Berlin Electric Rates To Increase, Error Cost Town $435K

Berlin Electric Rates To Increase, Error Cost Town $435K
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BERLIN– Berlin’s electric customers can expect to see a slight increase on their bills in the coming month.

Starting in February, bills are expected to increase about $2.50 a month as the town’s electric company works to recover 2015 power costs. The move comes after a December 28 order from the Maryland Public Service Commission (PSC) outlining the town’s need to recoup nearly $500,000 in costs. Rather than have customers pay for the entire amount, town officials opted to use $100,000 in contingency funds and spread the remaining expense over customer bills for a period of three years.

“I was looking for a way to mitigate the impact on customers,” Town Administrator Laura Allen said.

Some town council members, however, are critical of the fact that they had no input in the decision and didn’t even find out about it until this month.

“I’m very frustrated we’re just now finding out,” Councilman Thom Gulyas said. “We had no input on this whatsoever. It appears the town administrator and the mayor made this decision. I’m furious about that.”

According to Allen, town officials meet with the PSC each December to review the electric company’s PCA, or purchased power cost adjustment.

“The PCA is how we recover fluctuations in purchase power costs,” Allen explained.

As officials from Booth and Associates, the town’s electric consulting firm, prepared for the annual hearing, they realized the town had failed to generate during a peak period in February 2015. The consulting company, hired in 2008, has an open-ended contract with the town.

“We hire them to track peaks so we can generate,” Allen said. “Booth and Associates was really focused on summer peaks based on conversations with Delmarva Power. That has been the case for many years, except in February. We did have a peak and we missed it.”

That missed peak, because it ended up being one of the five the town’s electric company was supposed to have generated during in 2015, means the town needs to recover $435,876, according to the PSC. That, Allen said, would have equated to roughly a $10 increase a month for Berlin’s electric customers.

Instead, town officials proposed using $100,000 in contingency funds and spreading the remaining balance over three years so customers wouldn’t be impacted as significantly. The PSC agreed to the proposal but will continue to monitor the town’s power costs in the future.

Allen says she does not expect the town’s electric operation to miss any peaks in the future. Not long after the missed peak in February, Berlin joined American Municipal Power (AMP). Membership in the national organization connects the town with a variety of resources and provides the town with AMP’s information regarding peaks.

“AMP takes a much more year-round approach,” Allen said. “I’m confident we won’t have this problem again.”

She added that the town’s practice of generating when demand was high was sound and had saved Berlin $3 million since 2009.

“The alternative to generating is purchasing power on the market,” she said, “and the peak is when power is most expensive.”

Allen also said that while rates would be increasing slightly in 2016, they’ve decreased four out of the last five years. Customers saw a six-percent drop in 2015 and an eight-percent drop in 2014.

While supportive of the town’s electric operation in general, some council members say they were blindsided by what they’re referring to as a $500,000 mistake by Booth and Associates. Council member Lisa Hall said she and her peers had no knowledge of the issue until the executive session prior to the Jan. 11 council meeting.

“We were just as shocked as anyone,” she said.

Gulyas too says he doesn’t understand why the council was informed of the mistake and the subsequent decision to adjust electric rates until after the PSC hearing. He says it’s his job as a councilmember to represent his constituents and act on their behalf.

“I can’t do that job unless I’m given information,” he said, “and not after the horse has been let out of the barn.”

Gulyas said it didn’t matter that bills were only being affected by $2.50.

“I don’t care that it’s a minimal cost,” he said. “That’s not right. I’m aggravated as hell we didn’t know about this until after the fact.”

In researching the issue since the council was notified, Gulyas said it came to his attention that staff in the town’s electric department contacted Booth and Associates in February because they were concerned about the apparent peak in electric use.

“Booth and Associates said ‘don’t worry about it,’” Gulyas said. “That ‘don’t worry about it’ cost us $435,000.”

He and Hall are interested in finding out whether the consulting firm has any liability in the matter.

“Their job is to monitor this,” he said.

Hall echoed his sentiments.

“I’m interested in recouping these losses,” she said.

About The Author: Charlene Sharpe

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Charlene Sharpe has been with The Dispatch since 2014. A graduate of Stephen Decatur High School and the University of Richmond, she spent seven years with the Delmarva Media Group before joining the team at The Dispatch.