Delaware Electric Co-op proposes rate increase

For the first time in six years, the Delaware Electric Cooperative is proposing an increase in its electric supply rates, following an especially cold winter.

The increase would raise supply charges on customer bills from 1.56 cents per kilowatt hour to 2.4 cents per kwh.

The proposed price bump for summer rates is expected to add $8.40 to the monthly bill of a residential customer using 1,000 kilowatt hours per month.

The co-op board is planning to vote on the matter Wednesday night.

The increase is being driven by higher costs from the co-cop's power supplier, Old Dominion Electric Cooperative, of which the Delaware co-op is a member. The Delaware co-op gets 14 percent of its power through an ODEC nuclear power plant in Virginia.

But during those cold winter days, a large amount of power needed to be purchased on the spot market, from expensive peaker plants, to meet members' power needs, said Jeremy Tucker, co-op spokesman. The co-op serves 84,000 customers in Kent and Sussex counties.

The co-op and its partners in the Old Dominion Electric Cooperative are building a natural-gas fired plant in Cecil County, Maryland. But that won't be ready until 2017, he said.

There were natural gas supply constraints this winter, causing prices to spike in January, he said. The problem affected utilities around the country.

"We won't be the only ones raising our rates," Tucker said, describing the cost increase as a "pass-through."

The higher energy prices resulted in a projected $12 million in additional expenses for 2014, said Bill Wells, the co-op's chairman.

There has been some negative reaction, especially from seniors on fixed incomes, Tucker said. But most members, "they know we're a nonprofit, we're not making money on this, we do the best we can" to provide reasonably priced energy, he said.

If approved by the 11-member board, the increase will take effect on June 1. Tucker said members are encouraged to attend the meeting and voice their opinions.

The board still hopes to provide capital credits to its customers at the end of the year, said Wells, who also is a dairy farmer west of Felton. Wells praised the co-op management's efficient operations; Tucker said that if the increase is approved, it still will be 15 percent less than Delmarva Power, which must earn a profit margin to stay in business.

The co-op was able to absorb power price increases that began in October, but now it must seek more revenue from members, Wells said.

"Every board member recognizes the situation we're in," Wells said.

The price increase is probably not the last, given the expectation of more cold winters to come, said Bill Andrew, co-op president, in a video to members.

If energy prices go down, rates could go down in the next few years, but there's no way to predict that, Wells said. "It would be like trying to predict the weather on Christmas Day 2015," Wells said. "It's just impossible to know what the markets will do."

Contact Aaron Nathans at (302) 324-2786 or anathans@delawareonline.com.

If you go

The Delaware Electric Cooperative will hold its board meeting at 6 p.m. Wednesday at its headquarters, 14198 Sussex Highway in Greenwood. If you wish to have your opinion heard but cannot make the meeting, contact Mark Nielson at (302) 349-3147 or mnielson@decoop.com.