State, municipalities sign pact that reduces electric rates

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Patrick McCullar looks on as Gov. Jack Markell signs the memorandum of understanding

Gov. Jack Markell joined with mayors and the head a municipally owned power suppler to sign an agreement that will reduce rates.

For many years, businesses and more recently Markell have been concerned that higher municipal rates were hurting prospects of retaining and attracting businesses. Of late,  residential customers of Delmarva Power have seen competing utilities offer somewhat lower rates under the state’s electric deregulation bill.

Markell joined Patrick McCullar, CEO of Delaware Municipal Electric Corporation and the mayors or town officials of Newark, New Castle, Middletown, Clayton, Smyrna, Dover, Milford, Lewes and Seaford to sign a Memorandum of Understanding.

“Over the last three months, DEMEC and the towns rolled up their sleeves and worked diligently with us to find a way to lower electric utility rates without shifting the cost to the other essential and valuable services the towns provide, “ said Markell. “This memorandum of understanding strikes that balance. It sends a clear signal to businesses that Delaware and our towns and municipalities are ready to compete for jobs.”

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Under the memorandum, the nine DEMEC municipalities have agreed to lower retail electric rates by at least 10 percent in the next three years, starting this year. In addition, to the extent they have not done so already, each municipality will authorize an “economic development rate” for the purpose of encouraging job creation in the DEMEC municipalities and attracting new employers.

Finally, each municipality has agreed to cap for the next five years at fiscal 2012 amounts the revenue that they transfer from their electrical utility to their general fund budget. Those transfers have typically been used to hold down property taxes.

In return, as long as the municipalities abide by the memorandum, the governor has agreed to oppose any legislation that would allow third-party supply in the municipal electric territories. The municipalities have been aided by lower wholesale electric rates.

The City of Newark has already made moves aimed at holding on to large customers, notably the University of Delaware, in the form of lower rates. That caused an outcry from some residents at the time the plan was approved by the City Council. The city is betting that UD’s STAR campus will bring jobs and more demand for electricity. The former occupant of the STAR site, Chrysler, did not buy electric power from the city.

It was recently announced that Bloom Energy will build a manufacturing site at the STAR campus.

”DEMEC and its member communities share Gov.  Markell’s goal of making Delaware one of the most attractive and competitive locals in the world,” said Patrick McCullar, CEO of DEMEC. “We recognize how important lower energy costs are to Delaware and appreciate the opportunity to work closely with the  governor toward our common goals.”

Newark is the largest shareholder in DMAC, which operates a natural gas generation plant in Smyrna. – Doug Rainey


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