City of Milford Explained Electric Rate Increased

In a recent announcement, the City of Milford revealed that electric rates are set to rise. This increase is a result of the Delaware Municipal Electric Corporation (DEMEC) passing on higher costs to the city. A not-for-profit organization consisting of eight municipalities, including Milford, provides their own electric service.

“We have a team of professional staff members at DEMEC who are responsible for managing our purchasing power and planning for the future,” stated Mark Whitfield, the City Manager of Milford. A joint action agency has been established to advocate for fair and equitable regulations for power suppliers at both the state and federal level. This agency represents the interests of all eight cities involved.

In a recent announcement, DEMEC revealed that it would be raising rates for municipalities. This decision was influenced, in part, by the closure of the Indian River Power Plant. Whitfield stated that despite Milford not buying power from the plant, the shutdown resulted in a significant rise in transmission and congestion costs.

According to Whitfield, the costs are billed to DEMEC through PJM, the regional transmission organization responsible for coordinating the movement of wholesale electricity. Energy charges to DEMEC have experienced a significant increase of over five percent.

The requirements for renewable energy have also seen a significant increase of nine percent. In order to maintain stable rates throughout the year, DEMEC relies on a rate stabilization fund. According to an actuarial study that took into account power system costs, it was determined that an increase is necessary to sufficiently fund the reserve account in the next five years.

There is a widespread belief among many individuals that the City of Milford has electric rates that are unreasonably high. These individuals often express skepticism when the city announces that they rank as the third lowest in the state in terms of rates. It has been observed that the city of Milford has significantly lower rates compared to other municipalities and the Delaware Electric Co-op.

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“According to Whitfield, the typical City of Milford resident consumes around 950 kwh per month,” Whitfield explained in a news reporting tone. According to usage data, our rates are nearly identical to the Co-Op and considerably cheaper than Delmarva Power, the sole electricity providers in the 19963 zip code. Customers who consume more than the average amount of energy may receive higher bills from Milford compared to the co-op or other utilities.

This is due to the tiered charging system employed by these entities. Our bills are designed to be straightforward, with a consistent usage fee for both summer and winter. During the summer, Milford’s rate appears more favorable compared to other utilities due to their higher “summer” rate. However, this advantage diminishes during the winter.

According to a chart from Whitfield, it appears that both New Castle and the Co-Op have rates that are lower than Milford’s. In January 2024, customers in New Castle would be charged $135.53 for using an average of 950 kwh. On the other hand, Co-Op customers would pay an average of $140.92, while Milford customers would pay $141.29. Comparing rates for the same 950 kwh, customers in Dover would pay $146.00, Lewes $149.02, Clayton $150.79, Seaford $152.40, Middletown $157.89, Newark $165.78, and DP&L $189.96, which are higher than the rates in Milford.

“Residents of the City should also consider examining the electric portion of their utility bill when comparing electric usage and rates,” stated Whitfield. It has been discovered that a significant number of individuals are comparing their comprehensive utility bills, encompassing water, sewer, trash, and recycling, with those of residents living outside the city who only have electric bills. Electricity is just a fraction of their monthly utility bill. In 2024, Whitfield provided an explanation stating that the city had transferred $3.25 million from the electric fund to the General Fund.

“The transfer of funds has resulted in a significant decrease in property taxes and has allocated resources to support a range of general fund activities, including police and public safety, planning, administration, streets, community festivals, and parks and recreation,” stated Whitfield. Communities without an electric utility miss out on the financial benefits provided by the local electric utility.

As a result, these neighboring cities often face the burden of higher taxes and user fees. Consumers can greatly benefit from being served by a municipal non-profit electric company. They can expect reliable service, lower taxes, and lower electric rates, all while enjoying excellent police and public service amenities.