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FAQ

View frequently asked questions (FAQ) for City of Hamilton, Ohio Electric.

How are the Power Cost Adjustment and Gas Cost Recovery riders calculated?

Per codified ordinance, the Power Cost Adjustment (PCA) and Gas Cost Recovery (GCR) rider calculation shall be based on forward looking projections of power supply related costs and customer sales (i.e., kWh or Ccf) for the period. The calculation shall be performed at six-month intervals or more frequently if required, to accomplish recovery of power supply related costs in a timely manner. The calculation includes a provision to reconcile over or under collection of costs from previous periods based on actual costs versus projected costs for the period. These riders are administratively set and adjustment does not require council approval.

How does the City calculate debt service and fixed obligation charge coverages?

The Comprehensive Annual Financial Report (CAFR) calculates debt service coverage (DSC) on a generally accepted accounting basis (GAAP). However, the City of Hamilton, Ohio transfers funds from established rate stabilization funds to the operating fund to calculate DSC and fixed obligation charge coverage (FOCC), as permitted by the City's bond indentures. Furthermore, the City's auditors and bond council have previously approved this indenture calculation basis (i.e., non-GAAP) to calculate these financial metrics.

Transfers between funds are required to be budgeted and approved by City Council. The funds are moved from Rate Stabilization to Operating for DSC support, and then finally back to Rate Stabilization. The City's bond indentures define revenue as including transfers from rate stabilization, which are not reflected as revenue on a GAAP basis.

What is the purpose of the City's rate stabilization reserve funds?

Rate Stabilizations funds are established for the Electric, Gas, Water and Wastewater systems per the indentures for these systems. This fund serves to provide debt service coverage support in the event current year revenues are lower than anticipated. The rate stabilization reserve fund always maintains a minimum balance (e.g., $4MM for the Electric System) that is required per indenture. Per codified ordinance, if this fund is reduced below the indenture required minimum, customer rates are increased by a percentage that will recover the revenue necessary to replenish the fund.