Princeton Massachusetts Gear Box and High Electric Rates
Posted in the Portsmouth Forum
#1 Sep 14, 2012
filed: September 14, 2012 • Massachusetts
Electricity rate among highest in state
Credit: By Phyllis Booth | The Landmark | www.thelandmark.com 13 September 2012 ~~
PRINCETON _ Residents will receive a letter this week informing them of the financial status of the Princeton Municipal Light Department.
The news isn’t good.
"PMLD General Manager Brian Allen worked with local resident Jon Fudeman, retired CPA, to produce a financial analysis of the department. The entire report is available on the PMLD website.
“I’m very grateful to Jon Fudeman,” said Allen at the Sept. 12 meeting of the Board of Light Commissioners.“He spent a lot of hours and looked back over 10 years to see where the problems started,” he said.“It’s important this information gets out there so people will understand where we’re at.’’
In 2011, the wind turbine project lost $628,000. From Jan. 1, 2010 through June 20, 2012, the wind turbine project has lost $1,875,000. That is after credits for renewable energy production.
Original projections for the wind turbine project showed that Princeton residents would receive a financial advantage, wrote Allen.“In fact, Princeton residents have suffered a financial loss. The original projections overstated both the kilowatt hours produced, as well as the price of electricity and understated the expenses associated with the project."
“Before the wind turbine project PMLD was in a more solid financial position than it is today. PMLD had relatively little debt and its customers paid just slightly more than the average Massachusetts customer for electricity,” according to the letter.
Liabilities then were just under $1 million. In 2009 liabilities were $9.5 million. At the end of 2011 total liabilities were just under $8 million. Other financial losses include a $757,000 loss between 2006 and 2011 for providing Internet service. In 2008 the department experienced a $407,000 Internet related expense that should have been recognized in earlier years. PMLD is no longer in the Internet business."
"Initially, the wind turbines were projected to produce roughly 9,000 megawatt hours each year, but based on the past two and a half years of experience, a better estimate is 6,500 megawatts a year with both turbines running, wrote Allen. That is roughly 28 percent less than anticipated."
Because of the wind turbine losses, ratepayers are being charged more to cover the losses, resulting in “Princeton having one of the most expensive rate structures in the Commonwealth.” It also means PMLD must run a lean operation in all other areas, resulting in an inability to build up a reserve in the event of a major storm or other catastrophe, such as the 2008 ice storm, and upgrade of the infrastructure is limited. That increases the risk of future power outages in the case of a major storm."
"Another issue contributing to financial losses is the failure of the gearbox in the southern turbine unit. That went out of production in August, 2011 and went back on line in July 2012. In theory, PMLD should not have to bear the expense of the repair for that piece of equipment, wrote Allen, but because PMLD was a third party to the warranty, and there have been problems between the three companies involved, the entire issue is in litigation, which may take time to be resolved."
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