State lawmakers held their first hearing today on high energy bills in areas of Eastern North Carolina served by the utility group ElectriCities. Bills in areas like Rocky Mount and Wilson are 25% to 50% higher than power bills in other areas because the cities are paying off billions of dollars in debt they took on to buy shares in power plants.
The cities got into the business in the 1970s, when electricity rates were rising quickly. City leaders saw investing in generation as a way to insulate their citizens from future market price spikes. But the bet didn't pay off: conventional power got cheaper, not more expensive, while the nuclear plants they invested in became far more expensive after regulations changed in the wake of the Three Mile Island disaster in 1979.
As of the beginning of this year, the eastern group, NCEMPA, still owes about $2.2 billion on its debt. It won't be paid off before 2026. 38% of the price they charge for power goes to pay back that debt. A smaller western group is also in debt to the tune of $1.5B.
Residents, many of them low-income or retired, face monthly power bills of anywhere from $500 to $1000. And business owners in member cities say the high rates make them less competitive, hurt their bottom lines, and discourage new industry from moving into the area.
Nash Produce owner Thomas Joyner told the committee most of his business is on the Rocky Mount grid, where he calculates he’s paying a base rate of 11.6 cents.
Joyner recently added a new building, located in Progress Energy territory. He says his base rate on that bill is about 6.6 cents.
Joyner said his utility bill for 2010 was $393,000. If he’d been paying Progress’s rates, he estimates he would have saved $170,000.
He competes against two other sweet potato packers, both in Progress territory. “I don’t know how you’re supposed to remain competitive,” he told the committee.
“Something has to be done,” said Joyner. “This is all about creating jobs and creating opportunities in eastern NC, and these high power rates are absolutely killing us.”
It’s not clear yet what state lawmakers can do to solve the problem.
Senate co-chair Buck Newton, R-Nash, says unemployment in Wilson and Nash Counties is at 13%. He says the high utility rates have “a stranglehold on our economic development.” But he said he wouldn’t support a state bailout for part or all of the debt.
Some at the meeting suggested the cities should sell off their shares in power plants to the utilities that already own most of those plants. ElectriCities vice president Ken Raber said his group is open to the idea. But the state can’t compel the power companies – Duke, Progress, Dominion – to buy the shares back. And it might not make financial sense for them to do so, anyway.
Representatives of the power companies are expected to speak at the next meeting of the panel, dubbed the Legislative Research Comm. on Joint Municipal Power Agency Release.
“We may not be able to solve the problem,” Newton said. “But I’m committed to doing everything within my power to solve it.”