Seeking lower power bills

Published 11:56 am Thursday, April 22, 2010

Contributing Editor

Editor’s note: This is the final 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 Agency on Monday.
Washington power customers hoping to see the electric rates they pay — and their electric bills — decrease may wait a long time before that happens, if that happens.
The same holds true for other public-power customers. That was one of the messages Washington, Belhaven and New Bern officials heard during their meeting with ElectriCities and N.C. Eastern Municipal Power Agency officials Monday night at Washington’s Civic Center. The municipalities buy their power from NCEMPA before providing it to their customers.
A reduction in electric rates likely won’t happen, at least across the NCEMPA system, which has 32 municipalities as members, according to Graham Edwards, ElectriCities CEO; Ken Raber, senior vice president of NCEMPA; and other ElectriCities representatives. However, reducing electric bills by reducing power consumption can occur, they said.
The three NCEMPA members were told by Edwards and Raber that the debt-service portion of their monthly power bills cannot be reduced and that their share of the debt service continues until 2026. Edwards and Raber described that debt as the “800-pound gorilla” on NCEMPA members’ backs.
The issue of NCEMPA members leaving the power agency was discussed at the meeting. (See the April 21 edition of the Daily News for a report on that discussion.)
Michael Colo, the lawyer representing NCEMPA, discussed those options. (See accompanying article on Page XX.) NCEMPA and ElectriCities are exploring other options regarding easing the debt burden on their members.
With no choice but to pay off that debt, NCEMPA members will have to look elsewhere for ways to reduce their power bills and the power bills of their customers. The best way to do that is reduce energy use, especially during the one peak-demand hour each month for which they pay an extremely high price per kilowatt hour of power consumed, Edwards and Raber said.
Getting the average power customer to understand that can be difficult, they noted.
Dennis Bucher, an alderman from New Bern, asked Edwards for advice in explaining the difference between what a New Bern power customer pays for electricity and what a neighbor who buys power from Progress Energy pays for power. Edwards advised Bucher to first make sure he’s comparing “apples to apples” when it comes to the two customer’s bills. Municipal power customers’ bills usually have other charges for water, sewer and garbage collection on them, Edwards said.
Most of the energy consumed and paid for by NCEMPA members and their customers comes from “expensive nuclear plants” that NCEMPA members own and are required to buy most of their power from as the result of contracts signed nearly 30 years ago, Edwards said. Progress Energy is able to obtain its power from a broader base of power sources, including more power plants that burn fossil fuels to generate electricity. Being able to obtain power from that broader base helps Progress Energy reduce its costs, which is passed on to its customers, he noted.
Edwards also noted that while NCEMPA members pay the same wholesale rate, their overall wholesale costs vary because of several factors, including each power system’s unique needs and demands when it comes to obtaining power and providing it to customers.
Except for a one-hour period each month, it costs NCEMPA members about 4.5 cents, on average, for each kilowatt hour of power used, Raber said. But during that one-hour period each month, known as peak demand, that same amount of power costs about $12.56 per kilowatt hour, he noted.
That results in 50 percent of a NCEMPA member’s power bill coming from that one-hour usage of power, Raber said. Reducing power consumption during that peak hour each month can help save millions of dollars, he noted.
Donna Lay, a Washington resident who complained at a recent Washington City Council meeting about high electric bills, attended the Monday meeting. Lay said she was glad she attended the meeting, which she said proved beneficial to her.
“It gave me a little more information than I had about why the rates are higher,” she said in an interview Tuesday.
Still, all that new information did not answer her concerns about what to do about those high rates, Lay said.
Lay also said she continues to have concerns about Washington and other cities and towns that sell power using their electric systems to generate revenue to pay for other government functions. Lay doesn’t believe money generated by the city’s electric system should be used to help pay for other government functions.
Belhaven Mayor Adam O’Neal mentioned the same issue at the meeting.
O’Neal said NCEMPA members who transfer revenues from their electric funds to help pay for other municipal services need to curtail, if not eliminate, that practice. He said cities and towns that make such transfers need to be honest with themselves and their customers about the practice. Using revenues from the electric system to subsidize other government-provided services is doing rate payers a disservice, he said.
NCEMPA members
exploring options
Contributing Editor
Michael Colo, a lawyer representing the North Carolina Eastern Municipal Power Agency, recently discussed several options regarding NCEMPA members that may want to leave the power agency.
The common thread among those options is each NCEMPA member that wants to leave the power agency paying off its share of the remaining $2.4 billion debt NCEMPA members owe as their share of the cost of building power plants, in which they have partial ownership.
Those options 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 remaining $2.4 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, including possibly refinancing that debt, are being explored.
Currently, Washington’s share of the overall NCEMPA debt is $144 million, with Belhaven’s 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.