Hagerstown Light Department customers should see their power bills decrease slightly starting in August, officials said.
Hagerstown signed a two-year contract extension with its electric provider, Allegheny Energy Supply Inc., starting June 1 and locked into a lower rate, City Utility Director Mike Spiker said in an email.
As a not-for-profit utility, the city will pass the approximately 10 percent it will save buying energy under the extended contract onto its customers, he wrote.
“It was our priority to supply lower rates if possible,” Spiker wrote. “The city requested a quote for a contract extension and we were able to lock in when market pricing appeared to be at a low point.”
Hagerstown does not generate its own power and pays to purchase an average of 348,476 megawatt hours per year from Allegheny Energy Supply, Spiker wrote in a previous email.
It adjusts customers’ monthly bills for any difference in the purchase price from Allegheny and what is paid by customers, he wrote previously.
Spiker explained that under the extended contract, base electric rates for customers will not change.
Where customers will see a reduction is in the purchase power adjustment component of their bills, he wrote.
On average, customer bills in all three rate classes — residential, commerical and industrial — should decrease about 0.7 cent for every kilowatt hour, according to a city news release. Individual monthly bills will vary based on usage and demand, the release said.
The average residential customer uses 700 kilowatt hours per month, Spiker wrote.
Using 700 kilowatt hours as an example, he wrote that an electric bill before the rate decrease would be $61.24 and after the rate decrease would be $56.09, if the same amount of electricity was used by the light department.
The contract extension is from June 1, 2011, to May 31, 2013, he wrote.
While the new purchase rate for the city is already in effect, customers will not see it reflected on their bills until August, Spiker wrote.
Before the new rate can be applied to customer bills, the Maryland Public Service Commission must approve Hagerstown Light Department’s calculation for the purchase power adjustment using the new rate, he wrote.