Date Posted: Thursday, December 14th, 2023

MSC increases the Power Purchase Adjustment (PPA)

The Municipal Services Commission (MSC) is increasing the Power Purchase Adjustment (PPA) on their electric rates. The PPA is a mechanism that Electric Utilities use when there is an unexpected increase in power supply costs but needs time to appropriately design an electric rate. The current PPA is $0.0082 per kwh and will increase by $0.00704 per kwh. Increasing the PPA will impact the average residential electric customer approximately $5.20 per month.

Over the last year and a half Delaware rate payers have been required to pay for The Indian River Power Plant to stay operational due to reliability concerns on the transmission grid. NRG, the owner of the coal fired power plant, intends on closing the remaining generator at this location due to increased regulatory costs.

A second item that is driving up power supply costs are the Transmission rates. This portion of the power supply cost is up 17.5%. Transmission upgrades are needed before the Indian River Power Plant can be retired.   

The MSC is working with Utility Financial Solutions (UFS) on a rate design which the MSC plans to adopt before our April 1, 2024 start of our fiscal year. The rate design will cover these increased costs and reset the PPA back to zero.

The MSC has the lowest residential electric rate in the State of Delaware. Even with the increased PPA, we believe we will continue to be the lowest or a close second when the rate changes go in affect in April.

Please feel free to contact the MSC at 302-323-2330 if you have any concerns.

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