Tuesday, April 20, 2004
Setting rates for five years is presumptuous, the company vice president said.
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- City council will consider granting Youngstown Thermal a fraction of the rate increase the company requested.
Legislation before council Wednesday grants the downtown steam heating and cooling company 2 percent increases each of the next five years. The increase this year would be retroactive to Jan. 1.
Thermal had sought a 15 percent rate increase this year.
Mark A. Butta, vice president of Youngstown Thermal, said he isn't sure what will happen if the city approves the 2 percent for five years. He learned of the city's plans from a Vindicator reporter.
Council's reasoning
Carol Rimedio-Righetti, D-4th, council's utilities committee chairwoman, said downtown business are struggling. They can't afford big utility rate increases, she said. Neither can the financially shaky city, she said, which also is a Thermal customer.
"The 15 percent they asked for is a lot of money," Rimedio-Righetti said.
The hope is that downtown businesses will be healthier five years from now and customers will be able to afford higher rates, she said.
Youngstown Thermal is part of Thermal Ventures, which operates in several cities. That means the company can afford to absorb costs from here, Rimedio-Righetti said.
Council members arrived at 2 percent for five years by studying thermal's previous increases and talking to downtown building operators, Rimedio-Righetti said.
Council granted the company 5 percent increases in 1998, 1999 and 2000 and 7 percent in 2001.
Objections
Setting rates for five years is presumptuous, Butta said. Not even the company knows what the financial position will be then, he said.
The 2 percent increases don't even keep pace with inflation, he said. Meanwhile, the company's natural gas, water, coal and employee benefits continue rising while steam sales drop, he said.
He pointed to the city's 8.5 percent water rate increase this year as evidence that Thermal needs a higher rate.
Thermal Ventures' other operations are irrelevant to Youngstown Thermal's financial situation, Butta said.
He said previously that Youngstown Thermal projects a $14,000 deficit this year even with a 15 percent rate increase.
Steam heating and cooling remains a good deal compared with other methods, he said. Building owners aren't suffering just because of utility costs, Butta said.
rgsmith@vindy.com