By By MIKE VOSS
Contributing Editor
Michael Colo, a lawyer representing the North Carolina Eastern Municipal Power Agency, discussed several options regarding NCEMPA members who may want to leave the power agency. Those options, discussed at a NCEMPA Board of Commissioners’ meeting last month, follow:
• The North Carolina Eastern Municipal Power Agency could sell its assets. NCEMPA members would be required to pay the difference between the sales price of those assets and the $2.6 billion in bond debt that helped finance power plants.
• A municipality that wanted to leave the power agency could get another municipality to take over its obligations and rights and assume the debt.
• A municipality could merge its electric system with another municipality’s electric system. The city that wants to leave NCEMPA would be obligated under its contract to pay its bond obligations, Colo said.
• A municipality could disappear as a unit of government by merging with one or more local governments, which would have to be approved by the Local Government Commission. Colo said he’s not sure state law allows a city to do that. The entity created by such a merger must assume the contract and all obligations under it.
• A municipality could assign its rights and obligations under the contracts to another agency, either a private corporation or an investor-owned utility. That option poses many tax considerations, Colo said.
Other options have been discussed.
Trying to get federal help to refinance that debt is one option that’s been tossed around by some people, including Rocky Mount officials.
Washington City Manager James C. Smith doesn’t believe that option is feasible.
“We are not going to get federal help because, believe it or not, our rates through NCEMPA are less than a number of other places which are at 16-plus cents compared to our 14 cents. The federal government is very reluctant to get involved,” Smith wrote in an e-mail he sent to area media outlets.
The city’s current charge per kilowatt hour is 14.1 cents, according to Smith.
Smith’s e-mail, sent before the Feb. 24 meeting of the board, included the following proposed option:
“One option is to ask the State to issue a State guaranteed bond paid for by the NCEMPA municipalities. If the issue were for 20 years it would spread out the current payments. The down side is we would still have relatively high rates, though potentially lower than now, for a long period of time where the present bond payments will begin to decrease rapidly in the early 2020s. At least we should begin to study the idea, and as (Rocky Mount) Mayor Combs suggests, we need to work together. There may be bond call provisions and other legal issues which would make it difficult. We plan to discuss a joint approach this month at the ElectriCities Board meeting.”
Washington Mayor Archie Jennings said the $2.6 billion in debt that ElectriCities members are paying off is the 800-pound gorilla on their backs. That burden gets in the way as they seek ways to reduce the costs their customers pay for electricity and that they pay when they buy power at wholesale rates from the power agency, he said.
“It’s that debt load — that’s the thing,” Jennings said. “Somebody’s got to pay that debt.”