History - Delaware Municipal Electric Corporation, Inc.

Delaware Municipal Electric Corporation, Inc (DEMEC) is a public corporation constituted as a Joint Action Agency and a wholesale electric utility. DEMEC represents nine municipal electric distribution utilities located in the state of Delaware. The creation of DEMEC was made possible by an act of the Delaware General Assembly on June 6, 1978, and the entity was incorporated on July 12, 1979. The members of DEMEC comprise all the major towns in Delaware except Wilmington. The DEMEC members are: Newark, New Castle, Middletown, Dover, Smyrna, Seaford, Lewes, Clayton and Milford.

About 29 similar Joint Action Agencies exist in the United States. In total, there are over 2,000 municipal electric utilities in operation in the United States today. The municipal electric utilities and Joint Action Agencies are nationally represented by the American Public Power Association (APPA), (PublicPower.org).

The ultimate mission of DEMEC is to advance the principles of public power community ownership and provide competitive, reliable energy supply and services to our member’s stakeholders and customers.

DEMEC is governed by a nine-member Board of Directors, with one director from each of the nine member municipal electric utilities. The responsibility for day-to-day operations of the Agency resides with a President appointed by the Board. The President directs the efforts of the staff members and various contractual relationships in place to meet the service requirements of the members.

The DEMEC member utilities combined serve about 64,000 end-use meters and a population of about 114,000, with a combined load of 419 MW (See table at end). The DEMEC member distribution systems vary in size and character. The largest is Dover, with 22,700 meters, while the smallest, Clayton, has only 1,192 meters. Over the past ten years, all of the member systems have experiencing annual growth rates well above the national average. The members are primarily distribution utilities, but Dover owns substantial generation assets. Dover's total customer load is 165 MW and its generating capacity is about 170 MW.

Seven of the members receive 100% of their power requirements from DEMEC and two members receive partial requirements service. DEMEC supplies these requirements from a portfolio of owned generation assets, bilateral contracts with third-party suppliers, and through participation in the PJM regional markets. (See their website at pjm.com). In addition to power supply, DEMEC provides legal and technical consulting services to its members, as well as representation in the federal and regional arenas regarding electric industry regulation and operation. DEMEC provides its members with the benefits of joint and combined buying power. DEMEC also assists member utilities in customer retention, economic development, customer education, capital finance, system improvements and technical information sharing efforts for improved operating efficiency in their individual systems.

In 2002, DEMEC commissioned a $35 million state-of-the-art generation plant in Smyrna. The plant is jointly owned by seven of the DEMEC members, and supplies 50 megawatts of capacity, energy, and reliability to Delaware. DEMEC will build additional generation capacity as the growth of its member communities requires additional power supplies and reliability.

Public Power is an important force in the utility industry in America. Local decision making enables municipal electric utilities to act in ways that best suit local needs and values. The results of local decision making have been impressive, providing many benefits:

• Lower rates: on average, Delaware municipal utility rates are significantly lower than the rates charged by other utilities across the country.

• Efficient service: driven by the principle of service at the lowest possible cost consistent with local community aims and sound business practices, Delaware's municipal electric utilities are directly responsible to their customer/owners.

• Competition: historically, the municipal utilities have provided a "yardstick" of comparison by which to measure the price and performance of the other utilities in Delaware. In today's newly competitive electric utility environment, the municipal utilities are helping to make effective competition, rather than federal or state regulation, the driving force in the electricity marketplace.

• Financial Health: the nine DEMEC member communities stand out as well run, financially sound entities that bring a high quality of life to their communities and surrounding areas at a comparatively low cost. These municipalities have invested millions of dollars in building electric generation and distribution systems for the benefit of their communities. The returns on these community investments make possible the high level of municipal services and low tax burdens characteristic of the communities that own the electric utilities. This is because every dollar collected over the actual cost to operate and provide for capital improvement of the electric utilities goes back into providing services to the community and surrounding areas, such as high quality police and fire departments, parks and recreation facilities, and public works projects.

The joint action efforts of DEMEC have resulted in saving the municipal system customers hundreds of millions of dollars over the years. In today's volatile electric industry, DEMEC is becoming an even more valuable tool in assisting the public power systems in Delaware in bringing high reliability, lower costs and improved benefits to their electric customers. DEMEC and its member municipal electric utilities are a major asset of the State of Delaware, providing economic viability to the municipalities and the State. Since the State legislature created DEMEC in 1979, Delaware's municipal electric utilities have used their combined buying power to work toward securing the highest reliability and lowest possible energy costs for their customer/owners. DEMEC and its member municipal electric utilities have provided competitive, reliable electric service for decades, and will continue to provide the best service at the lowest possible cost.