ElectriCities on Stablizing Utilities

Stability predicted for utilities - By John Henderson
Rocky Mount Telegram
Monday, March 22, 2010

Electric rates should remain stable for the next five years, barring any major surprises, officials with the company that supplies Rocky Mount’s power said. That’s music to the ears of business owners who have seen repeated rate increases in the last few years. “That sounds great,” said Ron Barnes, the owner of Superior Dry Cleaners on Winstead Avenue. Barnes’ February utility bill was $3,732. The electric portion of it was $1,796.
“It take a lot of clothes (being dry cleaned) to pay the utility bill,” Barnes said. “With the economy the way it is, and the condition Rocky Mount is in, it’s very difficult. But that (news about a stable rate) is encouraging.”

In recent years, there have been three major wholesale rate increases and one small decrease by the N.C. Eastern Municipal Power Agency. The agency supplies 32 cities in Eastern North Carolina with power, including Rocky Mount.

Ken Raber, senior vice president of ElectriCities, the administrative arm of the power agency serving Rocky Mount, said the power agency’s five-year budget does not factor in rate increases. Increasing fuel prices were a factor in recent increases, but they seem to have leveled off, Raber said.

“Barring anything unforeseen, such as significant changes in fuel prices, plant performance or regulatory changes, we believe (rates) will hold (for five years),” he said. He said the power plants continue to perform well. “(Power) plants are seeing a leveling off in operational and maintenance and capital costs,” Raber said. “We’ve got a good handle on those.”

Raber said climate change legislation in Washington that power companies feared would drastically increase rates hasn’t passed. “Right now, it’s not moving at all,” he said. “But unforeseen plant performance regulations or legislation can change all assumptions.”

However, Raber said, the power company has been able to set aside reserves from the latest wholesale price increase that will make an increase in the next five years more unlikely. “We had been operating at such low reserves levels we had no flexibility (in holding off on rate increases),” Raber said.

In January 2006, there was a 10 percent increase in rates.
In January 2007, there was 1.5 percent decrease in rates.
In August 2008, there was a 14 percent increase in rates.
And in February, there was a 4 percent increase.

Rich Worsinger, director of utilities for Rocky Mount, said that slight decrease in rates in January 2007 set up the forthcoming increases. “Instead of doing that, they should have started building up their fund balance, their reserve account, their working capital,” he said.

Worsinger said he was “thrilled” to learn about the flat rate projection. “At the same time we are expecting to see no increase, Progress Energy and Dominion are requesting rate increases,” he said. “Maybe we jumped out ahead and now Progress and Dominion are catching up.”

Worsinger said he hopes the flat-rate projection sticks. “Of course there is always the possibly of some kind of catastrophic failure of one of the (power plant) stations where they have large capital expenditures,” he said. “There is always the possibility of unforeseen increases in the cost of coal or uranium, something like that.”

David Eilers, an owner of the Hunter Hill Café restaurant that spends about $2,000 a month on its electric bill, said he was also pleased to hear that rates aren’t supposed to increase for five years. “For businesses to remain in business, I think it is very important (for rates) not to increase any more,” he said.

Article published in the Rocky Mount Telegram