Posted on October 10, 2012
The Mayor and Council of the Town of Berlin this week asked the Maryland Public Service Commission (MPSC) to allow an 11.48 percent decrease in the town’s non-residential rates.
Berlin’s Council approved a recommendation to apply to the MPSC to reduce municipal electric rates for non-residential customers in February. In Maryland, rates, including reductions in rates, must be approved by the MPSC. The Council’s action directed the town’s electric utility consultant and an attorney specializing in electric utility issues in Maryland to prepare the extensive application for the rate case for consideration by the MPSC.
The reduced electric rates for commercial customers would lower revenue by about $270,000 to the Berlin Electric Utility. The application to the MPSC shows that the rate decrease can be accomplished while maintaining the increasingly sound financial condition of Berlin’s Electric Utility.
The application also includes information about Berlin’s ongoing electric utility capital improvement plan which is designed to further improve the reliability of Berlin’s electric service to all customers. Current residential rates will not be affected by the application.
Historically, Berlin’s commercial electric customers have paid more per kilowatt-hour for their service, in some cases up to 20 percent higher than residential customers, said Mayor Gee Williams. “This approach was necessary in years past when there were a very limited number of non-residential customers in town. But as one of many initiatives to increase businesses and jobs in Berlin, the current rate application will gradually reduce the disparity between residential and non-residential customers,” the mayor said.
Since electric utilities were deregulated in Maryland, the MPSC has used its ratemaking authority over electric utilities to gradually move rates toward parity to avoid rate shock among any classes of customers. Although, rates for now of non-residential customers will continue to be somewhat greater than for residential customers, Berlin’s customers will be paying a more equitable share of the cost of providing electricity to Town electric customers if the rate reduction application is approved, the mayor added.
It is rare that an electric utility would ask the MPSC to reduce rates, so it is uncertain how long the MPSC will take to act on Berlin’s application. “We are entering unchartered territory by requesting an electric rate reduction,” Mayor Williams noted, “but the Town is prepared to provide any information or other documentation necessary for the MPSC to make a thoughtful and timely decision on our rate reduction request,” he added.
All Town of Berlin electric customers, residential and commercial, have benefited from contracting multiple purchase power agreements that were approved by the Mayor and Council between June 2011 and February 2012. “The net effect of the electric contracts has been to first reduce and then help stabilize bills for the town’s electric customers through May 2015,” the mayor said.
Berlin officials were guided and advised through the last three electric supply contracts and the preparation of the new rate reduction filing by the electrical engineering consulting firm of Booth and Associates, Inc. of Raleigh, NC. who was first hired by the town in August 2008. The legal work for the electric rate case was provided by the law firm of Betts & Holt, LLP of Washington, DC.