Frozen asset

By on March 5, 2014

While there have been plenty of headlines lately about Pennsylvania electric customers having to pay significantly higher electric rates during this harsh winter, the residents of Ephrata Borough have been somewhat insulated from the effect.

The borough has been able to hold steady because of a number of rate stabilizing initiatives put in place over the past several years following the borough’s own rate spike.

Now, it appears those initiatives may pay off for the borough’s electric customers.

Ephrata Borough is one of only a few in the Commonwealth who purchase electrical power for resale to its residents. However, while the cost the borough paid for electric has spiked over the past month, those spikes have not yet been reflected in customer invoices.

And they may not.

Council members discussed the effect this extremely cold winter has had on electrical consumption and rates. There were multiple reports in other media recently when customers outside the borough, who subscribe to other power vendors, saw sharp increases in their electric bills. Not so for those in the borough.

According to council member Tom Reinhold, what the borough has spent on electric in
January is almost double what was budgeted, yet so far that has not been passed on to the customer.

“We are fortunate to have our own electric utility here in Ephrata,” commented Reinhold. It’s pretty fortunate to have such reliable but also affordable coverage.

Council member Anthony Kilkuskie questioned Bor ough Manager Bob Thompson about plans to make up that difference through the recently approved Power Cost Adjustment or PCA.

For the period in question, the borough would typically spend $1.2M, but was billed to the tune of $2.4M. Thompson said the revenue stream created by the electric business was $1.8.

“As discussed in the (municipal enterprises) committee, we could recover much of the difference through the PCA, explained Thompson.

But, we discussed NOT passing that $600,000 on to the customers but letting it ride into another month and then dealing with it out of our reserves.

Thompson stressed that this was not a done deal and that on-going discussions included the possibility of leveling things out through the PCA over the balance of the year to minimize any month-to-month spikes.

Since we have a healthy reserve, it might be appropriate to not charge through the PCA but have the citizens benefit from our efficient running of the electric utility, added Thompson.

When questioned by council member Melvin Weiler as to the cause of the increased cost, Thompson pointed to several factors, including bitter cold temperatures which drove up demand. Ephrata Borough is a member of AMP Ohio, an electrical supplier which derives its power from a wide portfolio of generation sources, including nuclear, wind, solar, coal and natural gas. One of AMP’s nuclear plants was taken off line for maintenance, increasing the cost to get electric from transmission site to the borough.

He added that while the borough had pre-purchased much of the power used, it was still forced to purchase some as needed at market prices.

When we went to the market, power was going at $1,600per kilowatt hour, explained
Thompson. In perspective, in 2013 it was about $85 per kilowatt hour. He added that a natural gas shortage has also contributed to spikes in electric generation costs.

How the shortfall will be handled will continue to be discussed when the Municipal
Enterprises committee meets on March 17 at 5:30 p.m. Final decisions will be based upon
the results of that meeting.

The electric fund carries a fund balance to be able to respond to unanticipated expenditures of which I would characterize this circumstance, added Thompson. Should the committee decide to recover less than the full amount of the shortfall through the PCA, we will not know the full impact to the fund balance until the end of the year.

Thompson stressed the benefit of having a local power utility.

If we were served by an investor-owned utility there would be no question that all of the shortfall would be passed through to the customer, stated Thompson. Because we are a public power provider and the utility board (borough council) lives in the community and are rate payers themselves they can consider the economic impact on the customers and make decisions accordingly.

For additional information on Ephrata Borough, visit ephrataboro.org.

Gary P. Klinger is a correspondent for The Ephrata Review and welcomes your feedback via e-mail at klingerglobal@gmail.com or on Twitter @GPKlinger.

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One Comment

  1. Robert Wasneuski

    March 5, 2014 at 11:23 pm

    My fears have come true & my prior predictions look on target & concern me greatly.Without rehashing all the factual past objections & the current factual reality I have but a few statements & questions for consideration.

    1. The boro is operating a ” de facto ” monopoly & holding hostage residents legislated rights to choose their energy service provider.

    2. The ” PCA” surcharge just allows further add’l costs to already surcharged bundled rates( hidden tax ) that I could otherwise purchase & negotiate at a lower cost & its my right.

    3. My last 2 billing invoices since 1/1 have had PCA costs of $ 10.94 & $ 14.18 & I fear its only going to escalate to fund speculative energy purchasing losses & capital general fund spending reductions. If I could exercise my right of choice those losses would not be incurred.

    4.Why are we invested & have business contracts with AMP , Ohio.? .Has anyone researched their history & current impact & litigations with several of their Ohio & Mid West investors & client municipalities?

    5. How can our leaders misforcast the recent January expenditure budget by 100 % ?

    6.The spin on doing business with an investor owned utility & having their losses passed on to the customer I find amusing..We already are paying any such losses by the boro’s purchasing on our behalf & then further surcharging ( hidden tax ) on our bundled total rate sold back to us.We can purchase the same but without the surcharge & now the PCA cash revenue tool.

    Bottom line not withstanding the ” de facto ” monopoly is WRONG & our legislated right of choice is being held hostage,Our leaders need to be courageous especially with difficult economic times yet to come & look to reforming or abating totally their buying & selling & investing in energy over a 3-5 yr term & adjust the spending & revenue / taxation policies accordingly.It will not be easy but in my opinion its the proper call.

    I have the utmost respect for our boro council members & total staff & volunteers for their past & ongoing efforts to make Ephrata a special community.

    Bob Wasneuski

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