MARBLEHEAD — The Municipal Light Board on Thursday voted to approve revised utility rates that will gradually increase the fixed base rate that customers pay each month for their utilities while also decreasing the flexible electricity rate.
The town’s municipal light department, which functions as a nonprofit government agency supplying electricity to the town, for years offered a low base rate to customers under the belief that it was a benefit to residents to do so. But, according to General Manager Joe Kowalik, with the growing need to combat climate change and the requirement for the department to fund its expenses with money reaped from the rates it charges, it no longer makes sense to offer a low fixed rate.
“What is a systemic reality in municipal utilities is that their base rate is too low,” Kowalik said in an interview Tuesday afternoon.
Instead, beginning in January 2023, the base rate the department charges to residents will rise from $4.25 to $11.25 before eventually rising to $18.25 the following January. The department will also hike the rates it charges to small commercial properties and large commercial properties — from $5 to $18.50 to $32.25 for small commercial, and from $10 to $61.75 to $113.50 for large commercial.
But, Kowalik said, most customers won’t notice a change to their monthly bill, because the electricity rate will decrease each of those years. For residential customers that rate will fall from 19.85 cents per kilowatt hour (the standard measure for how much electricity is used) to 18.80 cents per kilowatt hour.
For small commercial properties, it will fall from 20.6 cents per kilowatt hour to 18.8 cents to 17.2 cents. For large commercial properties, it will fall from 16.6 cents per kilowatt hour to 16.3 cents to 16.2 cents.
The rate increases were adopted by the board Thursday evening, after reviewing a presentation created by Utility Financial Solutions, who developed the specific figures for the rate increases during a review of the department’s finances. In doing so, they developed the recommendation that the department relies not on the electricity rates it offers to generate revenue but to do so via the base rate instead.
“They said, ‘you’ve got to increase your customer charge … more significantly to cover these costs,” he said. “The example they always use is someone who used one-kilowatt hour a month. You still gotta keep the lights on. You gotta have a meter working. You gotta send the bills out, that doesn’t matter if they use 1000 or one-kilowatt hour a month. So those are all what they would consider to be these fixed distribution costs such as in you have to exist and that’s really what your base rate should cover.”
Charlie McKenna can be reached at [email protected].
