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Newark electric rate increases 8 percent, will cost residents more than $120 each year

  • Oct 5, 2022
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Source: 
Newark Post

Newark residents will see an 8 percent increase in their electric bills due to federal regulations related to a power plant in Sussex County, city officials said Tuesday.

The increase, which takes effect with this month's bill, means that the average resident will pay between $10 and $14 more each month, which equates to an extra $120 to $168 each year.

Commercial users will see a 9 to 11 percent increase, and the University of Delaware will see a similar impact.

The increase is due to fees associated with the Indian River Power Plant, a coal-fired plant operated by NRG in Millsboro that only runs during times of peak demand.

NRG determined the plant is not cost-efficient to run and decided to permanently shut it down. However, PJM, which operates the regional power grid, determined that shutting down the plant could cause grid reliability issues.

"PJM did an analysis and determined that if they take that plant offline, at least some hours out of the year there's going to be some grid stability issues," City Manager Tom Coleman explained earlier this year.

While NRG can't be forced to keep the plant open, concerns about grid reliability allowed it to submit a proposal to the Federal Energy Regulatory Commission for how much money it would take to make it worthwhile for NRG to keep the plant online while Delmarva Power upgrades the grid.

Due to federal regulations, the cost of keeping it open must be split among all electric users on the Delmarva Peninsula, even though the City of Newark does not receive power from Indian River.

Newark's share of the cost will be a minimum of $2.3 million per year for at least the next four years.

"City staff and Mayor Markham have been working collaboratively with local, state, federal and business leaders to find creative solutions for reducing costs where possible," Newark spokeswoman Jayme Gravell said.

She suggested that residents concerned about the increase should consider energy efficiency initiatives like insulating windows, servicing their HVAC system or installing a water heater jacket.

"Reducing your household energy consumption by just 2-3 kWh per day will completely offset this rate adjustment," Gravell said.

The city's Efficiency Smart program offers rebates on some of those measures. For more information, visit efficiencysmart.org/newark-delaware.

The electric rate hike comes as Newark residents are bracing for additional tax and utility rate increases that officials say are needed to address a budget shortfall caused by rising costs and increased personnel expenses.

As part of the 2023 budget, which city council will vote on next month, Coleman is proposing a 10 percent tax hike, an 8.7 percent water rate hike and an 11.2 percent sewer rate hike.

Factoring in the electric rate hike and the proposed increases, the average resident could end up paying between $260 to $310 more to the city next year.

Meanwhile, another electric rate hike is anticipated in March, this one to account for the rising cost of wholesale power due to inflation, the war in Ukraine and other factors.

Questions regarding utility billing or the rate change can be directed to the Payments and Utility Billing Division at 302-366-7000 or paymentsandutilitybilling@newark.de.us.

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