Debt cited as key factor in high power bills|Editors note: This is the first article in a two-part series about a meeting between Washington, Belhaven and New Bern officials and representatives of ElectriCities and the N.C. Eastern Municipal Power Agen
Published 11:46 am Wednesday, April 21, 2010
By By MIKE VOSS
Leaving the N.C. Eastern Municipal Power Agency is possible but impractical Washington, Belhaven and New Bern officials were told Monday night at a meeting with NCEMPA and ElectriCities officials.
The governing bodies of the three NCEMPA members met with Graham Edwards, ElectriCities CEO; and Ken Raber, senior vice president of NCEMPA; and other ElectriCities representatives at the Washington Civic Center. Also attending the meeting were employees of the three municipalities and members of the public. ElectriCities is a trade organization that provides administrative support and other services such as training for NCEMPA members and members of the power agency that serves the western part of the state.
Yes. You can get out of the power agency, Edwards said. If its economical, Ill help you get out of the power agency.
Asked if he had been approached directly or indirectly by a NCEMPA member interested in leaving the power agency, Edwards said that had not happened. He said some NCEMPA members have inquired about what they would need to do if they opted to leave the power agency. Edwards also said he is aware of media accounts of some NCEMPA members considering leaving the power agency.
Washington officials have said they are keeping abreast of the movement calling for power agency members to disconnect from the power agency. NCEMPA members buy their power wholesale from the power agency, then sell it to their customers. Those customers are complaining about their electric rates being higher than those of customers with power providers such as Progress Energy.
Edwards said the biggest challenge facing any NCEMPA member wishing to leave the power agency is paying off its share of debt it owes as a NCEMPA member. Collectively, the 32 NCEMPA members face $2.4 billion in debt. Currently, Washingtons share of that debt is $144 million, with Belhavens share of that debt at $9.98 million. The bulk of that debt is to pay for the construction of power plants, including nuclear power plants, some built as far back as the mid-1970s. NCEMPA members have ownership in those power plants.
Washington, Belhaven and other public-power municipalities have contracts with NCEMPA. Those contracts, which 32 cities and towns in eastern North Carolina signed in the 1970s, commit those municipalities to repaying a share of the debt incurred as the result of building nuclear power plants owned by NCEMPA. The contracts require those cities and towns to buy their electricity from NCEMPA.
Edwards said that, systemwide, about 36 percent of the cost of power paid by NCEMPA members is tied to the $2.4 billion debt on the bonds.
In Washingtons case, about 70 percent of the citys wholesale electric bill goes toward retiring the citys share of that debt, according to city officials.
In Washington, about 40 cents for each energy-related dollar paid by a residential customer goes toward retiring the citys NCEMPA-related debt, those officials have said.
Getting rid of that debt would remove a large cost area that makes up the electric bills for NCEMPA members and their customers, Edwards said. That debt is scheduled to be fully retired by 2026.
NCEMPA has refinanced its debt twice, the maximum amount its allowed to finance such debt under existing regulations, Edwards said. However, NCEMPA is exploring ways, including legislation that would change existing regulations regarding refinancing of debt, that would provide it other avenues to ease the debt burden of power agency members, he said.
Michael Colo, the lawyer representing NCEMPA, addressed the debt issue, too. Colo discussed several options cities and towns could consider when it comes to leaving the power agency. His remarks echoed what he told the Daily News in an interview in February.
(Those options, previously outlined in the Daily News, will be discussed again in the second installment of this series, which is scheduled for publication Thursday.)
Raber said he understands that increases in the wholesale rate NCEMPA charges its members have burdened them and their customers with higher electric bills.
Its been a tough five years. No question about it, Raber said.
As for the past several increases in the wholesale rate NCEMPA charges it members for power, those increases were needed to put the power agency on sound financial footing, Edwards said.
Edwards said NCEMPA does need to become more price competitive with other power providers. NCEMPA and ElectriCities is working with public-power municipalities to identify ways to decrease their costs by reducing power consumption, especially during peak times, and reducing operational and maintenance costs associated with their power systems.
You might not always like the message were going to tell you, but well tell you like it is, he said.
Still, Washington, Belhaven and New Bern officials continue to seek relief for their power customers struggling to pay high electric bills. That includes making customers aware of conservation and best-management practices that will help them reduce their power consumption and their electric bills.