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Librandi electricity case could affect your rates: Editorial

Posted 2/26/20

We don’t know what the final outcome of the long battle that Librandi Machine Shop is waging with the borough of Middletown over electricity will be.

However, a recent ruling by a …

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Librandi electricity case could affect your rates: Editorial

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We don’t know what the final outcome of the long battle that Librandi Machine Shop is waging with the borough of Middletown over electricity will be.

However, a recent ruling by a Pennsylvania Public Utility Commission administrative law judge made one thing clear. If Librandi wins, it likely won’t lead to more borough electricity customers being able to choose from where they get service, as Mayor James H. Curry III previously stated he feared. Such an exodus of customers could cause major problems for the borough because the ability to provide reasonable electrical rates would take a major hit.

Both the borough and Librandi have unique situations that affect this legal war.

Middletown is one of 35 boroughs in Pennsylvania that provide electricity to its residents and businesses.

While Middletown officials have long contended that the rates it charges customers for electricity are competitive with the rates charged by private utilities such as Met-Ed and PPL, Librandi disagrees. The company claims the borough sets its electricity rates artificially high so that the borough can use electric revenue to subsidize the borough’s general fund budget each year in order to avoid raising taxes.

Librandi’s unique situation involves where it is located. It wants to get its electricity from Met-Ed, which provides service in Lower Swatara Township. The machine shop is located at 93 Airport Drive, on Harrisburg International Airport property.

PUC Administrative Law Judge Andrew M. Calvelli said in his ruling that if Librandi can show that part of its facilities are located within Lower Swatara, it has the legal right to receive service from Met-Ed. Now it’s up to Dauphin County Court to decide exactly where Librandi lies.

Getting back to Librandi’s claim about the electric revenue: Curry has gone on record strongly opposing the borough council’s annual decision to transfer money from the electric fund to the general fund budget to balance it. He vetoed his approval of the borough’s tax rate last year, which had the effect of holding the budget hostage. The borough council ended up compromising by eliminating two full-time positions that were proposed for this year, but $1.6 million out of the electric fund budget was still transferred in order to balance the general fund budget.

Librandi is one of the borough’s biggest electricity customers. Curry in October estimated Librandi pays about $200,000 a year. However, the borough has previously estimated the amount at as high as $500,000 a year. That number is not all profit for the borough, but it still is a significant amount.

The loss of one of the borough’s biggest customers almost certainly would have a trickle-down effect on the rest of the borough’s electricity rate-payers. In other words, if you are reading this and you live in the borough, you likely would pay more for electricity.

Remember, the borough doesn’t generate the electricity it provides. Middletown buys electricity from wholesalers and resells the power at a price set by council.

Last summer, council approved the borough entering into a contract with BP Energy Company to purchase electricity on the wholesale market at a fixed cost of $34.91 per megawatt hour that will go through 2027.

In other words, the borough will pay the same amount through 2027 for its electricity whether Librandi is a customer or not.

If Librandi is able to go to Met-Ed, how else could the borough make up for the lost revenue other than increase the rates of its remaining customers?

The good news, however, is that Curry’s fear that a ruling in Librandi’s favor would lead to more customers trying to leave the electricity service of the borough is unlikely. The judge’s ruling made it clear that Librandi’s location is the deciding factor in whether it can get electricity service elsewhere.

We will continue to keep an eye on Librandi’s legal crusade. If you think it’s simply a turf battle between the borough and a company, it’s more than that. And if you are a borough electricity customer and you want to avoid volatility in your rates, you likely want a ruling in favor of the borough against Librandi’s move to leave.

Stay tuned.