Area legislators are supporting legislation that would allow Washington, Belhaven and other eastern North Carolina cities and towns to proceed with a sales agreement that should reduce electricity rates and spur economic development and job growth across the region.

State Rep. Paul Tine, a Dare County resident who represents the 6^th District in the state House, and state Sen. Bill Cook, who represents the 1^st District in the state Senate, are among a bipartisan coalition that introduced the legislation in the General Assembly on St. Patrick’s Day. Identical bills — House Bill 265 and Senate Bill 305 — were introduced in the House and Senate.

The agreement would permit Duke Energy Progress to buy stakes in power-generation facilities now owned, in part, by the North Carolina Eastern Municipal Power Agency, which comprises 32 cities and towns in eastern North Carolina. The Federal Energy Regulatory Commission has approved the agreement, however, approval by the General Assembly is needed for the agreement to take effect. The commission approved the agreement in December 2014.

For many years, NCEMPA customers have paid as much as 35 percent more than power customers in other parts of the state for electricity, a result of the power agency carrying nearly $2 billion in debt for around 33 years. In 2010, the movement to do something about that debt took on new life when several NCEMPA members explored withdrawing from NCEMPA. They faced several contractual and fiscal challenges if they did so.

In Washington’s case, about 70 percent of the city’s wholesale electric bill goes toward retiring the city’s share of that debt, according to city officials.

“One of the major impediments to economic development in eastern North Carolina has always been high electric rates, and one of those has been the debt that the (NCEMPA members) have been paying for the portion of some (power) production plants,” said Tine, who changed his party affiliation in January from Democrat to unaffiliated. “I believe it’s a couple of coal plants and maybe two other nuclear plants. … They bought into them a long time ago, and they haven’t gotten the production versus the debt that they had. This will allow lower rates throughout eastern North Carolina by reducing that debt.”

That debt, currently, is about $1.7 billion.

Cook said that decades-old debt has been a burden on the 32 NCEMPA members and their customers. He expects it to sail through the Legislature without any problems.

“It’s going to help the whole northeast,” said Cook, who believes lower electric rates in the 32 NCEMPA towns will help spur economic development.

“Think about it. If you’re a business, are you going to come to a place and pay these kinds of (high) rates? No,” Cook said.

The senator said the agreement benefits Duke Energy Progress because it will acquire nuclear power plants — which do not use fossil fuels — and their power generating capacity.

“It is another one of the steps that has got to be taken to complete that assets sale. We’re very pleased there appears, based on their press conference, there is bipartisan support for that. We’re excited that if all that works out and goes through there will be some rate relief,” said Washington City Manager Brian Alligood.

“This initiative is a win-win – it will bring affordable energy to eastern North Carolina, make the region far more competitive for new jobs and ensure all customers of both entities ultimately pay less on their utility bills,” said Sen. Buck Newton (R-Wilson, Johnston, Nash), a primary sponsor of the Senate bill, in a press release.

The proposed legislation allows NCEMPA to issue new bonds to facilitate the sale of the generation assets, and it allows Duke Energy Progress to receive the cost of its asset purchase. It also requires Duke Energy Progress to spread out cost recovery over 20 to 30 years, which ensures a benefit for all customers – regardless of location – in the long-term.

Under the agreement, NCEMPA would reduce its debt by more than 70 percent – leading to lower rates for their customers and removing one of the largest obstacles to economic development in eastern North Carolina, according to supporters of the legislation. Duke Energy Progress would take ownership of a lower-cost electricity supply, which is anticipated to generate approximately $70 million in fuel savings per year.

 

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