Richmond residents unknowingly pay millions in hidden utility charges
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Every month, Richmonders pay into a multimillion-dollar revenue stream for the city via their utility bills.
Why it matters: They likely have no idea they're doing it.
The big picture: The charges, first reported by the Richmond Times-Dispatch, aren't listed in the bill breakdown residents get from the Department of Public Utilities.
- Instead, they're baked into the general fees without clear labeling — and city officials told RTD they don't know how much each person is contributing.
How it works: The payments are known as PILOTs, payments in lieu of taxes. Richmond's DPU has the authority to collect them from residents to make up for the property tax revenue the city would get if DPU was privately owned.
- It's laid out in Virginia law, which doesn't require Richmond to disclose those fees, and is a common practice nationwide.
- Charlottesville, however, lets you calculate the PILOT and says it's included in the rates residents pay. The charge ranges from 6% to nearly 15% of the total usage charge, per an Axios review.
- Similar charges in Kansas City led to outrage from some residents who pushed for the PILOTs to be removed.
Zoom in: A city spokesperson told Axios the charge is just a normal part of DPU's operating expenses.
- But RTD found DPU has collected more than $102 million in revenue since 2020 that didn't go toward its operating costs.
- Instead, it went into Richmond's general fund, which invests in city services like schools, police and affordable housing.
Between the lines: City Council is responsible for overseeing DPU and approving utility rate increases.
- But Kevin Cianfarini, chair of the city's public utilities oversight commission, told Axios it's "unreasonable" to expect nine elected officials to "properly review" those proposals.
- The state's privately owned utilities have hundreds of employees dedicated to the same work, he added.
What they're saying: Cianfarini told Axios it's still unclear how the PILOT payments are calculated annually and how the revenue from it is allocated in the budget.
- Cianfarini said the uncertainty can also mean not knowing if lower income residents are disproportionately burdened by it.
- Interim city spokesperson Julian Walker told Axios the PILOT payments depend on DPU's revenue in previous years and real estate and property values but didn't share specifics.
- Walker also said "it is not realistic" to assign revenue dollars to general fund expenses because they're not earmarked for particular uses.
What we're watching: If PILOT payments come up in next week's Public Utilities Commission meeting, where DPU will discuss how utility rates are set.