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Council extends municipal electricity supply contract through 2028 to avoid near-term capacity surcharges
Summary
Council adopted an ordinance amending the city’s municipal electricity supply contract, adding one year to extend it through Dec. 31, 2028, to avoid an immediate capacity surcharge triggered by recent state legislation; the extension applies only to city-owned facilities, not the community aggregation program.
Defiance City Council approved an amendment to the city’s electricity supply contract for 16 municipal facilities, extending the contract through Dec. 31, 2028, after staff said electricity suppliers sought to invoke a contract clause following recent action by the Ohio General Assembly.
City legal/contract staff explained that the existing contract with Constellation New Energy included a change-in-law clause that suppliers could invoke after state action. Staff said the Ohio General Assembly addressed grid integrity and that one supplier proposed capacity surcharges that would otherwise take effect June 1; in exchange, the supplier agreed to hold off on surcharges if the city extended the municipal contract an additional year.
Staff emphasized the measure applies only to city-owned facilities covered by the contract and does not affect the city’s community aggregation program. The administration described the proposed extension as a one-year add-on, locking municipal supply through Dec. 31, 2028, at the then-quoted price (staff noted a quoted example of 6.921¢ per kilowatt-hour but emphasized market rates fluctuate when executing a contract).
Council adopted the ordinance by recorded vote. Several council members clarified they did not want the municipal contract change conflated with the community aggregation program that covers residents. The presenter said the city generally avoids very long-term locked contracts to preserve flexibility if wholesale rates change.
Why it matters: The action avoids an immediate supplier-imposed capacity surcharge for municipal facilities and stabilizes the city’s municipal electricity purchases for an additional year; staff said the extension does not change resident aggregation rates.
