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Sides argue bill that would stop use of electrical funds for other services; it would affect Middletown

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 2/13/18

HARRISBURG — Views for and against proposed state legislation that would prevent Middletown and other boroughs selling electricity from using that revenue to pay for local services  were …

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Sides argue bill that would stop use of electrical funds for other services; it would affect Middletown

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HARRISBURG — Views for and against proposed state legislation that would prevent Middletown and other boroughs selling electricity from using that revenue to pay for local services  were heard during a hearing on the bill held at the capitol on Tuesday, Feb. 13.

The legislation sponsored by Rep. Aaron Bernstine, R-Ellwood City, would also impose state regulation upon boroughs that provide electricity, similar to the rules that private companies like PP&L and Metropolitan Edison are subject to under the Pennsylvania Public Utility Commission.

Residents and businesses living in public power boroughs also could shop for a different electricity supplier under Bernstine’s legislation, something they are now prohibited from doing.

Middletown and most of the 34 other boroughs that sell electricity transfer a portion of that revenue every year to help pay for services such as police and road maintenance.

Opponents of the bill, led by the Pennsylvania Municipal Electric Association representing the 35 public power boroughs, say the legislation would force Middletown and the others to raise property taxes to make up for lost revenue.

Bernstine sought to refute that during the hearing before the Local Government Commission, saying the boroughs could avoid raising taxes by cutting spending, just as most other municipalities in Pennsylvania do.

But Ephrata Borough Manager Robert Thompson, whose municipality is one of the 35 selling electricity and who testified against the bill on behalf of PMEA, said that the average household in Ephrata would pay $696 more in property taxes per year to make up the difference, if Bernstine’s legislation passes.

Transferring electric fund revenue helps Ephrata keep its property tax lower than any other municipality in Lancaster County, Thompson said, and the borough also has no general fund debt.

However, lack of standard regulation at the local level hurts low- to moderate-income residents who live in these public power municipalities, said Patrick Cicero, testifying for Bernstine’s legislation as executive director of the Pennsylvania Utility Law Project.

For example, Cicero said public power boroughs do not have to provide special rates to those who are of low income.

Bernstine’s legislation is “no panacea, but it’s a start” toward providing low to moderate income people living in these boroughs with the type of consumer protection they would have if the boroughs were subject to PUC-like regulation, Cicero said.

However, Rep. Tom Mehaffie, R-Lower Swatara, who represents both Middletown and Royalton, which is also a public power borough, said both municipalities go to “a great extent” to assist people who cannot pay their bill.

Bernstine contended that electric rates in public power boroughs are “significantly higher” than those in municipalities served by private companies.

In Grove City, residents and businesses pay 27.8 percent more for electricity, mostly because they are not allowed to shop for a different supplier of electricity, Bernstine told the committee.

He provided other statistics intended to refute the claim of public power advocates that boroughs providing their own electricity have lower property taxes. He noted for example that Middletown’s local property tax is the ninth highest of any municipality in Dauphin County.

Thompson said Ephrata residents pay less on average for electricity than people living outside the borough served by private utilities.

An Ephrata resident pays $127.45 per month on average for electricity, compared to someone served by PP&L using the same amount of power who pays $148.56, Thompson said.