Friday, August 22 – Berlin Electric Rates Soaring

BERLIN – The high cost of electricity in Berlin will rise a bit before prices start to come down in the shoulder season from a peak that several weeks ago was the highest in Maryland.

“You’ll see a little bit of increase next month, then you’ll see a drop,” said Berlin Administrative Director Linda Bambary during the Berlin Utilities Commission (BUC) meeting Tuesday evening.

The culprit is the Power Cost Adjustment (PCA) charge, which reflects the actual cost of the power purchased.

The Maryland Public Service Commission issues a spreadsheet “snapshot” of power costs across the state to power providers and municipalities, which earlier this summer showed Berlin with the highest cost in the state.

While the PCA charge has not quite doubled in a year, the charge rose from 6.6 cents per kilowatt-hour in August 2007 to 10.4 cents per kilowatt-hour in August 2008.

The PCA charge is calculated by adding the purchase cost for power to the power generation cost and dividing that total by the number of kilowatt hours used by Berlin’s electric customers.

“This is not a random thing where you say, we’re short of cash, let’s bump the PCA,” said Eric Quisgard, an accountant serves as a member of the BUC.

“This is regulated,” Bambary said, referring to reports on power costs being submitted to the Maryland Public Service Commission.

The fixed rate, which covers operations and maintenance, has not changed since 2002.

Berlin electric customers have seen some extremely high bills in the last few months, as has the town. Power costs from Conectiv increased from $300,000 in June to over $500,000 in July, according to Bambary. The town used 3.6 million kilowatt-hours overall in June, which went up to 4.1 million kilowatt-hours in July.

The total PCA charges for an average residential account, which uses roughly 1,000 kilowatt-hours of electricity a month during the summer, increased from about $83 to $100.

“People had their air conditioning on. It was hot,” she said.

Berlin’s electric utility does not have a power cost contract, instead paying real time rates.

“It wasn’t to our benefit to go to a contract,” Bambary said.

The contract considered, with an energy cooperative, would have cost money and time, including co-op membership fees and attendance at out-of-state meetings.

Running the town’s electric plant usually costs more than buying power, so the generators only run when the cost is less than purchasing energy would be. Just having that capability can reap benefits.

Conectiv recently credited Berlin $52,000 for owning its own generation facility, but the impact on residential and commercial customers’ bills is unknown.

When residents received their bills last week, many were hit with sticker shock. An informal survey of six single-family home customers by The Dispatch showed an average month bill for electric service to be $559. A similar-sized house to those surveyed with similar usage in Ocean City had an electric bill of $235.

In the face of numerous complaints fielded at town hall in recent weeks, staff ensured this week that they buy the diesel fuel needed to run the generators from the least expensive source. Power plant head Mike Rodgers said at the BUC meeting that he calls at least seven vendors looking for the lowest cost. Berlin is not tied to a contract to purchase diesel at a certain price.

“We don’t just buy a load of fuel. We call and we get the cheapest price we can find,” Rodgers said.

At times, Rodgers said, diesel can be had for cost plus trucking fees.

Berlin staff will continue to explore alternatives to current practices, Bambary said. The town will also commission professional consultants to analyze electric rates.

“The council’s committed to doing their part on reviewing our rates,” Bambary said.

Staff will be trained to look at power bills for errors, and power systems are being checked to ensure proper programming and usage.

Berlin has attempted to work out a deal with Easton, Md., to piggyback on their power purchasing to get better rates, but those talks did not yield fruit.

“What we need the consumer to do is conserve energy,” Bambary said.

While prices should drop in the next few months, power costs will not drop far.

“It’s still going to be high. It’s not going to be the days of cheap energy,” Bambary said.

Many Berlin electric customers have contacted the town for an explanation or to ask that staff check for mistakes, but few have made angry complaints, Bambary said.

Most just want proof that the town is doing everything it can to keep rates down and to find out what they themselves can do to reduce their bills.

“The hospital asked for us to take a look at theirs,” Bambary said, as have some medical offices that use a lot of energy.

“I really don’t know what to say,” she said. “Our rates are high.”