City could face increase in wholesale power costs

Published 2:26 pm Sunday, November 26, 2017


There’s a possibility that Washington Electric Utilities could see an increase in its wholesale power costs in 2018 and 2019, according to one city official.

For now, it’s unclear how a change in the wholesale rate the city pays for power could affect power rates for Washington Electric Utilities customers in the coming years. Electric rates for residential customers, churches and small general service customers were reduced by 6 percent Aug. 1, 2015.

During the City Council’s Oct. 9 meeting, Councilman Doug Mercer, a member of the North Carolina Eastern Municipal Power Agency’s rate committee, discussed Duke Energy’s five-year forecast of its costs to provide electricity to its customers, of which NCEMPA is one. Duke Energy Progress’ latest forecast is substantially higher than previous forecasts, Mercer said. The city buys its power through NCEMPA.

“One of the things that figure into our rates is that Duke gives the power agency an estimated cost each year, and we’re billed at the rate for 12 months. At the end of the 12-month period, the power agency is then given a true-up value for both demand and energy costs,” Mercer said. “When that true-up value came through this month, the demand charge was about $10 million more than the estimate last fall. The energy charge was about $9 million below the estimate last fall, leaving about a $3 million gap that was to be filled to the individual cities on a monthly basis for the next 12 months.”

The power agency had minimum working capital — also known as fund balance — of $80 million, which grew to more than $100 million in several months, Mercer said. “So at the conclusion of the discussion about the true-up values … the motion was made to recommend to the full board that we take that $3 million out of the working capital and not assess it to the members individually. … I see no reason that it wouldn’t be approved because there are 21 members of the rate committee and it was a unanimous vote.”

Mercer said Washington’s true-up adjustment would have been about $13,000 a month if the power agency did not dip into its working capital. “That’s $13,000 a month off of our total electric bill,” he noted.

The rate committee is expected to further review cost estimates at its January 2018 meeting.

On April 1 of this year, the city saw the wholesale rate it pays to buy power from Duke Energy Progress drop by 4.5 percent. Before that rate dropped April 1, Mercer told the City Council that the city the city could expect a 3-percent increase it its wholesale rate in 2020, followed by another 3-percent increase in 2021.













About Mike Voss

Mike Voss is the contributing editor at the Washington Daily News. He has a daughter and four grandchildren. Except for nearly six years he worked at the Free Lance-Star in Fredericksburg, Va., in the early to mid-1990s, he has been at the Daily News since April 1986.
Journalism awards:
• Pulitzer Prize for Meritorious Public Service, 1990.
• Society of Professional Journalists: Sigma Delta Chi Award, Bronze Medallion.
• Associated Press Managing Editors’ Public Service Award.
• Investigative Reporters & Editors’ Award.
• North Carolina Press Association, First Place, Public Service Award, 1989.
• North Carolina Press Association, Second Place, Investigative Reporting, 1990.
All those were for the articles he and Betty Gray wrote about the city’s contaminated water system in 1989-1990.
• North Carolina Press Association, First Place, Investigative Reporting, 1991.
• North Carolina Press Association, Third Place, General News Reporting, 2005.
• North Carolina Press Association, Second Place, Lighter Columns, 2006.
Recently learned he will receive another award.
• North Carolina Press Association, First Place, Lighter Columns, 2010.
4. Lectured at or served on seminar panels at journalism schools at UNC-Chapel Hill, University of Maryland, Columbia University, Mary Washington University and Francis Marion University.

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