WALLINGFORD — The town’s Electric Division discussed the rising cost of electricity with the Town Council earlier this week.
The discussion was prompted by an Electric Division request to have the council approve a $3.6 million budget amendment so the division could transfer money within its accounts to cover the rising cost of electricity. The amendment was approved by the council.
General Manager Tony Buccheri described the request as an end of the fiscal year housekeeping item, partially driven by the sharp increase in natural gas prices over recent months. Natural gas is used to generate electricity.
Buccheri told the council the Electric Division budgeted the cost of electricity at $43.30 per megawatt hour, however the actual price has come in at $87.83 per megawatt hour.
Though the increase will mean increased costs for local customers, Director of Public Utilities Richard Hendershot said the impact will be softened by the Electric Division’s policy of pre-purchasing 90 percent of its power ahead of time at fixed rates.
“Historically for the past many several years the Electric division has left 10 percent open (to market prices). In most years that has been advantageous,” he said.
The $3.6 million will allow the Electric Division to pay grid operators for the rising cost of power in the future as it continues to collect bills from the past few months with the its updated power cost adjustment, a figure the division calculates every six months to determine if it properly billed customers for market rate power.
“The 3.6 million is to ensure that there's enough in the appropriate accounts,” Hendershot said. “ … It’s our own money that’s sort of in the bank and we need permission to spend it.”