The Northfield Electric Department filed new electric rates structures on Friday, Nov. 1, with the Vermont Public Service Board (PSB), the state agency with authority over electric rates.  It also filed a class cost of service analysis, an accounting study performed to determine which of Northfield Electric's costs were attributable to which class of customer.  This study was performed by the Vermont Public Power Supply Authority (VPPSA), a state-authorized organization of municipal electric companies that manages Northfield's electric power supplies.

This study showed that Northfield’s residential usage accounts for a smaller fraction of costs than residential users now contribute revenue.  It also showed that all three commercial classes, Commercial, Large Power, and Large Power B, were responsible for a larger fraction of costs than they now contribute in revenue.  Changes in cost allocation were primarily due to power cost changes resulting from the deregulation of the wholesale electric power market a few years ago.

Normally the rate structure that is filed with a cost of service study is designed to balance costs and revenue.  For Northfield, that would result in lowering Residential rates 6.8% and increasing Large Power rates 7.2%, Large Power B rates 6.1%, and Commercial rates 3.7%.  Because Northfield's commercial rates are already high in comparison with the commercial rates of neighboring service territories and its residential rates already comparatively low, Northfield Village Trustees were reluctant to raise commercial rates further.  Higher rates would provide a reason for businesses to locate elsewhere and would benefit neither businesses nor residents.  Consequently, the Trustees requested a compromise rate plan that lowers Residential rates 4%, increases Large Power 5%, Large Power B 4%, and Commercial 1.6%.  Northfield Electric filed proposed rates based on this plan.  The proposal is subject to approval by the Public Service Board before implementation.

In an additional study, VPPSA determined that Northfield can reduce its overall rate level because some of Northfield's contracted purchased power was replaced by some that will be less expensive.  VPPSA proposed a 5% reduction in overall rates.  Such a reduction would offset the cost-of-service-based increase for Large Power customers, more than offset the increases for the other commercial customers and make the rate reduction for residential users even larger.  The PSB allows rate reductions to be implemented with a week's notice; the Trustees plan to implement the reduction when the new rate structure goes into effect.  The Trustees will aim, with the approval of the PSB, to have the net rate increase for the Large Power Customers be zero.  If that goal is achieved, the other two commercial classes would see a slight rate decrease, and the residential users would have a rate decrease of over 8%.

Questions or requests for more detail can be directed to Northfield manager Charles Morse, 485-6121.