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City of Milford Looks at Electric Rate Reduction

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Earlier this year, the City Council voted to increase water, sewer and trash rates based on the results of a Cost of Services study. On April 13, as a result of the pandemic, the City placed a six-month moratorium on increases for water and sewer. Solid waste rates will increase on July 1, 2020. The same study found that city electric rates could be reduced by 5 percent. In addition, a winter/summer rate differential could be eliminated which would reduce rates throughout the year. On May 11, Council agreed to the lower rates which will go into effect June 1.

“The average home in Milford uses about 1,000 kwh per month of electricity,” Mark Whitfield, Acting City Manager, said. “The average residential electric customer should realize a savings of about $62 per year. Savings will be more in the summer months than in the winter since we are eliminating the winter/summer differential. A letter will go out in utility bills next month describing the various rate changes, including electric. There is also a comparison with the Delaware Electric Cooperative and Delmarva Power.”

According to the electric rate comparison, once the lower rate is implemented, the average City of Milford electric customer will pay $124.78 per month for 1,000 kwh usage while Delaware Electric Cooperative customers pay $122.12 and Delmarva Power customers pay $137.58 in the winter and $134.33 in the summer for the same amount of power.

“This rate reduction came about for multiple reasons,” Whitfield said. “First, the cost of power has actually decreased since the last rate study was done. Second, with the last rate study, we actually accumulated about $3 million more over the past four years than what we anticipated. We are using that excess cash to pay off outstanding debt, so the utility will be pretty much debt free, hence no debt payments. Lastly, the growth of the City means more distribution of costs, so with more users comes less costs per customer.”

Whitfield explained that, at the current rate structure, the City would have continued to accumulate excess cash within the utility. The lower rate and the defeasance of debt allowed the City to pass savings along to the customer. The City also pays the same amount for bulk electric in the summer as the winter so it seemed unfair to have customers continue to pay a higher rate in the summertime.

“There are no significant drawbacks to the rate change,” Whitfield said. “If people create a significant demand in the summer months during an extremely hot period, we could see our demand costs go up, but in recent years that has not been an issue. As long as people use electric wisely, there should be no drawbacks.”

The lower rate will be discussed at the next City Council meeting which is being held virtually. Information on how to call or log in will be at the top of the agenda on the City website. Public comment will be permitted and Mayor Archie Campbell will recognize those who wish to speak. The City asks that anyone who knows they will speak at the meeting contact the City beforehand. Residents are also able to put comments in writing or email in order to have those comments read into the record. The next City Council meeting is Monday, May 11.

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