BERLIN – Electric consultant Booth and Associates had good news for the town of Berlin Monday night after completing a preliminary survey of the electric generation and distribution system.
The burning question, whether Booth can find a way to bring electric bills down, will be answered in detail at the Oct. 7 meeting.
“I think the good news is we can help you work your way out of this situation,” said Richard Booth in the cafetorium of Berlin Intermediate School.
The first priority for Booth has been determining the needs and priorities in the electric utility’s generation plant and transmission system.
“I would say your system is in good to very good shape,” Booth said.
System staff identified roughly $750,000 in priority improvements, the consultants reported. A hefty part of that price tag, up to $500,000 would be the rebuilding of the failed Mitsubishi generator that is currently idle and has not been repaired since breaking down in 2004.
“I went in there with an open mind and asked what they thought,” Booth said. “I think [the priorities] are all valid. They narrowed it down. They were very specific on what their needs are.”
The power plant needs capital improvements, upgrades and repairs, according to Booth. The staff also asked for black start training, a black start fail-safe and an additional technician. Staff would also like to see the strike price formula reviewed. The highest expense would come from repairs to the failed number three Mistubishi generator.
On the transmission side of the system, staff is asking for two more employees, a journeyman lineman, and shop foreman who doubles as a vehicle mechanic. Two new vehicles and new tools are also on the list. Transmission staff also needs black start training and a sectionalizing study.
An aging power cable will need to be replaced in the near future, and some old style technology should be changed out for modern, the consultant reported.
Knowing the cost of improvements will now let the consultants work on the financial side of the equation.
Booth and Associates are looking into reducing costs, but necessary repairs must be done, Booth said. “With any system you have to put money in it to operate it,” he said.
After reviewing the power cost adjustment (PCA) charge that has caused so much controversy in recent months, the consultants concluded that the state approved formula is being properly applied.
The consultants fielded numerous questions on rates, saying that the financial analysis could not be begun until the needs assessment and cost of improvements had been completed.
One citizen asked where the specific scope of work is, and Booth replied that the scope of work has been outlined by the town administration, and that there is no written version, unlike many engineering projects that are based on multi-page documents.
One citizen said that the electric utility should be run like a business and bill other departments in town internally for services rendered outside their scope of responsibility.
“If you’ll let us get to Oct. 7, we’ll deal with the cost side then. You’ve got to let us get there first,” Booth said.
Most of Berlin’s electric costs, $4.5 million, are in purchasing power, said Dwight Davis of Booth and Associates who is responsible for the financial analysis. Berlin spends another $1 million every year on debt service, which works out to about three cents per kilowatt-hour per customer.
Costs for operations, maintenance, and administration, are $1 million to $1.5 million a year and could probably use an infusion of cash, Davis said.
“We’re going to put that plan together and then we’ll come back and look at it based on your priorities,” said Davis.
The consultants will also work on a power supply contract, which would result in level rates throughout the year.
The consultants said they have not been tasked with planning for growth, Booth said, although they will take long-term repair and improvement costs into consideration.
Whether Berlin wants to stay in the power business or get out of it will be part of the discussion, Davis said, as will the outstanding $9.3 million in debt.
While the consultants do not know the cost implications of selling the electric system, they are looking into it.
“What price are you going to get for them? That’s the question,” Davis said.
The four working generators at Berlin’s power plant save the utility over $1 million a year in capacity charges and power costs, said Davis.
Rates and further financial analysis will be the focus of the next meeting, on Oct. 7, starting at 6 p.m., at Berlin Intermediate School.