County aggregates for lower electric rates

Sussex County Council authorized staff to move forward with a Memorandum of Agreement between the state, Kent and New Castle counties, and various cities and school districts, in pursuit of an aggregated bid for electricity, at the May 2 council meeting.

For anyone who’s been camped out in the middle of the Cypress Swamp for the past few months — unless you live in one of the Delaware Electric Cooperative’s (DEC’s) service areas, your electric rates just spiked. Sharply.

And what’s true for the average citizen is doubly true for Sussex County government.

Residential customers will soon see the effects of a nearly 60 percent rate hike on their electric bills. However, as County Administrator Robert Stickels pointed out, some of the county’s bills would more than double.

“This building (the Sussex County Administrative Office Building), last year, cost us $73,000,” Stickels said. “This year, it’s going to cost $158,000.”

“Last year, South Coastal (the South Coastal Regional Wastewater Facility, near Ocean View cost us $247,000,” Stickels continued. “This year it going to be $537,000. We’re not even going to talk about what this is going to do to sewer rates.”

The county uses 11 million kilowatts (11,000 megawatts) a year, and 75 percent of that goes to water and sewer operations.

As Finance Director David Baker pointed out, the county had about 120 accounts with Delmarva Power (and other accounts with the DEC, but DEC rates are only expected to increase by 5 or 10 percent this year).

The DEC’s business model is a little different. However, for standard-model corporations like Delmarva Power, or Washington Gas Energy Services (WGES), or anyone else in privately-owned transmission and distribution, wholesale prices just spiked.

Delmarva Power, at present the peninsula’s biggest player in transmission and distribution, is still regulated.

As local Rep. Gerald Hocker (38th District) noted at a recent “town meeting” in Clarksville that the Public Service Commission still has oversight of Delmarva Power’s margins. Delmarva Power was realizing a roughly 10-percent profit margin, Hocker pointed out — hardly obscene.

Profits on the generation side of the electric business are not scrutinized in the same way. Those companies have to be more concerned with balancing shareholder interests against the threat of hungry newcomers bearing lower bids.

The problem this year, for Delmarva Power or WGES — or anyone else in transmission and distribution — is that there aren’t any lower bids. That is because everyone on the generation side just came out from under the same rate caps.

But perhaps the situation isn’t entirely hopeless.

Steve Hudson, the county’s director of maintenance and engineering, explained the aggregated bid process, and some of the possible benefits.

Hudson anticipated lower rates, due to the grouping of the counties and the state. The aggregated group would rely on a broker (from the Honeywell Corporation) to find the best available rates and set up a contract.

The Memorandum of Agreement would not obligate the county to enter into whatever best-deal contract Honeywell was able to procure. However, it would obligate the county to at least participate in the aggregation, now and whenever that energy contract comes up for renewal.

But Hudson said they were proceeding under the assumption that purchasing in aggregate would save money.

For part two, Hudson said the state was hiring an energy management team, and he recommended the county do likewise.

This team would focus on energy conservation, he explained: evaluate the county’s buildings and electrical systems, try to increase efficiencies, install Energy Star products, maybe conduct a “lighting audit” or upgrade heating and air conditioning systems.

As for his department, he said the wastewater treatment plants had been utilizing variable frequency drive (VFD) motors, but he’d asked for some new Power Logic equipment in this year’s budget, to better track power conditions, electricity usage and demand at the plants.