Borough rejects plan to raise power rates

PENNSYLVANIA - The Middletown Borough Council has voted down a proposed increase in electricity rates.

"I'm just trying to stave off probably what's inevitable," Councilman Ken Whitebread said. "Many of my constituents have said, 'Don't raise the electric rates. We're paying enough as it is.'"

The council rejected the proposed increase, which would have raised rates $9.36 a month on average. It would have raised the rates 1 cent per kilowatt-hour, from 7.7 cents to 8.7 cents. The rate increase would only have affected residential customers.

Middletown belongs to a government cooperative of 81 communities from four states that purchases electricity wholesale. The borough raised its electricity rates in 2002, 2004 and last year.

Middletown had a flat-rate contract with energy company Metropolitan Edison dating to 1906. In the mid-1990s, Met-Ed wanted to break that agreement, and Middletown sued. The result was a $14 million settlement spread over 10 years into a trust fund used to keep rates low. Historically, the borough's electricity rates have been lower than other area utilities', such as Met-Ed and PPL.

The trust fund has about $7.5 million. There are two more scheduled payments to the borough, in 2007 and 2008.

In June, Rick Groves, the borough's financial director, told the council members they could choose to have low electricity rates until the trust fund runs out, or they could choose a small increase now to slow down the depletion of the trust fund.

Jeffrey Stonehill, the borough manager, said after the meeting that he would schedule Groves to speak at the September meeting. He said he would also schedule a motion to re-advertise the electricity rate increase.

"I want to give the financial director one more opportunity to explain to the councilors what will happen if we don't increase electric rates," Stonehill said.

Of the seven council members, two were absent and one, Joe Dailey, abstained from voting. Only Council President Danny Crawford voted for the increase.