Deregulation Ahead for NC Power Companies?
Posted May 20, 1999 7:00 a.m. EDT
RALEIGH — Every month a chunk of your hard-earned money probably goes to pay your power bill.
There's talk of increasing competition between electric companies, which could save you money in the long run.
As consumers we have millions of choices. Coke or Pepsi? Ford or Chevy? McDonald's or Burger King?
But when it comes to electricity, we deal with a monopoly, where one price fits all. That's why there are a number of studies looking at changing the way we buy power in North Carolina.
Deregulating North Carolina's power industry could save consumers $17 a month on their household electric bills.
That's an average. A study by N.C. State University economist Michael Walden says competition could drive down prices.
"We could see rates go down by somewhere in the neighborhood of -- well, it depends on the county -- but somewhere in the neighborhood of 15 to 20 percent."
Of course, Walden says there's a catch with this electric deregulation. He says at first our rates may have to go up by about 2 percent.
That's to help pay off the debt for the construction of several nuclear power plants in North Carolina. Twenty years ago, dozens of municipal power companies agreed to chip in billions of dollars to build them. Before anyone gets to deregulate the industry, they want that debt paid off.
"We can't lower our rates because we have to pay on this debt. So there's no chance of us lowering the rate as long as we have the debt. So we will lose our customers under customer choice, cause naturally they will go to whoever has the best rate," says Apex Town Manager Tom Sutton.
The risk to municipal power companies is one of the reasons legislators are proceeding so carefully on deregulation, in spite of the potential consumer cost savings.
"I would say this is probably the most complicated and complex issue that the legislature will be asked to deal with -- maybe ever," says David Hoyle, a Democrat from Gaston County.
There's another reason behind North Carolina's interest in electric deregulation.
It's happening right next door in both Virginia and South Carolina.
There are concerns that could cost us jobs, as employers move to our neighboring states.