Boro will cover harsh winter’s electric overrun Not passing $656K cost to customers

By on April 9, 2014

Many local residents were feeling the heat when this unusually cold winter caused electric bills to skyrocket.

But residents of Ephrata Borough, subscribers to the borough’s electric service, are in line to benefit from it being a locally-owned public utility. A significant cost overrun for wholesale power recognized by the borough will be absorbed through fund balances rather than passed on to customers through the Power Cost Adjustment (or PCA).

There had been some talk in recent months about how the borough would ultimately deal with the additional costs incurred in January and February.

Monday night’s borough council meeting started off on topic when local resident Scott Miller questioned members on what he perceived to be high electric rates. He cited the results of some comparison shopping he had done which seemed to reflect lower power charges for other local suppliers.

However, several council members felt the comparison was hardly an “apples for apples” match up.

“Our (rates) include generation, distribution and transmission,” explained Council President Dale Hertzog. “What the other companies are not telling is what the distribution and transmission charges will be with them. Outside of the borough you would be paying both distribution and transmission. In our own studies we are about dead even.”

Borough manager Bob Thompson added some additional information on the matter.

“We bundle energy plus distribution,” said Thompson. “At some point this year we will be able to break that out to show what part of that is the cost of power and what part is distribution. Right now that amounts to being about eight to nine cents to compare. That’s actually very good.”

Thompson also pointed out that many of the other electric suppliers are offering teaser rates, which lock a customer in for a period of perhaps three months, before they then see significant rate hikes at the end of that period, often without warning.

Miller agreed that he had seen what Thompson was saying in his own study.

Municipal Enterprises chair Tom Reinhold reported that the $656,000 cost overrun could be due to excessive transmission cost coupled with exorbitant market prices encountered when the borough had to buy power on the open market in excess of what had been pre-purchased according to plan.

Reinhold explained that a number of circumstances came together to make the cold weather demand on the grid even more precarious. A nuclear power plant in Western PA had to be taken offline, causing bottlenecks in power transmission. In addition, there was a shortage of natural gas which is used to power increasing numbers of power generation plants.

“When we pre-purchase power, we do so based on what we think the need will be,” added Thompson. “This year, we had to purchase additional power on the open market at a much higher cost.”

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3 Comments

  1. Robert Wasneuski

    April 9, 2014 at 11:49 am

    I am always intrigued as to how skillful people with special agendas can turn water into wine.The boro’s response while accurate on several points leaves out other critical facts & truths that are needed to paint the “total” picture as respects the boro’s electric distribution operation.The truth of the matter is its not an owned “utility” but rather a ” de facto ” monopoly.The boro generates “zero” wattage & purchases power on the open market just as we can ( if allowed ) & then surcharges the bundled ( gross total ) rate & resells to its residents & puts the over charges ( a hidden tax ) into a general capital fund to spend without the taxpayers control or knowledge.Pennsylvanians have a legistrated right to choose their electric supplier however the boro is holding us hostage & not allowing us our right of choice.This recent loss ( 650K ) was effected by speculative investment with Amp Ohio which is similar to millions in prior losses & ongoing litigation with other municipal towns & entities in Ohio & Mid West as well as now in Pennsylvania.The fund absorbing this loss is actually collected overages ( surcharged ) bundled rates we paid.The PCA is but another tool to fund losses & collect additional revenue when needed for special interst spending.We are being used as collateral on these speculative purchases & we were lucky this time unlike many other AMP Ohio investors.If my money is to be at risk then I should have a say & not have the boro decide how to spec buy my power.We have that legislated right & its improper for the boro to suppress it.Its also wrong that the boro is in fact operating a “de facto ” electric distribution monopoly.While I am pleased with the decision to fund this recent loss with the collected energy fund & not using the ” PCA” tool to make up this deficit the truth remains we lost over 650K & what about the “next” time? The boro should not be in the electric business however if they are unwilling to seriously look toward future abatement of this monopoly then at least allow us the taxpayers & residents our legislated right to “choose ” who we wish to be our enengy provider.

    Bob Wasneuski
    Ephrata Citizen

  2. Thomas Bingeman

    April 10, 2014 at 11:42 am

    I agree 100% with Mr. Wasneuski. We as ciizens of the Boro are being raped by their electric rates. Below you will find the current rates listed on the Boro’s website at http://www.ephrataboro.org/2171/Rates.

    Residential Service Rates
    Electric Service
    Monthly Customer Charge
    $9
    First 300 KWH
    13.78 cents per KWH
    Next 700 KWH
    12.28 cents per KWH
    All Additional KWH
    11.78 cents per KWH

    When looking at these rates, the generation, transmission, and distribution charges are all lumped together in one rate, depending on your usage. For a family that is using 1200 kWh of electricity, they will pay $159.86 for electricity alone by these schedules. If that same family were to switch to First Energy, the generation and transmission costs would only be approximately $94.80. If we added on $.035 per kWh for distribution charges, that would only add on an aditional $42.00. That would be a savings of $23.06 per month to the average consumer. When the law was passed to deregulate the power utilites within PA, the clause to allow Boroughs that offer electricity to their citizens to keep those same citizens from being able to shop elsewhere for power should not have been put in as this forms a monopoly in the area. It is just another way that the Boro is legally able to stiffle the working man and keep their pockets lined with the cash of the every day working person.

  3. Andrew

    April 13, 2014 at 4:35 pm

    So are we going make any change and break this monopoly? How did they not pass this overrun when our electric bills this winters averaged $700 for a small family home??? Just feels like being stolen from by the Burrough. Something has to be done… Ephrata Burrough is notorious and has bad reputation for its inflated electric rates. This is hurting the community. Please change!!!

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