Council, Residents Divided Over Electric Department

Last Monday’s council meeting highlighted a number of potential issues in the Ellwood City Borough Electric Department, namely customer service concerns and the advantages of private utilities over a municipal-owned utility service.

As explained in a previous article, Ellwood City Borough has its own Electric Department, which belongs to a consortium of municipalities called American Municipal Power (AMP). The borough uses a consulting group, Utility Engineers, for its purchasing agreements, and in 2015 entered a five-year contract with an electric provider.

The borough purchases electricity at a yearly rate of $.08529 per kilowatt (kWh). In turn, it sells electricity to the residents at a domestic rate of $.1149 per kWh. The profits from this transaction are transferred to the General Fund and cover costs in the borough departments, including the police and fire departments. This is used as an alternative to tax revenue.

There are 35 other municipalities in Pennsylvania that use this system as opposed to private utilities. According to borough solicitor Ed Leymarie, under Pennsylvania law, it is legal for municipalities for public utility systems to require all residents to purchase power from their department. In addition, the Borough Electric Department is not regulated by the Pennsylvania Utility Control (PUC) regulations.

Private v. Public Utilities

Because the borough uses electric profits as an alternative to tax revenues, switching to private providers would increase taxes. According to Borough Manager Bob Villella, taxes would have to increase by 5.88 mills. The current tax rate is 7.75 mills.

In addition, property taxes are distributed differently than electric bills, as renters pay the latter but not the former. However, renters do pay rent to landlords which includes property tax expenses, so more in-depth calculations would be required to project an expense distribution.

Council President Connie MacDonald was opposed to the notion of switching.

“The advantage of a public electric department is that the board of directors are elected and answer directly to the consumers,” MacDonald said. “Does Penn Power have an office you can go to and speak to the president? Citizens have control over the department through the election process.”

Council member Judi Dici wasn’t adverse to the notion, but said research would be required to know what the tax impact would be in depth. In addition, she was in favor of offering electric discounts to new businesses.

When Dici previously served on the council before losing an election in 2013, she had suggested electric discounts but was met with criticism by some members on the council at that time.

MacDonald was opposed to electric discounts, stating that the borough already offers tax reductions for the first five years for businesses and that the electric rates aren’t as major a factor.

Electric Department Customer Service

At last Monday’s meeting, numerous complaints were made concerning customer service at the electric department.

“In any other business, customers come first, except Ellwood electric,” visitor Bill Grossman commented.

Major complaints included: the short period of time before power is terminated (10 days), the late fees, how soon late fees are applied, the vagueness of electric bills and hours of customer service at the department.

Currently, the customer service desk is open Monday through Thursday from 8:30 a.m. until 12:30 p.m. As the employees already work full-time, expanding customer service hours wouldn’t create additional overhead costs.

At Monday’s meeting, Villella did express concerns after hearing specific grievances. “Our method of communication with customers is insufficient and should be changed,” he said.

In an interview later in the week, MacDonald commented that Monday’s meeting brought to the forefront many potential issues with customer service. “We will have to examine our service procedures to see how they can be changed and research PUC regulations. Although we aren’t required to follow PUC, we still should.”

During a phone interview, Dici commented that the 10 day window to turn off utilities was “horrible” and expressed a desire to increase customer service hours.

2 Comments on "Council, Residents Divided Over Electric Department"

  1. Francis Ramsden | July 18, 2016 at 10:23 am | Reply

    Why is there no mention or discussion about cutting spending? How come we must continue to increase revenues only?

    If people do not like the way our local government is running the electric company, just wait to see how they run local commerce if the zoning ordinances go through.

  2. Dale Brown Jr. | July 18, 2016 at 12:08 pm | Reply

    Politics, smoke and mirrors at it’s VERY BEST. Remember this at election time and vote the ENTIRE council out!! We need a change and we need public officals who actually look out for the taxpayers. VOTE THEM ALL OUT!!!

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