Norwood electric rates to increase 7.5 percent
By Brian Falla/Daily News staff
GateHouse News Service
Posted Jul 02, 2009 @ 12:30 AM
NORWOOD — Customers will see their electric bills increase this year by an average of 7.5 percent under rate increases approved by selectmen this week.
The Board of Selectmen, acting in its capacity as electric light commissioners, approved new rates that will increase the average homeowner's monthly bill by $4.82 from $64.21 a month to $69.03.
Light Department Superintendent Malcolm McDonald said the increase has nothing to do with the $20 million settlement with New England Power Co. (see related story) It is related to the wholesale electric market's prices.
In January, the light department's 10-year contract with its energy provider expired, and McDonald said the market has changed to the point where wholesale energy providers are not offering all-inclusive contracts. Instead, the department is buying its power from different sources in what McDonald likened to the stock market.
The bottom line, he said, is that the price of power has increased from four cents a kilowatt-hour to 11 cents a kilowatt-hour.
In anticipation of the large increase, light commissioners in 2006 established a "rate shock" fund to help cushion the blow.
"We were trying to do slow, incremental increases as opposed to one large rate shock," said light commissioner Mike Lyons.
"We felt that to increase the rates about 60 percent in one year would have been unpalatable," said McDonald.
Instead, commissioners have raised electric rates in small chunks over the past three years, but McDonald said the town is still not recouping its power costs through rates and is using roughly $1.4 million out of its rate shock fund to help pay the bills.
McDonald said he anticipates two more years of roughly 7.5 percent increases will get the town to the point where it is paying its wholesale electric costs solely through rates.
the average Norwood electric monthly bill of $69.03 is still less than surrounding towns serviced by NStar Electric who he said pay roughly $88 a month
But light commissioner Helen Donohue does not take solace in the comparison.
"We have residents who have been laid off or had wage freezes or wage reductions, we need to find a way to tighten our belt and help these people out," said Donohue. "The fact that we're lower than NStar really doesn't do anything for me."
Donohue believes there might be other ways to help ease the burden on ratepayers, such as use some of the department's roughly $4 million annual profit to offset rate increases.
But commission Chairman Bill Plasko said that $4 million goes directly into town coffers to help the town provide services.
Town Meeting member Gordon Smith asked commissioners for a one-year reprieve due to the economic crisis, but McDonald said he looked at a one-year rate freeze and dismissed it because it would mean the department would have to raise rates by 22 percent next year to have enough money to purchase wholesale power.
"It's all a function of what the market is seeking for power these days," said McDonald.
Brian Falla can be reached at 781-433-8339 or email@example.com.