LORAIN — A deal between the city and FirstEnergy Solutions is designed to keep the taxpayers grounded if there is a surge in electricity prices.
Former Negro League player Ernie Nimmons was on hand for the announcement Thursday that FirstEnergy Solutions had acquired the naming rights to Lorain’s Pipe Yard ballpark. (CT photo by Chuck Humel.)Taxpayers will save $185,000 over the life of the eight-year agreement, city and FirstEnergy officials said Thursday. The deal calls for a 3 percent annual discount for electricity supplied to City Hall, the water purification plant, two wastewater treatment plants and two pump stations.
In a related agreement, FirstEnergy will spend $500,000 on improvements and upkeep of The Pipe Yard ballpark in exchange for naming the park The Pipe Yard Stadium powered by FirstEnergy Solutions.
“It’s a good deal for the city,” Mayor Tony Krasienko said after a City Hall news conference that included players and management from the Lorain County Ironmen, the baseball team that plays at The Pipe Yard. “It guarantees dollars (saved) on our electric, and we have a title sponsor for the ballpark.”
It’s unclear how much FirstEnergy will profit from selling electricity to the city.
“We’re a competitive business, so we’re not going to reveal our (profit) margins,” said Diane Francis, a FirstEnergy spokeswoman.
Krasienko said negotiations over electric rates began in July or August. FirstEnergy was the low bidder. Other bidders included Exelon and Duke Energy.
Because the agreement is not a fixed-price contract, the city is not locked in to a specific payment rate if electricity prices drop, Francis said. The prices will be set by energy auctions in January and October involving Ohio Edison, a FirstEnergy subsidiary. If prices increase, the 3 percent discount still applies.
“You’re pretty much guaranteed to save no matter if the rate goes up or down,” Francis said. “Unlike a fixed price (in which) you could actually end up paying more sometimes depending on what the utility’s rate does.”
Electricity rates are expected to stay low for the next couple years, according to Ken Rose, a Columbus-based energy industry expert who has consulted for the Ohio Inspector General’s office and the U.S. Department of Energy. The low prices are because of hydrofracking — high pressure underground drilling involving water and chemicals — which has produced large amounts of natural gas for power plants.
Rose said natural gas prices could rise in future years because of environmental worries about fracking, a process critics say may contaminate underground water supplies.
However, congressional Republicans are holding up a law allowing the federal Environmental Protection Agency to regulate toxic fracking fluids. Rose said taxpayers stand to save on the agreement, at least in the short term.
“Given that FirstEnergy is the dominant player in that area, it’d be pretty hard to imagine that somebody could beat that (price),” Rose said. “It’s probably not a bad deal.”
Rose said he couldn’t comment on whether the city got a good price for naming rights for The Pipe Yard, but Bob Shenosky, Ironmen co-owner, said it will help keep low-priced “family-friendly” baseball available. The team, which features area college baseball players, charges $99 for season tickets for its 30 home games, which are scheduled to begin May 31.
“We believe it will be an exciting and busy summer at The Pipe Yard,” Shenosky said. “We hope to see you all out there.”
