On Wednesday, May 9 Gov. Jack Markell joined Patrick McCullar, President and CEO of the Delaware Municipal Electric Corporation (DEMEC), and the Mayors or town officials of Milford, Newark, New Castle, Middletown, Clayton, Smyrna, Dover, Lewes and Seaford to sign a Memorandum of Understanding (MOU) that highlighted their “shared commitment toward making municipal energy rates more competitive in order to spur job creation, while preserving the core functions and services provided to residents and businesses in the municipal service territories.”
Under the Memorandum of Understanding, the nine DEMEC municipalities, including Milford, agreed to lower retail electric rates by at least 10% in the next three years, beginning in 2012. Each city also agreed to authorize an “economic development rate” for the purpose of attracting new businesses and creating jobs within the DEMEC municipalities.
Each municipality has also agreed to cap the amounts of revenue transfer from their electrical utility to their general fund budget for the next five years at the Fiscal Year 2012 rate. Under the Memorandum of Understanding, as long as the DEMEC municipalities abide by the MOU, the Governor has agreed to oppose any legislation that would allow third-party supply in the municipal electric territories.
According to Milford City Manager Richard Carmean, the signing of the MOU means stability for the City of Milford and the other DEMEC municipalities. The stability of knowing that customers will purchase electric from the City of Milford will allow the City to continue its efforts to decrease electric rates and encourage economic development.
“We already take action on all of the areas that the Memorandum of Understanding touches on,” stated Carmean. “Our transfer rates from our electric utility to the general fund have been frozen for over twelve years, we have been able to cut rates for commercial users by more than ten percent and we have developed economic incentive rates to encourage expansion of existing businesses and new businesses.”
The debate on utility rates in the city of Milford has been a contentious subject matter for years and came to a head on April 18 when Dave Stevenson, of Caesar Rodney Institute, promoted the idea to move the City’s electric under the Delaware Electric Coop (DEC) during an Economic Development Advisory Panel’s (EDAP) meeting.
At that meeting City of Milford officials voiced their reluctance to give up their autonomy of supplying electric to City of Milford customers to a third-party supplier. The stability promised under the Memorandum of Understanding by Governor Markell gives city officials a guarantee that their customer base will continue to purchase electric from the DEMEC municipalities by ruling out a take over from third-party suppliers. City Manager Richard Carmean sees this as a move to encourage economic expansion across the entire state of Delaware and a tool that may allow the City of Milford greater purchasing power for electric in the future.
“The City is committed to not raising electric rates to any level of customer,” commented Carmean. “This memorandum allows municipalities to be the captains of their own ships by ensuring stability for DEMEC municipalities.”