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Chambersburg power rates to rise

September 19, 2007|By DON AINES

CHAMBERSBURG, Pa. - The 10,500 customers of the Chambersburg Electric Department will see their rates go up by about 20 percent by the end of 2008, but the increase is likely to take place in two stages, limiting the "rate shock," according to Department Superintendent Richard Hamsher.

Staging the increases will lessen the impact over the course of the year, but electric bills averaged out over 12 months will be "in the neighborhood of 15 percent higher," Hamsher said Tuesday. The bottom line on the electric bill, for the residential customers who paid an average of $81 for the power they used this past July, will be closer to $100, he said.

Electric rates for borough customers had increased about 20 percent in the previous five years, Hamsher said.

While residential, commercial and industrial bills might increase 20 percent, Hamsher said he expects the cost of electricity purchased wholesale by the department to nearly double over what it paid under the terms of a five-year contract with Detroit Edison Energy Trading that expires at the end of this year. The department is negotiating a new contract with five generating companies still in the running.

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"Since electricity was deregulated, it hit wholesale customers first because utilities accepted caps on retail customers," Hamsher said. Chambersburg is a wholesale buyer and is subject to buying electricity on that rapidly fluctuating market, he said.

As those caps on retail electric rates have expired, the result has been increases up to 70 percent or more for customers in some parts of Maryland, he said.

"We've taken steps to mitigate the increase so there isn't such a rate shock," Hamsher said.

Chambersburg is one of 35 municipalities in Pennsylvania with its own electric distribution grid and the only one that can generate power, Hamsher said. While the system's capacity is more than 50 megawatts a day and demand is usually about 40 megawatts, the borough's Falling Spring and Orchard Park generating plants can produce up to 30 megawatts, he said.

Those plants are not running around the clock, but do allow the borough to avoid purchasing more expensive electricity on the spot market during periods of peak demand and to make money by selling power it generates into the wholesale market.

Just having the ability to generate electricity, the department's "idle capacity value" is worth $1.2 million a year, about the same as the debt service on the $20 million Orchard Park plant that went on line in 2004, he said. That savings is in transmission fees to PJM Interconnection, a regional transmission organization serving 13 states and Washington, D.C., he said.

The borough also benefited from resolving a dispute with PJM over transmission congestion fees through the Federal Energy Regulatory Commission, he said. The borough was charged $4.9 million more by PJM in 2006-07 for electricity transmission through a substation in West Virginia based on increasing energy demand through that station.

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