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Posted March 20, 2013 | comments Leave a comment

Money Saver: Front Royal boasts lowest electric rates in Virginia

By Alex Bridges

Front Royal charges the lowest rate for electricity of all Virginia providers, according to a recent state report.

The town retains its position for the second year in a row among municipalities, investor-owned and cooperative power suppliers, the state Attorney General's Office report shows.

The Attorney General's Office compiles the list on residential electric rates each year with information provided by the State Corporation Commission, the Municipal Electric Power Association of Virginia and the Edison Electric Institute.

As of this past January, Front Royal charges $93.28 per 1,000-kilowatt hours of electricity used -- the same rate as reported in 2012. Manassas charges the second-lowest rate of $93.31 -- more than $6 less than the charge reported in January 2012. By comparison, Harrisonburg, the next closest municipal supplier of power, charges a monthly average of $97.84.

Front Royal's electric rate has not changed since 2007, according to Joseph Waltz, the town's director of energy resources. But the department's approach may sound more like how someone would invest in the stock market.

"We've kept prices stable due to how we purchase wholesale power," Waltz said Wednesday. "Basically what we've started to do, strategy-wise, is diversify our portfolio for wholesale by not buying into one wholesale contract to spread our risk. That's allowed us to keep our rates lower by not being affected."

Waltz explained the gas market directly influences prices of electric power. He attributed approximately 70-85 percent of the department's cost goes to buying electricity at wholesale rates to then resell to consumers.

"But a lot of our success has to be, one, is getting a handle on our wholesale power costs and watching our pennies," Waltz said. "We work for the citizens here. We're not out to make a profit. We're just trying to provide the lowest-cost, reliable power we can to the citizens."

Municipalities, investor-owned distributors and cooperatives use different business models, Waltz said. Front Royal is one of more than a dozen Virginia municipalities that supply residents and businesses with electricity. Waltz estimated more than 2,000 municipalities nationwide supply power.

The suppliers for the rest of the Northern Shenandoah Valley still rank low among providers. Shenandoah Valley Electric Cooperative charges $98.15 per 1,000-kilowatt hours; Rappahannock Electric Cooperative charges $98.83; and Dominion Virginia Power charges an average of $107.22, according to the report. All three providers charged higher average rates than those reported in January 2012.

The national average as of July 2012 was $128.29, according to the report, an increase from $124.31, the report showed.

Cooperatives serving Craig and Botetourt counties and the Northern Neck charge rates higher than the national average. The two providers also charge the highest rates in the state: Craig/Botetourt charge $141.87 per 1,000 kilowatt hours to 6,500 customers, while Northern Neck charges $130.41, according to the report.

The 2013 rates listed may change and represent a snapshot of the charges as of January, the report states. Rates for electric cooperatives reflect wholesale power cost adjustments filed with the State Corporation Commission in January. All rates do not include local utility, consumption and sales and use taxes.

Front Royal serves approximately 7,300 customers compared to Harrisonburg's 19,500, Shenandoah Valley Electric's 52,000 and Rappahannock Electric's 50,000. Dominion has approximately 2.3 million customers.

Front Royal is not immune to the same weather-related problems that can disrupt power from other distributors. Waltz recalled that one storm disrupted electricity going into one of the town's substations and as a result approximately 700 customers lost power.

"We've got a lot of local workforce here that can respond quickly," Waltz said. "In my seven years being here I've never had anyone complain of being out of power too long."

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com

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