School district, Lansdale talk electric rates
LANSDALE » As work continues on a long-discussed project to renovate Knapp Elementary School in Lansdale, the district’s school board is taking up talks on a new question.
Should the board consider switching the school’s electricity provider from PECO to Lansdale Electric?
“We’re very excited to share our perspective on the value that the borough brings, as far as Lansdale Electric is concerned,” said Lansdale Mayor Garry Herbert.
Work has now officially begun on a multiyear renovation project at Knapp, which will see the construction of a new classroom wing, bus entrance, and full modernization of utilities throughout the school. As part of that project, the school board’s Facilities and Operations committee began talks last week on whether the time is right to switch the supplier of electricity to the school. Herbert and Lansdale Electric Superintendent Andy Krauss outlined the pros and cons
to using the town as a provider.
“We’re definitely higher compared to PECO or PPL, but let me tell you why I’m proud to call Lansdale Electric my home, and why it’s a little different than those investor-owned utilities,” Krauss said.
Lansdale currently supplies electricity to four district properties: York Avenue Elementary, Penndale Middle School, the district Educational Services Center just down Church Road from Penndale, and the district Facilities department offices on West Eighth Street. Showing detailed rate comparisons, including cost per kilowatt-hour and cost per square foot prices, Krauss explained how Lansdale’s electric rate does tend to produce higher prices than the two others, and explained why.
“Our rate base is much smaller: three square miles of borough in Lansdale, and just shy of 9,000 customers. When you take the one million, or 1.5 million, or whatever PECO has, they have a much broader rate base,” he said.
“Our load makeup is mostly residential, so our residential rate is the most economical, and that’s for our residents. The business rate is higher, and you’re in two different rates, the school district, depending on the metering,” Krauss said.
Those rates very depending on whether the district facility uses high-tension connections or a general service rate, Krauss told the board. The last time Lansdale’s council voted to raise electric rates was in 2015, and since then the borough has continued to approve annual transfers of $5.5 to $6 million in electric revenues to the general fund to cover annual operating expenses, such as police and parks that benefit the entire town, as well as capital projects like road repairs, electric system upgrades or other infrastructure.
“We’re roughly a $14 million a year expense, and we bring in around $20 million, so between five and six million goes to either debt service, or to fund capital projects, or to bridge the operational gap for the following budget year,” Krauss said.
Having service with Lansdale Borough instead of the larger utilities could mean faster repairs and fewer outages due to local staff being closer to any emergencies, Krauss told the board, and the borough is currently looking at ways to shift part of its purchase allocation toward, and find ways to stimulate more production locally of, green sources like solar power.
“For the time being, my recommendation for Knapp school is to stay with PECO, just for the dollar-and-cents aspect of it,” Krauss said.
“But on the service end, we do recover a lot faster than those larger utilities, and you’re paying a bit more for that, and we’re feeding that back into the community.”
Committee chairman Jonathan Kassa said the district asked to hear from the borough on the various rates after talks in the committee about the cost differences for Lansdale compared to the other two providers.
“We’re committed to transparency, and communication, and honestly trying to make sure we get the best deal for our taxpayers. At the same time, we did have a power outage recently, and as many of us are aware Lansdale Electric came online a lot more quickly than some PECO customers,” Kassa said.
“We overlaid this with Knapp Elementary coming on board, which currently isn’t a Lansdale Electric customer, but could be — we want to at least practice due diligence, and explore all of our options,” Kassa said.
Krauss added that while the borough is prohibited by the state from seeking new electric customers, the district and borough have worked together over the past decade in several areas, including renovations at York Avenue, shared services agreements, and demand management programs when the town asks customers to cut their consumption of electricity during high demand periods.
“We’ve had a long, great relationship with the school district,” Krauss said.
Board member Cathy Wesley asked if Lansdale is planning any imminent rate increases, and how those are typically done. Krauss answered that rates are typically only modified at the end of each year when the town passes its budget, and every two years an outside third party performs a rate study to reassess current conditions.
“Without the rate study being done, I would not recommend to my council to raise rates. In 2015, we did, and we’ve been able to hold that line since 2015, while PECO and PPL fluctuate,” he said.
Board member Juliane Ramic said hes lives near Knapp Elementary in a neighborhood where some houses are on PECO services while others are on Lansdale’s, and asked if residents can switch from one to the other. Krauss said a high-volume transmission line does run through the school property, so a direct connection from that line to the school is possible, but connecting to the roughly 70 PECO homes in that area is more difficult.
“The problem comes when you have multiple houses on a block, and you have a Lansdale pole line on one end of the block, and you have a PECO pole that Ts into that,” Krauss said.
Changes to state law in the mid-1990s that allowed deregulation of electricity providers put in prohibitions against Lansdale seeking to shop for PECO customers, or vice-versa, he added, and mixed neighborhoods tend to be a legacy of those law changes.
“If the person is right on the end of the line, and it’s one house, PECO will say ‘Fine, you can have that customer.’ But if I call them and say, I have to set four poles, or attach to five of your poles to take three of your customers, they’re not going to let that go,” Krauss said.
“And we wouldn’t want them to do that to us either. It works both ways; we wouldn’t want PECO coming in to scoop up a bunch of our customers,” he said.
District Director of Business Administration Steve Skrocki said he was “willing to ask the question” of Lansdale whether the borough’s current rate categories could be changed or examined to create some new category for educational facilities, separate from the current residential and commercial rates.
“That’s something that we could absolutely look at,” Krauss said.
Wesley added that she has heard of PECO providing other help such as assessments of energy efficiency for customers with large projects like the Knapp renovations, and asked if Lansdale could offer anything similar.
“There are a few different options there as well; we’d be happy to talk about those,” Krauss said.