The sparkling electric snowflakes that line the utility poles on Main Street may be causing more anxiety than cheer for residents here during the holiday season.

They serve as a grim reminder of the inevitable: Starting Jan. 1, South River residents will pay 67 percent more for electricity than they have for the past three years.

"I'm just going to have to give things up," said Marilyn H. Meloni, 74, who, like many other elderly residents, lives on Social Security. "I wish I could cut down on my medicals."

Ms. Meloni, a widow, expects her electricity bill to grow by $130 a month during the summer.

The municipality is one of 10 in the state that operate their own utility companies and provide power directly to residents. A nonprofit bargaining cooperative, the Public Power Association of New Jersey, buys electricity wholesale in an auction once every three years.

The decades-old arrangement has allowed South River, population 15,000, to maintain lower electricity rates than many other cities in the state, borough officials say. The town uses its annual surplus, which is generated by the utility and is about $1.5 million, to pay for municipal services and to offset property taxes.

The average South River consumer pays about $50 less a month for electricity than people who use large providers like P.S.E.&G., said Andrew J. Salerno, the borough's business administrator.

The cooperative lost out when it bid for a new energy contract in May and had to pay around 67 percent more for electricity, said James A. Jablonski, the association's executive director. The higher price reflected the rising cost of energy nationwide. Towns like Park Ridge, in Bergen County, Seaside Heights, in Ocean County, and neighboring Milltown face a similar increase.

"It's not like somebody woke up one day and said they wanted to do this," said Mayor-elect Raymond Eppinger, a member of the six-person municipal council and the sponsor of the ordinance to raise rates. "Everyone on the voting body lives in South River. This is hitting all of us."

Residents are none too happy about the rate increase but feel powerless.

"I certainly don't know how we are going to generate another $150 to $200 a month," said Edward L. Trygar, 49, who owns Trygar's Hardware Store. "The economy has been bad all year. There's just too much competition to go around raising prices."

Rui Baptista, general manager of Ria Mar restaurant, expects to pay $30,000 more for electricity in 2008, which he said he would have to shift to his customers.

It took months for the council to decide on the ordinance. In September, the vote on a 50 percent increase failed after Mayor Robert P. Szegeti, a Democrat, broke a tie that ran down party lines. In November, the council voted 3 to 1 to introduce the ordinance increasing the rate by 67 percent. Then last week, the Republican-dominated council passed it, 4 to 2.

"Sixty-seven percent is just not good government," said David A. Sliker, council president and the lone dissenter in the November vote. He contends the town could balance its $14 million budget, maintain a significant surplus and pay for operational costs with a 40 to 50 percent electricity increase. He said the council should cut expenditures instead of relying on the utility surplus.

Mr. Eppinger and other Republicans disagree. And Mr. Salerno, the business administrator, appears to agree with the Republicans about the rate increase.

"We could have catastrophic cutbacks," said Mr. Salerno, who added that the borough would be forced to reduce services like policing, fire rescue and park maintenance if the council had not approved the ordinance.

The political haggling only frustrated residents, some of whom wished the bitter medicine could have been administered in smaller doses.

"They've been talking about this since May, and now the bomb is falling," Ms. Meloni said. "The town looks really pretty with everybody's Christmas decorations, but next year, I don't know if we'll be in a blackout."