Utility Rate Debate Continues

Apr 24 2012 /

Dave Stevenson, Director of the Center for Energy Competitiveness at Caesar Rodney Institute, talks to EDAP about switching to Delaware Electric Coop.

The Economic Development Advisory Panel’s (EDAP) meeting on Wednesday, April 18 hosted a lively debate about utility rates in the First State and the City of MIlford when guest speaker Dave Stevenson, of Caesar Rodney Institute, promoted an idea that he stated would save hundreds of dollars for utility users in Milford and spur economic development.

As Director of the Center for Energy Competitiveness at Caesar Rodney Institute, a self proclaimed free-market oriented think tank, Dave Stevenson shared with the members at EDAP that moving the City’s electric under the Delaware Electric Coop (DEC) would achieve lower contract prices for the electricity they buy. Mr. Stevenson stated that DEC prices already average about 20% lower than Milford’s municipal utility.

“In Delaware the average customer is paying 50% more than those in surrounding states, except customers of the Coop,” commented Mr. Stevenson. “There is a manufacturing renaissance happening in this country and the first city in Delaware to significantly lower electricity rates will see an economic boom.”

At the meeting in support of Mr. Stevenson’s suggestion to move Milford’s utilities under the supervision of DEC were representatives from three large commercial businesses in Milford including U.S. Cold Storage, Perdue and Sea Watch.

“We have done some expansion and are currently in the process of a $3.5 million capital investment that will add 60-80 additional employees,” commented Jerry Gordon, CFO at Sea Watch International in Milford. “We have multiple plants in surrounding states and as we look to build on to our infrastructure we would like to choose Milford. Anything we can do to reduce those rates to help us become more competitive would help.”

The validity of whether or not the move to DEC would produce lower rates for consumers was questioned by several members of the EDAP committee. Committee member Irv Ambrose addressed the concern about whether the city would have to eventually raise property taxes to cover a lost utility revenue.

“I will tell you exactly what will happen,” commented Mr. Ambrose. “Property rates would double and then we have a real problem on our hands.”

Mr. Stevenson pointed to the prediction that added economic growth from new businesses and residents would be enough to raise the tax base in a decade if the move to DEC was made, therefore alleviating the need for raising property taxes. Although this is a reasonable prediction, Mr. Ambrose reminded the committee that it is just a prediction.

City Manager Richard Carmen disagreed with the assessment made by Mr. Stevenson and noted that the City of Milford has already begun the process to reduce electric rates for commercial and residential users. Just last year the City of Milford saw a decrease in rates that they receive as a member of the Delaware Municipal Electric Corporation; DEMEC supplies nine city electric distribution utilities located in the state of Delaware. According to City Manager Richard Carmean residential user should see a 2% reduction in their utility bill this year and commercial entities could see as much as an 18% reduction based on their usage and demand.

“Everything that I am hearing in the energy industry in Delaware right now is that the Coop will be at the same rates as us in 3 years,” stated City Manager Richard Carmean. “I have also been told that our purchase of power is going to continue to decrease, allowing us to pass those savings onto our citizens. The purpose is to make sure we are doing the best we can do for our citizens.”

Mr. Carmean stated that he welcomes the opportunity for the Coop themselves to come before the City with a plan for The City of MIlford. As the utility debate continues in Milford, City officials and the Economic Development Advisory Panel will continue to search for alternative paths to reduce commercial and residential rates in the future.

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