Resident charged up over electric business Feels time may be right for borough to stop selling power

By on September 11, 2013

By:

GARY P. KLINGER Review Correspondent

, Staff Writer

It was not the first time the question was raised and it won’t be the last:

Should Ephrata Borough be in the business of selling electric?

Local businessman and resident Brian Hoffman questioned council members Monday night on whether now might be the time for the borough to consider getting out of the business of buying wholesale electrical power and then re-selling it to residents and b businesses. This came as council considered the first round of expenditures aimed at upgrading the borough’s electrical grid.

"I have been thinking about this for quite a long time (since) the deregulation of the electrical service in Pennsylvania and the difficulty in creating and maintaining a profit margin with the borough directly reselling electricity back," stated Hoffman. "It is very difficult to resell electricity at a competitive price compared to our neighbors with choice options. I think it’s time to consider getting out of the electric business in the borough."

Hoffman pointed to all the costs associated with providing electrical service over and above the raw, wholesale price for power.

"I strongly suggest that the borough consider getting a professional appraiser to appraise the resale value of the electric asset and I believe you would be surprise at the cost-benefit that would come out of that," added Hoffman. "I’m not in favor of spending $3 million (on re-conductoring) before we consider getting out of the business."

Council members were receptive to Hoffman’s input. However, as council president Dale Hertzog pointed out, in communities that have divested of their electrical business, the windfall only lasted for so long.

Ephrata Borough has long participated in a number of joint-ownership type electrical generation projects through AMP Ohio. By maintaining a diverse portfolio and owning portions of various electrical generating facilities, the borough has been able to maintain relatively stable electrical costs over the past several years. But unlike other companies in the business of selling electrical service, all profits from the sale of electricity stays within the borough, benefiting borough residents. These profits also allow the borough to maintain adequate emergency funds should a wide-scale disaster such as a hurricane or ice storm inflict crippling damage to the borough’s power grid. The borough has also enjoyed an impressive record with regard to uninterrupted service, which is generally very rare and brief.

Hertzog thanked Hoffman for his input and invited him to attend the Municipal Enterprises Committee meetings to continue meaningful dialogue on the matter.

With regard to the borough’s electrical grid, council did vote to approve a contract for $96,500 to Utility Engineers of Drums, PA for detailed engineering design for a proposed re-conductoring project. The cost for the engineering design is to be paid out of the reserve funds for the electric system.

"This contract is to prepare the engineering plans for bidding purposes," explained council member Tony Kilkuskie.

Kilkuskie addressed Hoffman’s concerns about getting out the business altogether by explaining that the system would still need to be upgraded, regardless of whether the borough stays in the business or not. He also pointed out that even if the borough were to divest of the electrical business, upgrades to the power grid would only enhance the value the borough could expect to collect in the sale of the system.

The actual re-conductoring of circuits 2, 3, 5 and 6 of the borough’s electrical distribution system is expected to cost $2.9M. It is estimated the project will take 12-18 months for completion. Staff is investigating financing options and will prepare a recommendation for funding the re-conductoring project once engineering design is completed and the project has been bid.

In other council business, council awarded a contract for $123,365 to Flyway Excavating for additional parking for the Ephrata Public Library. The new section of parking is expected to be located on the lower lot, facing Route 272. Work on the project is expected to begin yet this year.

And finally, local resident William Nelson introduced himself to council, stating that he is attempting to do something historic in Ephrata: win election to borough council as a Libertarian candidate.

"I’m running as a Libertarian," stated Nelson. "From what I understand, there has never been a third party elected to council. I would like to be the first one."

Nelson expressed an interest in getting to know each and every member on council.

For additional information on Ephrata Borough, visit ephrataboro.org. Gary P. Klinger welcomes your comments, questions and suggestions via e-mail at klingerglobal@gmail.com.

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