Marblehead Light Dept. targets shortfalls with monthly rate increases

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Increases to electricity rates are becoming a routine occurrence in Marblehead – with the average residential electricity bill to increase $23.83 in November.

And ratepayers should expect monthly hikes though at least March, the Marblehead Municipal Light Department General Manager Joseph Kowalick recently told the Marblehead Municipal Light Commission. Forecasts and actual costs are not balancing from month to month, he continued.

Marblehead electricity ratepayers should expect monthly hikes though at least March, the Marblehead Municipal Light Department General Manager Joseph Kowalick recently told the Marblehead Municipal Light Commission. [MARBLEHEAD NEWS PHOTO / WILLIAM J. DOWD]

When the MMLD raised rates in October to tackle the near $800,000 deficit, like a game of Whack-a-Mole, another popped up.

“Last month, we were hoping we covered the gap for the year, we didn’t, and what we didn’t cover is this $573,000 shortfall, which is based upon the new forecast that says, ‘Guess what your energy prices in October, November and December are higher than what you have in your numbers,” said Kowalick.

The Light Department closed September’s books.

“We’re in a situation at the end of October [where there is this] $573,000 shortfall,” said Kowalick, adding that the Light Department wants to close out the calendar year in black. “We want to fix it within the last two months.”

To close the $778,000 deficit, the MMLD increased the purchasing-power adjustment (PPA) for October by .0337, bringing the average residential electricity bill to $152.26, an increase of $22.31.

“September actuals and the new forecast show a new $573,000 [shortfall],” Kowalick said. “We need to increase the PPA in November by .036, an average bill increase of $23.83.”

With the the latter increase, the MMLD estimates the average residential electricity bill increase in November will come in at $179.50. That’s a cumulative, year-to-day power-cost adjustment of $62.89.

Kowalik has sourced the shortfalls to future wholesale electricity prices, driven by the cost of fuel used to generate electricity and demand for electricity during the winter months. Twenty percent of its energy portfolio determined by the ISO-NE day-ahead market from plants powered by natural gas.

The war in Ukraine is causing severe shortages of natural gas. Russian President Vladimir Putin shut down pipelines into western Europe and many countries there are scrambling to stockpile whatever natural gas supplies they have. That is spiking prices here in New England.

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