Friday, September 12 – Residents Pack Town Hall Seeking Electric Answers

BERLIN – The Berlin Mayor and Council
meeting was standing room only Monday night, packed with residents seeking
answers over escalating electricity bills.

The crowd of about 75 people
reflected the citizens meeting on electric rates held two weeks ago, during
which organizer Lisa Hall urged citizens to ask the town’s elected officials
directly for an answer.

Interim Mayor Gee Williams had
some news for concerned citizens at the beginning of the meeting. Two meetings
have been scheduled within the next four weeks with recently hired electric
system consultants Booth and Associates to discuss preliminary findings in
their analysis of the town power system. The meetings will take the place of
the regular council meetings and other council meeting business will be put on
hold until Oct. 20. The first meeting will be Sept. 22, beginning at 6 p.m., at
Berlin Intermediate School.

According to Williams, Booth and
Associates will summarize the scope of the investigation; outline the
historical background behind the current situation; explain the current
electricity market; and go over Berlin’s
specific challenges.

The consultants will also offer
initial comments on rates and a power supply action plan.

“We will be receiving this
information at the same time you do,” Williams said.

The second meeting will be held
Oct. 7, at Berlin Intermediate School, and will begin at 6 p.m. Booth and
Associates will discuss the rate study, present a preliminary report on capital
priorities and operating costs, and talk about power supply alternatives.

The first priority for Booth and
Associates will be reducing rates, Williams said.

Overall, the consultants’ brief
will also include Berlin’s
high debt load. The consultants will also advise the town on its next
request for proposals for a power purchasing agreement, both on the wording and
the timing.

Market conditions, they have
told Williams, are breaking a little in Berlin’s
favor, which was not the case in the past. With Booth and Associates’ help, Berlin can probably
manage to get rates in line with the other power providers in the area,
Williams said.

The factors that make up the
strike price, the cut-off point where it is cheaper for Berlin to generate energy than buy it, will
also be part of Booth and Associate’s analysis. Operating the power plant just
5 percent of the time, as compared to the current 3 percent, could save Berlin electric
customers thousands of dollars, Williams said.

An audience member asked if the
council could provide a specific scope of work to give the public some context.
Williams answered in the negative. The scope of work will be determined in the
next two weeks, and that information will be presented at the Sept. 22 meeting.

Professional services are
budgeted in the electric fund budget already, he said. The council has not put
a ‘not to exceed’ figure on the work.

Berlin has $42,600 set aside across
the entire budget for professional services, according to Administrative
Director Linda Bambary. If the analysis exceeds the budgeted funds, the town
would use reserve funds to pay the rest of the costs.

The analysis will take anywhere
from three to six months and the consultants are already on the job.

Williams spent over an hour Monday
night answering questions from townsfolk during time set aside for public
comments after the agenda items were completed.

The first speaker, Gerry
Fentress, wanted to know why the town had hired another consultant, instead of
following to advice of the last one, from four years ago.

Williams explained that the
previous consultant had recommended spending millions more on the power plant,
while advising at the same time that doing so would increase the debt load
alarmingly. This coincided with an audit report that concluded that the debt
service payments were getting “scary,” Williams said.

That was when Berlin decided to look into selling the
electric plant and distribution system, to reduce costs to the power customers
and eliminate the debt. The sale, however, did not work out.

Calling in new consultants will
bring fresh eyes to the problem, Williams said. The new consultants also do not
have a history with the town and will have no stake in defending or criticizing
past decisions.

In response to a question from
Fentress, Williams said that the consultants do not anticipate the need for
further bond debt to improve the electric system. The consultants will,
however, provide a game plan and priority list for future capital investments,
large and small.

Hall asked for a further
explanation of the minor contamination at the power plant site that prompted
the only potential buyer of the facility to pull out of the sale last spring,
and wondered why the contamination was not fixed. She also wanted to know why
other prospective power plant buyers were not shocked by the problem.

There was only one buyer
interested in the power plant that made a reasonable offer, Williams said, and
that buyer, Old Dominion Electric Cooperative (ODEC), was not enthusiastic over
the purchase from the beginning. ODEC was brought into the deal by Choptank
Electric, which wanted to buy the town’s electric distribution system

“I think they were dragged to
the table. They were not excited about buying the power plant,” Williams said.

ODEC withdrew from the deal
using the minor stain as an excuse, Williams said. He characterized the stain
as the lightest environmental problem a power plant could have.

“Where are we going to be if
Booth comes back and says, sell your plant?” Hall asked.

There has been no indication
that the consultant will suggest that, Williams said.

Senior citizens who cannot pay
their electric bills will have to go on welfare for the first time in their
lives, Hall said, with the electric rates so high.

“It’s a very big concern. It’s
not going to go away,” Hall said.

Everyone is concerned, Williams
said.

Hall then asked Williams whether
he was a customer of Berlin Electric, but Williams replied that he is not,
although he lives within the town limits.

The Berlin
electric service area encompasses most of Berlin, but not all, and extends outside
town borders in some areas. Service areas are set by the Maryland Public
Service Commission, and past attempts by Mayor John Howard Burbage to change
the Berlin electric service area to encompass
all of Berlin, and any land ever annexed by Berlin, met with
failure.

“We’re one of the tiniest
electric utilities on the East Coast and the other folks are not going to let
that happen,” Williams said.

According to Hall, people are
very offended at the last line of a letter sent to electric customers,
indicating that the town does not want citizen input on electric system
problems.

The town needs experts, not
well-intentioned amateur advice, Williams said, which has influenced town
decisions in the past.

“We can’t just take a poll in
here and say this is what we want to do,” Williams said.

People are also concerned,
according to Hall, that the power cost adjustment charge (PCA), which
fluctuates, is actually a slush fund the town is making money on.

“Any implication we are making a
slush fund from these charges is ridiculous,” Williams said.

The
PCA goes up or comes down based on actual power costs in the electric
marketplace.   

One factor in the high cost of
electric power in Berlin
is the small customer base. Choptank Electric supplies tens of thousands with
power, and many more people share the changing costs.

“Berlin can only spread over 2,300
customers,” Williams said.

Speakers also asked about power
purchase agreements. Berlin
has tried to negotiate a better rate through power purchase agreements,
Williams explained, but the most recent proposals by power suppliers all cost
more than continuing with the month-to-month rate the town now pays.

Berlin cannot simply begin using the
power plant more often, because the plant generally costs more to run than
buying power does. Plant employees need more training and additional safeguards
are also needed to keep from wrecking the equipment, Booth and Associates have
told the town.

Mark Sabia suggested looking
into wind power.

First, the town will concentrate
on getting the rates reduced, Williams said, and on short-term fixes that can
be done over the next year. Then Berlin
can consider longer-term solutions.

Rich Tindall urged the council
to take a gamble on the electric marketplace and hope for the best in looking
for a power purchase agreement.

“We’re trying to get an educated
crystal ball here,” said Councilwoman Paula Lynch.

The town is not going to gamble
on electric rates, instead focusing on making educated decisions, Williams
said.

Williams urged townspeople to
attend the next two meetings, ask questions, and work together.

“For 40 years, every time a
critical decision’s come to the town, the town’s turned on itself,” Williams
said. “It’s time to think of this as a community.”

 

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