City increases cost of electric

By Lynn R. Parks

The cost of power is up for the city of Seaford. Tuesday night, the city council voted to pass those costs on to consumers. With the July bills, increases in the cost of electricity to the city will be reflected in the Purchased Power Cost Adjustment Clause (PPCAC) portion of the statements. City manager Dolores Slatcher said that the average residential customer using 1,000 kilowatt hours of electricity will pay $25 more in July. She forecasted that after August, the increase will go down to $14.50 a month. In addition to the higher power costs, city electric customers also used "significantly more kilowatt hours" in July than they normally do, Slatcher said. "Many people will get a double whammy when they get their bills," she said. "People are going to be extremely unhappy with this." And, she said, some people will have trouble paying their bills. "There are some people we are going to have to work with, some we haven't had to work with in the past," she said. Councilman Mike Vincent, liaison with the electric department, said that the city had no choice but to pass increased costs on to consumers. "This isn't a profit thing," he said. "We are just passing along costs."

The city's 2008 budget assumes a power cost of 8.9 cents a kilowatt hour. That is what its electric rates are based on. But the power cost in June was 10.8 cents a kilowatt hour, an increase that was absorbed by the Delaware Municipal Electric Corporation, which purchases power for Seaford and eight other municipalities in the State. The power cost in July was 11.4 cents a kilowatt hour, an increase that DEMEC could not absorb. Expected cost in August is 11.2 cents a kilowatt hour. DEMEC buys 74 percent of its power through contract, at a fixed cost, and pays the market rate for the remaining 26 percent of its power. Up until now, that process resulted in lower costs to the city, Slatcher said. But with market rates soaring, "it certainly hurt us now," she added. The nine municipalities that purchase power from DEMEC have directed it to change its purchasing procedure, so that 90 percent is fixed and only 10 percent is at the market rate. Slatcher said that the benefit of passing costs on to consumers through the power cost adjustment clause is that, when costs go down, so will consumers' bills. "This method will allow for the immediate collection of increases and the immediate passing along of any decreases," she wrote in a memo to the council.

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