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Berlin, Ocean Pines News Worcester County Bayside Gazette Logo Berlin, Ocean Pines News Worcester County Bayside Gazette


Town gets Chamber input in preparation for PSC rate reduction case

BERLIN — The next step in lowering the electric rates for Berlin has begun, with the Mayor Gee Williams and the Town Council this week seeking the support of the business community as they prepare to argue the town’s case before the state Public Service Commission (PSC).

Earlier this month, the council endorsed a proposal that would begin the process for reducing commercial electric rates and this latest development is aimed at bolstering the town’s argument.

The PSC reviews all proposed changes in electric rates as the state’s official protector of consumers and investors. As such, it requires significant proof before allowing rate adjustments. 

Representatives of the Berlin Chamber of Commerce met with Mayor Gee Williams, town staff and Booth and Associates, the town’s engineering company, to begin to discuss how to approach the Public Service Commission with the request. 

The situation is more complicated than simply seeking a lower rate, since Berlin’s utility situation has a number of anomalies. One is that in most other electric districts, small businesses pay less than residential users. In Berlin, they pay more than three cents more per kilowatt hour. Another is that since the town owns the electric utility, the investors and consumers are essentially the same people.

Dwight Davis, an engineer for Booth and Associates, told the mayor and council earlier this month that he believed the town had a good case for a rate reduction. To secure one, the town must demonstrate that it can afford the revenue reduction that would come along with it.

“They want to make sure we’ve thought through this thing,” Davis said, because the PSC wants to be sure that the town doesn’t come back three years from now asking for an across-the-board rate hike to cover that revenue loss.

This is where the Chamber of Commerce can help the town’s cause, as it can respond to the question of whether lower rates will coincide with an increase in demand.

Chamber members had a pretty good bead on expected business development over the next 10 years. It wasn’t a crystal ball reading so much as a practical assessment of the kinds of business growth that is expected to occur as it relates to the demand for electricity.

This is also where the project gets a little complex. The Berlin Electric Company (BEC) serves the majority of businesses and homes within the town limits and also has some out-of-town customers. Any properties annexed by the town in the future, though in town limits, would not be served by the BEC.

The challenge for the chamber members present was to figure out which properties and potential properties — i.e. vacant lots — would be candidates for development over the next 10 years and how, if developed, they could change the power demand for small businesses in Berlin.

It was declared unlikely but possible that a large scale manufacturing plant would settle in the Tyson property and be up and running within three years. The former Tyson plant would pose the most significant amount of electric demand.

After a brief recap of the economic possibilities over the next three years, Davis thanked the participants for all the help they provided in rounding out the case for a rate reduction that will be made to the PSC.

Other factors in the town’s favor are that the BEC’s debt service is lower than it has to be and the success of the department’s cost-saving measures. 

The cost of pursuing the case, including engineers, lawyers and other expenses could approach $135,000. The contingency fund for the electric department has $500,000 for the upcoming year and will be tapped to support the reduction.

Should the town be successful, it would go a long way toward improving the BEC’s image. Although the rates are more in line with surrounding areas than they’ve been for years, the history of exorbitant rates and rate increases combined with the still-high rates small businesses pay has made potential home and business buyers skittish when it comes to committing Berlin.

Town Director of Community and Economic Development Michael Day said as much during the town meeting earlier this month, calling the electric rates something of a deterrent for potential new businesses.

Realtor Cam Bunting, who was at Monday afternoon’s meeting with Booth and Associates, said the same applied to the residential inquiries. The cost of electricity is more important to potential homebuyers than it has been in the past, she said.

Dispelling the rumors about exorbitant residential charges and bringing small business charges down to a more reasonable amount is the first step in an overall plan to prepare the town for the future.

Williams said that between the investments in wastewater and storm water management and the pending legislation aimed at dealing with unsightly properties, getting the electric rates under control will put Berlin in an enviable economic position as the recovery begins.

“I think we’ll be on the front end of local economic recovery,” Williams said. “Here, we should be ideally situated.”