise.

Dover Chemical's response

Dover Chemical has confirmed it made a successful transition to AEP after significant infrastructure investments, according to Ryan McElduff, general counsel for the company.

"The current administration's political games and baseless allegations destroyed a decades-long relationship that benefitted Dover's citizens," McElduff said in a statement to The T-R.  "The city's own consulting engineers told this administration that forcing Dover Chemical to transition to AEP would cost every customer of Dover Light & Power hundreds of dollars a year or more and could make Dover Light & Power shut down entirely.

"For the sake of Dover's citizens and the community we share, we hope the consultants are wrong. We also hope that the citizens of Dover are better served by their government in the future. Dover Chemical will continue its legal proceedings as every citizen of Dover deserves to know the truth."

Reach Jon at 330-364-8415 or at jon.baker@timesreporter.com.

This article originally appeared on The Times-Reporter: Dover Chemical switches from Dover Light & Power to AEP Ohio