Berlin Inks Power Purchase Agreement

BERLIN – Berlin electric customers will pay less for their energy after the town signed a power purchase agreement Wednesday with Florida Power and Light.

Just how much customers will save under the 26-month contract with Florida Power and Light is unclear, due to the complex nature of power selling.

“The base rates we are looking at are quite a bit better than the last bid we saw, probably 25 percent less than the bids we saw in the past,” said Berlin Utilities Commission (BUC) Chair Erik Quisgard. “The rate for the electricity itself is great. It’s less than the average we paid over the last two years.”

Councilwoman Lisa Hall, who became involved in politics after organizing a standing room only community meeting on electric rates last summer, called the deal “good for the consumer.”

The good news is that electric bills should be more stable and allow customers to budget better, Berlin Mayor Gee Williams said, apologizing for not being able to say what the exact price would be per kilowatt hour. “It’s not like a fixed, one set price,” he said.

The cost of power consists of the base rate from the power company, the base rate for running the electric system, which is set by the Berlin Town Council, and the pass through charges, which are actual costs not controlled by either the town or the power company. The pass-through costs are also known as the Power Cost Adjustment, or PCA, charge.

“Nobody’s going to say, this is what your rate’s going to be next March,” said Quisgard. “We just know the purchase power portion is good and we’re not going to suffer because of it.”

The contract sets a low introductory rate for the first two months, with a small increase for the next 12 months, and then another increase for the year after that, he said.

The town’s base rate covering the cost of electric distribution and the power plant will remain the same.

The average cost over the next 26 months will be less than the average cost to Berlin electric customers over the last two years, according to Williams.

Electric customers will not be subject to “roller coaster” price changes, as happened in summer 2008, with this contract, Williams said. Power usage will become the key variable in power  bills.

“The PCA will be pretty constant and not so big a number as it’s been in the past,” Quisgard said.

The contract also protects consumers from rising energy prices, which experts are predicting will go up 10 to 20 percent in the next year, according to Quisgard.

The Florida Power and Light purchase power contract will begin on April 1, 2009 and runs through May 2011.

Now the town can move on and consider the needs and usage of the town electric system. The BUC continues to look into a demand-response contract with Enerwise, which could save the town hundreds of thousands of dollars by running the power plant generators more efficiently.

Concerns over obligations to run the power plant under such a contract, despite equipment problems or costs to the town, are on Quisgard’s radar. He said he does not want to be part of any contract that would mandate the town go into debt to fulfill it, in the case of engine breakdown.

“I don’t want to see us tie our hands for any length of time,” Quisgard said. “I don’t want to see us get into a position where we have to buy a million or half million dollar generator or break a contract.”

A demand-response program, saving the customer money, is an important part of making the entire electric operation work financially. A financial review of the electric operation is underway, now that rates have been stabilized, he said.