Lawmakers ponder power bills

Posted October 25, 2011

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.”


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  • SpaceRokr Oct 26, 2011

    It looks like the stage is being set for an NC taxpayer Bail Out of a private problem.

  • SaveEnergyMan Oct 25, 2011

    They invested in the power plants because CP&L was looking for help to build the plants and demand was approaching supply. 3 Mile Island unexpectedly made the price for one unit at Harris more than original cost of 4 units - totally unpredictable when the deal was made.

    The problem is that they didn't pay down their debt in a timely fashion and continue to finance city operations through the power bill. That's why they won't sell out to Progress now, they would have raise taxes to cover the shortfall. We need some WRAL research on how much this is.

    Another issue is how cities buy power from Progress. Some have a coincident peak rate in which they pay outrageous demand charges for the power they buy at the peak hour of the month. Scheduling around this hour can reduce total costs by 30-40%. Some larger facilities do this with generators or scheduling operations. Mr. Joyner should look into it if he hasn't already.

  • skeeter II Oct 25, 2011

    In the 1970's. the cities gambled that buying part of the electric power plants would be to their benefit. It did not work out that way!

    If the reverse were true--that the cities are now able to buy their electricity cheaper than the power company customers-- would they be willing to pay more to help the power company customers? I think not! They would say that they made a good deal!

    Now that the deal is BAD, they want help by receiving funds or some other reduction in their debt for their purchase of part of the generating plants.

    I remember that someone said, "you can not have your cake and eat it too". I feel sorry for the cities electric customers but not the cities themselves.

    Who advised them to purchase part of the generating plants? Maybe they need to SUE the consultants for bad advice.

    It would not be fair to the power companies or the power company customers to have them purchase the cities portion of the generating plants at the remaining cities debt amount.