The City of Newark and University of Delaware reached a long-term agreement on electric service. The deal came after two years of discussion and was approved by the City Council on Monday night.
The University of Delaware negotiations have been a concern with the city, which gets one-third of its electric utility revenue from the institution.
Some residents also expressed concerns that UD would pay low rates that would put more of a burden on residents in the future.
The city cited the following features of the agreement:
– Certainty of a 15-year agreement – stable and growing revenue stream
– Retain the ability to raise rates if required in the future
– Additional $300,000 a year payment (total $511,000) with annual consumer price index increase to the City’s general fund
– Control over the size and location of university meters that are served by the agreement.
– Minimum delivery charge (revenue guarantee of $2.6 million annually)
– High likelihood of increased demand and electric consumption by UD. This is due to the expansion of the STAR campus (former site of the Chrysler plant) which was not on the city electric system).
– Rate stability for UD with reductions in line with rate study completed by Black and Veatch
– Flexibility as to how energy is procured and priced to UD by the city;s wholesale power supplier
– Approval for up to 5 megawatts self-generation for university facilities over the course of the 15-year term
– Margin increase constraints
– Future rate increases are capped at the Newark system average increase
“To the Newark community this fifteen-year agreement represents a stability regarding their electric rates as opposed to the burden of funding our electric infrastructure needs without the university as a customer,” said City Manager Carol Houck. “We are now in a position to plan for our electric system needs into the future during a time that may prove to be one of great change within the industry.”
Mayor Vance Funk said, “I am pleased that both organizations stuck it out during recent negotiations and delivered an agreement that serves the interests of both the university and Newark. This negotiation also provided the momentum for greater cooperation and partnership between our organizations which is of utmost importance.”
