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Thursday, October 23, 2008 10:36 AM Energy rates: Up again? By Rochelle Moore | Times Staff Writer ElectriCities managers are recommending another 3 percent electric wholesale rate increase in January. The increase was presented by Ken Raber, an ElectriCities senior vice president, during the monthly N.C. Eastern Municipal Power Agency board meeting Wednesday in Wilson. NCEMPA sells electricity at a wholesale rate to Wilson and 31 other cities in the eastern half of the state. The rate increase would come on the heels of a 14 percent increase, which was reduced to 12.8 percent by Wilson officials, that went into effect Aug. 1. Wilson Energy customers also experienced a city-enacted 5 percent increase July 1. The cumulative effect, is that by the start of 2009, Wilson Energy customers could be paying 20 percent more for electricity than they did last winter. Raber said the increase is needed to ensure that NCEMPA has at least $5 million in working capital. He also attributed the increase to the cost of energy resources and other operational costs for NCEMPA's nuclear and coal-fired plants. In addition to working capital, NCEMPA has about $21 million in fund equity. "Without a rate increase, we will run out of fund equity in July," Raber said. "We simply do not have enough working capital to get through a market that is almost bizarre when you talk about fuel costs and when you talk about plants that are 30 years old." A one percent increase in the wholesale electric rate would generate $7 million for NCEMPA. Raber said the board could consider alternatives to delay a rate increase until June or July. The delay would result in a higher overall cost, due to interest charged on any financing arrangements. Delaying an increase, however, could lead to an even higher rate increase by June or July, he said. "We (would) not be looking at a 3 percent increase in June or July," Raber said. "It will most likely be double that amount." Raber offered alternatives to a rate increase, including a $63 million bond to pay for capital additions to the power plants through 2012. He also suggested borrowing money to pay Progress Energy for 2008 for supplemental power and financing the cost over one to three years. "You're kind of putting your supplement costs on the credit card," Raber said. Bob Ahlert, a NCEMPA board member from Clayton, said that ElectriCities staff did not have a good track record when making cost predictions that impact customer rates. He suggested that the board accept the 3 percent and work with it as best as they can. "Our track record with projections stinks," he said. "We've never been accurate in my 11 years." John Craft, a NCEMPA board member from LaGrange, suggested that the ElectriCities rate committee meet as soon as possible and not wait until its planned January meeting. "We need to do better planning," he said. "We need to move as quick as we can to have the rate committee meet." The NCEMPA board decided to have the rate committee meet on Nov. 19, from 10 a.m. to noon, in the Wilson Operations Center, 1800 Herring Ave. The NCEMPA board will also meet Nov. 19, starting at 1 p.m. The NCEMPA board will include a review of the proposed 2009 budget. Jesse Tilton, ElectriCities chief executive officer, offered several alternatives that could impact the electric rate in the future. Several would require borrowing money and one involves extending the NCEMPA debt beyond 2026. "I believe we have a lean and efficient budget but it's also a budget that funds new initiatives that are going to make a difference for you," Tilton said. "It's more than a budget freeze, it's a reduction." Tilton said that budget spending would "slightly" increase in the 2009 budget but be less than 1 percent. The budget's top priorities include controlling costs and saving money, helping NCEMPA cities and its customers and complying with state and federal regulations, he said. Tilton also suggested issuing bonds to pay for capital additions to the power plants. "This is obviously an additional cost because we would have interest," said Sam Noble, a NCEMPA board member from Tarboro. "It's pay now or pay later." Tilton also said that the board could borrow money and extend its overall debt another 10 years to 2036, which would provide a 3 to 6 percent savings to the electric rate. "It could reduce rates through 2025," Tilton said. "It would be a long-term rate benefit if you extend the debt 10 years." Noble said that the extension would end up costing more, in money and years. "You all wanted initiatives," Tilton said. "So, here they are." Scott Stevens, a NCEMPA board member from Kinston, said that the cost savings would help. "2025 is still a very long time for our rates to be significantly higher than Progress Energy and that's a challenge for Kinston," Stevens said. "Most of us will not be here and after losing customer after customer after customer, for us that makes 10 to 15 years a big deal." The NCEMPA debt is about $2.6 billion with Wilson's share at close to $400 million. About 37 percent of Wilson Energy electric bills go toward the debt. The debt was assumed in the 1980s when the 32 cities of NCEMPA became a minority owner of several nuclear and coal-fired plants. The largest part of the debt is related to construction costs to build the 990-megawatt Shearon Harris nuclear power plant in Wake County. NCEMPA owns part of the plant with Progress Energy. The NCEMPA debt is supposed to be paid in full in 2026. rochelle@wilsontimes.com | 265-7818 |
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spencer allen said...
well we got people looseing there jobs and they won't to raise the rates, maybe they need to change places with some of these people that are looseing there jobs, people are not getting any more money in their pay checks,they can just barely feed and cloth there kids, wilson need to re think one
Friday, October 24, 2008 at 11:08 AM
Wilson said...well we got people looseing there jobs and they won't to raise the rates, maybe they need to change places with some of these people that are looseing there jobs, people are not getting any more money in their pay checks,they can just barely feed and cloth there kids, wilson need to re think one
Friday, October 24, 2008 at 11:08 AM
Show me the petition. I have had enough!!
Friday, October 24, 2008 at 8:29 AM
It is my understanding that the if enough people in a given area sign a petition, Progress Energy will provide the electricity & gas. I say enough of this greed. Let's petition to bring in Progress Energy.
Friday, October 24, 2008 at 6:19 AM
This is beginning to seem like double-talk. When I hear someone suggest "ElectriCities rate committee meet as soon as possible and not wait until its planned January meeting," it sure looks like these folks are in hurry to get a little more of my money. It doesn't make sense for almost other energy comoddities to be falling sharply, but that coal is still rising. It doesn't really matter that it doesn't make sense, however. Most of us are going to have to be colder than normal this winter. God will have to help, not our leaders. ?
Thursday, October 23, 2008 at 5:26 PM
When I run out of money, who am I gonna get an increase from...NO ONE!!! I work with what I have and they should too. People in Wilson can barely afford their utilies now. If you haven't noticed, gasoline prices have gone down because it was getting too expensive. If the utility rates keep going up, people will start cutting back, resulting in the increase in rates not generating anymore capital.
Thursday, October 23, 2008 at 4:10 PM
