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