Indian River Power Plant retirement to affect Middletown electric rates

Mayor Kenneth L. Branner, Jr. | Town of Middletown website

By North New Castle News Report

May 19, 2023

Due to events out of our control, the Town of Middletown has been informed by DEMEC that the cost of our electric supply would soon be increasing due to costs associated with the Indian River Power Plant.
The Indian River Power plant, is a coal-fired plant and has become “uneconomic” for NRG (the operator of the plant) to operate due to environmental regulations and fines.
PJM, the regional transmission organization, has notified Indian River that due to transmission reliability needs, the plant must run until an alternate solution can be completed (could take up to 5 years).
Although we do not directly purchase power from Indian River, this generation is needed for reliability in our service territory. Therefore, all of the power providers in Delaware, including Delmarva Power, Delaware Electric Co-Op and DEMEC will be impacted with this cost increase. The Town of Middletown is part of DEMEC, along with 7 other municipalities across the state
As part of PJM’s “Reliability Must-Run” notice, Indian River submitted a rate schedule to recover the costs to run, subject to federal (FERC) review.
The expected impact for Middletown is about $1.7MM over the first 12 months. DEMEC estimates that the impact over the expected 4.5 years could be about $6.4MM, just to the Town of Middletown (An estimated combined impact of $32MM to all DEMEC members).
Although all other DEMEC municipalities immediately passed these added costs onto their customers’ monthly utility bills, the Mayor & Council of Middletown decided to not immediately pass these costs along until the actual impact to Middletown was better understood.
The Town was able to absorb the rate increase for the first few months (through the end of the calendar year).
However, beginning with the February 2023 utility bill (January’s usage), the Town will need to pass along a portion of this increase.
50% of the anticipated increase will be absorbed by the Town, and the customer will be responsible for the remainder through the end of the fiscal year (June 30, 2023).
Everyone’s cost will be different, based on the amount of electricity used
The average residential electric bill is $153.90 (based on 1,000 kwh)
Based on this usage, the average increase will be about $3.00 (or 2%)
The entire burden of these increases will be factored into and evaluated during the fiscal year 2024 budget process.
Parties at all levels, up to the Federal level, are aware of these issues. Every attempt is being made to expedite the construction of the necessary infrastructure needed to eliminate this issue and allow the retirement of the Indian River Power Plant.

Original source can be found here.

ORGANIZATIONS IN THIS STORY

Town of Middletown