WNCT9: Special Report: The Price of Power

by Allan Hoffman

Blog Note: The City of Kinston has been out front on this issue for the last few years, culminating in an extensive review by the North Carolina General Assembly.  The NCGA didn’t come up with any solution that we aren’t already implementing at the City of Kinston.  The only apparent solution is to ensure that Eastern NC has all the tools we need to grow and create jobs, because a debt bailout isn’t possible and there is no apparent buyer of our electric system.

Not a day goes by that we don’t get a call or email from someone complaining about the high cost of electricity in the east. The fact is, you’re right. You pay more for power than cities on the other side of I-95, but recently a legislative committee tried to tackle the issue and while they did get a piece of legislation through, it really doesn’t do anything to help your power bill now.

So what can be done about a problem that has been with us for 35 years? Well, maybe nothing, at least not right now. Last year we introduced you to George and Ann Travis. They moved to New Bern 4 years ago and they love it here, except for the power bills. They Pay $400 a Month.

Will Barker is a member of the North Carolina Eastern Municipal Power Agency, a part of Electricities, which signed the original agreement that got us into this mess. So I asked him a simple Question, “Did the people buy a lemon?”  “Yes, plain and simple,” he replied.

In 1976, thirty-two cities in the east signed on to build Shearon Harris Nuclear Power plant. We were supposed to get four generators for one billion dollars.  We got one generator for four billion dollars and each city has been paying it back ever since. That means, if you buy energy from NCEMPA you’re paying 38% more on average for a kilowatt than say, High Point.

“We are over our heads collectively in debt and we have to find a way to pay it down.”  That’s the feeling newly elected State Senator Buck Newton.  He co-chaired the Municipal Power Agency Relief Subcommittee to find a way to fix it. They managed to get the legislature to pass a bill limiting the amount of money a city can transfer from electric sales to their General Funds to 3-to-5 percent.

One lawmaker says it was like shooting bb’s at a freight train. But Newton says something had to be done, “We all know that 2.2 billion dollar debt doesn’t just evaporate overnight!”  New Bern Mayor Lee Bettis is fired up about the problem. “It was a draconian Contract and the chairman of the Federal Regulator Commission assured me that contract would not be ratified today!”  Even Electricities C.E.O. Graham Edwards told us there is no way he would make that deal today. So there are three options. First, sell off the assets to pay the debt. But Senator Newton says, “There is not a liquid market for Power plants and we don’t have any good measurement of what the assets are worth”.  That means, like selling your used car, you’ve got to have a buyer, which we don’t, and you have to know its value, which we don’t. So How about refinancing?  Senator Newton says, “Refinancing the Debt really isn’t an option.”

The problem is there are no bond instruments up for refinance for another 8 to 10 years.

Mayor Bettis say how about renegotiate the contract, “Contracts are modified all the time. There is no black and white, there is always an out, you just have to put your mind to it to get to it” But unless the state orders it, both parties must agree to even talk about it, according to the head of Electricities, Graham Edward, “In my opinion, there is no way we can put pressure on them to have them pay off our debt or pay off part of our debt.”

So did the members of the subcommittee waste their time and our tax money?

St. Sen. Newton says, “This problem has been getting worse year after year after year and nobody was doing anything about it. We were committed to trying to start to begin the process of trying to solve the problem.”

Mayor Bettis says, “This 3 to 5 thing this board did, it’s garbage! We’ve already done that, we’ve already implemented a long term plan.”

William Barker says, “It’s not a waste of time, but I don’t know that it’s not some level of Don Quixote, tilting at windmills.”

Everyone agrees the current merger plan between Duke and Progress Energy is blocking any solution to the problem. New Bern and Rocky Mount filed suit to block the merger and Senator Barker says until it either passes or fails, everything is at a stand-still.  The bottom line is, you have to pay your debts! That means cities in the east will continue to pay 38% more for power until 2026.