Raleigh, N.C. — A bill that would relieve municipal power agencies in North Carolina of decades of expensive debt is moving quickly toward the Senate floor, with lavish praise from Republicans and Democrats alike.
Senate Bill 305, unveiled Tuesday afternoon, won unanimous approval Wednesday morning in the Senate Commerce Committee. It's scheduled for a floor vote next Tuesday.
The North Carolina Eastern Municipal Power Agency, or NCEMPA, is made up of 32 cities, towns and communities that banded together in the 1980s to buy into several power plants, both nuclear and coal-fired. They believed that owning part of the generating capacity of these plants would provide the authority with plentiful, dependable, low-cost electricity that would spur economic growth.
However, the effect was the opposite. The billions of dollars of debt taken on for the deal by NCEMPA left its customers with exorbitant rates. It's still carrying a balance of about $1.8 billion.
"We pay an extra premium on our monthly electric bill," explained sponsor Sen. Buck Newton, R-Wilson, "a 35 to 40 percent markup or premium on their rates simply to pay this debt.
"This has a huge negative economic impact on our district. It’s not just the everyday folks, the working families that struggle to pay a $500 power bill, $800 in the winter. It’s our small businesses, it’s our churches, our large businesses, our major manufacturers," Newton said.
"Think about the crippling pressure this debt has been for those in our region," added co-sponsor Sen. Angela Bryant, D-Nash.
Senate Bill 305 would allow NCEMPA to sell its generating shares back to Duke Energy, which already owns the rest of those plants. The sale price agreed on by Duke and NCEMPA's management entity, ElectriCities, would be $1.2 billion. The bill allows NCEMPA to re-issue bonds to cover the remainder of the original debt, about $600 million. The cities would be collectively bound to satisfy the bonds.
Supporters say the deal should result in immediate relief for NCEMPA customers averaging 10 to 15 percent of their bills, although that will vary by city, since each member community sets its own rates.
Duke customers will pay a little more in the short term to finance the deal. Legislative staff estimated the additional cost for residential customers would be less than 25 cents per month.
However, the utility projects that the acquisition will save residential customers money by 2020 because it will allow for a reduction in fuel costs. Of the 700 megawatts of generating capacity that Duke Progress is buying back, 500 MW is nuclear capacity, fuel for which is about half the price of coal.
Larger commercial customers of Duke Progress will see immediate savings from the switch in generation
Senators from eastern districts lauded the bill as a step toward addressing structural economic disparities that have left many of their communities lagging behind the rest of the state.
"This is a wonderful thing for eastern North Carolina" said Sen. Jane Smith, D-Robeson. "It's really been a problem recruiting companies when they’re looking at such a high rate that other places don't have. This will make a big difference in economic recruitment."