Earlier this year, the Eric Ryan Corporation, a nationally-known utility auditing company, obtained information from the Borough’s electric department using Pennsylvania’s Right to Know act.
At a special town hall meeting on Monday, Borough Manager Bob Villella read an email he received from Keith Venezie, ERC’s CEO.
“Based on the information we were provided, we were able to validate that the borough is being billed correctly by the suppliers based on the contracts that were negotiated and executed, the borough is billing the customers (who’s bills we reviewed) correctly based on the current ordinance, and the PPA that is part of that ordinance is being calculated and billed properly,” Villella read.
In addition, ERC offered to analyze anyone’s bill for free using a software tool that can normalize the data based on degree days (which is weather) and billing days.
Yesterday’s town hall was designed to provide information to the public regarding the borough’s electric department. As with the past two meeting, attendance exceeded 50 visitors.
Borough Manager Bob Villella presented a handout with information regarding the electric department and borough finances. Pam Sullivan, a representative from American Municipal Power (AMP), presented information regarding the borough’s acquisition of power.
Both the borough’s and AMP’s presentations will be available on EllwoodCity.org.
In brief, the borough is one of 35 municipalities that in Pennsyvlania that has its own electric department. It belongs to AMP, a multi-state consortium of municipalities and utilizes a consulting company, Utility Engineers, for its power purchasing decisions.
The borough purchases electricity and sells it to residents for profit. These profits are transferred to the borough’s General Fund as an alternative revenue in lieu of a higher tax rate. In 2015, $1.4 out of the General Fund’s $3.3 million came from the Electric Fund.
The meeting ended with visitor Rob Brough, one of the moderator’s of the Facebook group “Standing Up to Ellwood Electric,” requesting a meeting between three council members and a few citizens. As council cannot take legislative action with less than four members, such a meeting could be held in private without violating the Sunshine Act.
Council President Connie MacDonald stating that he was in favor of such a meeting and asked Brough to attend council’s agenda meeting next Monday.
In this and prior meetings, the discussion between residents and borough officials has centered on three questions:
- Should the borough rely more on taxes as opposed to electric revenue?
- Can the borough cut spending?
- Should the electric department be eliminated altogether?
MacDonald has previously stated he is in favor of keeping the electric department. At yesterday’s meeting he added, “Instead of money going to some corporation, why not have it go here?”
However, he added that he is also in favor of shifting revenue toward taxes. “I like taxes because they are deductible,” MacDonald said.
“This is about transparency to me,” visitor Jeff Krosovich said. “Taxes are transparent.”
According to electric superintendent Mark Linville, until recently, the borough’s electric rates have been competitive with private companies, which spawned additional questions by Brough.
“When did we become based on the electric fund instead of taxes?” Brough asked. “When did we switch from producing our own power to buying? And what can we do to become competitive again?”
None of his questions appeared to be directly answered during the meeting.
John Cress, an Allegheny resident considering moving to Ellwood City, asked council what could be done to create an environment of growth and attract new businesses, which would create a wealthier community to fund the borough.
“We need a philosophy of growth instead of having to gouge what’s left,” Cress said.
Krosovich also called for the borough to be more fiscally responsible, as did visitor Lisa Guerrera. “Why do we need $1.4 million from the electric fund?” Guerrera asked.
Another visitor responded that the public could attend budget meetings to make their voices heard.
“We don’t feel our voices heard when we have three police officers who make $400,000 combined and secretaries that make $45,000,” visitor Dave Gulish said.
MacDonald responded that the police budget is out of council’s control, as the mayor is the head of the police department. Villella added that 70% of employee costs are union employees, which can only be lowered in contract negotiations.
“Cutting the budget is legitimate,” Borough Solicitor Ed Leymarie said. “But how do we do it? Do we cut the police, fire, paving?”
Another source of contention is the borough’s rate adjustment, which creates a seemingly unpredictable variable in how high an individual’s bill will be.
According to Linville, the borough must make three cents profit per kilowatt hour (kWh). As the borough purchases electricity at approximately eight cents per kWh, it sells it at approximately 11 cents.
However, if the borough experiences additional costs, such as transmission or capacity charges, in order to reconcile that cost, it is passed on through customers and this is done with the rate adjustment. Essentially, the adjustment assures that the borough will make a three cent profit regardless of additional cost.*
In addition, Linville examined other boroughs with municipal electric such as Zelienople, which doesn’t use a rate adjustment but has a higher price per kilowatt (between 15 and 20 cents.)
Former Borough Manager Dom Viccarri took the mic to discuss transmission fees. Transmission charges reflect the cost of transferring power from power plants to customers and are regulated by an organization called Pennsylvania-Jersey-Maryland, which controls the power grid for the northeastern United States.
Viccari said that between 2014-2017, transmission lines will be upgraded, which resulted in transmission charges sharply increasing. These charges affect private and government utility companies and are reflected in the borough by the rate adjustment increasing.
“In my history, there’s never been a four cent rate adjustment,” Viccari said. Linville had prior said that rate adjustment was typically around two or three cents.
Although parts of the meeting may have been contentious, visitor Lou Gatto addressed council and visitors with a more optimistic perspective.
“When you get old, you can’t see, you can’t hear much,” Gatto said. “I don’t know everything that was said, but I see beautiful people voicing concerns and local government listening. I trust our council and manager and I’m sure they’ll make the best decisions and serve their constituents.”
*Previous explanations of Rate Adjustment on EllwoodCity.org were not as complete as the staff didn’t fully understand what it was.
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