KFP: Legislative committee gathers information on electric issues in ENC

by David Anderson

RALEIGH — Debt relief from the state is not an option for lowering costs to local municipal electric customers.

That was the word from Sen. Buck Newton, R-Wilson, during Tuesday’s meeting of a special legislative committee convened to find a way of relieving Eastern North Carolina electric customers of high electric costs, which many consider to be the main reason why the region is stymied economically.

“Politically speaking, there will be no taxpayer bailout of NCEMPA (N.C. Eastern Municipal Power Agency),” Newton told reporters after the hearing. “In our view, it’s not appropriate for the taxpayers or the state.”

Newton is co-chairman of the Joint Municipal Power Agency Relief Committee, along with Rep. Jeff Collins, R-Nash. He said he wanted to see more of a “market approach” to solving the issue, such as selling power generating assets currently owned by the 32 cities that make up the NCEMPA, including Kinston and La Grange.

Based on information presented by ElectriCities CEO Graham Edwards during Tuesday’s meeting, selling coal and nuclear power assets would be a difficult proposition, though — ElectriCities is a nonprofit trade group tasked with managing the affairs of the NCEMPA and its sister agency for Western North Carolina public power communities.

Edwards noted NCEMPA currently owes $2.1 billion in debt on the funds it took on in the early 1980s to buy into power plants and guarantee a steady supply of power for customers. The debt makes the average bill of a public power customer about 35 percent higher then a customer of an investor-owned utility, such as Progress Energy, or a co-operative.

He said the current “book value” of the assets is $704 million.

“If that was a house that you owned, you would way, ‘I’m under water,’ ” Edwards told the committee.

He said he had asked the CEO of Progress Energy, Bill Johnson, about two years ago to look into having Progress buy back the city-owned assets — Progress and NCEMPA jointly own coal and nuclear plants — but Johnson stated in a letter it would not be possible.

“We have not been able to devise an option for purchasing the Power Agency’s share of the five generating units at the time that would serve the best interests of our customers and shareholders and your members,” Johnson wrote in a letter to Edwards.

Edwards said ElectriCities officials still look for opportunities to sell the assets, though.

“At the end of the day, the debt has got to be repaid,” he said.

Thomas A. Stith, program director for economic development at UNC’s Kenan Institute of Private Enterprise, gave a sobering report on the costs facing Eastern North Carolina electric customers — he stated residential customers in the East typically pay 13 to 18 cents per kilowatt hour, commercial customers 11.4 cents and industrial customers 7.9 cents.

“In the aggregate, you’re talking about approximately $240 million (a year), additional, those customers, whether they be residential, commercial and industrial customers are having to pay, just for utilities,” Stith said.

Representatives of two NCEMPA member cities, Greenville and Wake Forest, talked about how their communities work to overcome the electric cost burdens placed on their customers. In both cases, superior customer service and steady economic and population growth help ease those burdens.

Mark Williams, town manager for Wake Forest, said his community — which was once home to Wake Forest College and now hosts the Southeastern Baptist Theological Seminary — has grown by about 30,000 people since the 1980s.

The city’s utility must compete with Progress Energy and the Wake Electric cooperative, and has about 6,400 residential and commercial customers, but no industrial. The average bill for a municipal customer is about 19 percent higher than that of a Progress customer.

“When you can’t sell your product the cheapest, you have to make it up to your customers by providing second-to-none customer service,” Williams said.

Ron Elks, general manger and CEO of the Greenville Utilities Commission, said his city has benefited from the presence of ECU, the Brody School of Medicine and Pitt County Memorial Hospital, a regional medical center. The city has also seen strong industrial growth, and officials work to absorb costs before passing them along to customers.

Elks said the GUC has absorbed more than $15 million in wholesale power costs, and infrastructure costs, in the past 10 years.

The agency also has a policy of keeping rates “at or below the median or midpoint when compared to other regional electric providers.”

“If you want to be competitive when you operate a business, you don’t automatically pass costs along to your customers, you look at what your competitors are charging,” Elks explained.

Kinston City Manager Tony Sears, Mayor B.J. Murphy, City Councilman Sammy C. Aiken, as well as La Grange Town Manager John Craft, attended Tuesday’s meeting.

“Learning more about the history and the present and the … future of this operation is very vital to the success of our community,” Murphy said.

Aiken stated: “Using the Greenville model, we’re going to have to grow our way (out of the situation).”

Newton, the committee co-chairman, said the group will have another meeting later this winter, and provide a report to the legislature in the spring.

“If we can grow the economy and grow the economic pie, then it’s easier for everyone to be able to afford (the cost of electricity), and Greenville is the perfect example,” he said.

 

David Anderson can be reached at 252-559-1077 or danderson@freedomenc.com. Follow him on Twitter @DavidFreePress.

 

BREAKOUT BOX:

For more information on the Municipal Power Agency Relief Committee, visit the General Assembly’s website, ncleg.net, and click on the ‘Committee’ tab at the top of the page.