Councilman says Dismantle ElectriCities

Regulating electricity rates
Councilman favors dismantling ElectriCities

When investor-owned electric companies like Progress Energy want to raise rates, they go through a lengthy review process with the N.C. Utilities Commission. Public hearings are held, an audit is completed by the commission's public staff and the need for an increase has to be clearly justified, said Robert Gruber, executive director of public staff, which represents the interests of the public.

The process for the public-power agencies managed by ElectriCities, including the N.C. Eastern Municipal Power Agency, is completely different. But both methods are defined in the N.C. General Statutes.

"We don't regulate them at all," Gruber said of NCEMPA, which sells electricity at a wholesale rate to 32 cities, including Wilson. "We don't regulate them because the N.C. Utilities Commission was set up to only regulate investor-owned utilities. We regulate them (investor-owned) very closely if they want a rate increase."

The role of the N.C. Utilities Commission, a branch of state government, is to regulate the rates and services of all public utilities in the state. NCEMPA, however, is not included because N.C. General Statute 159B allowed cities to form a joint agency to buy into power generating plants, manage their own electric generation, assume debt and set their own rates. The law, the Joint Municipal Electric Power and Energy Act, was passed in 1975.

Electric rates for NCEMPA are recommended by the ElectriCities Board of Directors with the NCEMPA Board of Commissioners having the final authority.

The NCEMPA Board of Commissioners includes a government representative from each of the 32 cities and the NCEMPA board selects its representatives for the ElectriCities board. The ElectriCities board is tasked with making decisions for ElectriCities staff, which manage the public-power agencies, and includes members from NCEMPA, and the N.C. Municipal Power Agency in the western part of the state.

Mayor Bruce Rose, current chairman of the ElectriCities board, said that the oversight and management of the power agency has its benefits.

The public has access to their government leaders, they can attend city council meetings to express any concerns and the records of NCEMPA and ElectriCities are open for the public. The public can also attend and speak during NCEMPA meetings, which are held in Wilson on a quarterly basis.

"I think it's a good set up because every city has a representative on that board," said Rose. "That means they've got someone looking at the issues. Local officials are always available. It's a known fact that people can get to me and the city council a lot quicker than NCEMPA."

When electric rate increases were being considered in 2008, the process included rate committee reviews, public comment opportunities as well as opposition and support by city leaders and NCEMPA board members.

Recent public concern about the cost of electricity has its roots in three consecutive rate increases that took hold in 2008 and early 2009. At the time two of the increases were being considered by NCEMPA, residents voiced their opposition during rate committee and NCEMPA meetings.

The first of the three increases was passed solely by the Wilson City Council to raise rates 5 percent to pay for a $33 million project to expand its electric system to meet future customer demands.

Rose was the only ElectriCities board member to vote against a 14 percent increase passed by NCEMPA in August 2008. Fred Horne, Wilson's utilities director, also opposed a 4 percent NCEMPA hike approved in February 2009.

ElectriCities Chief Executive Officer Graham Edwards said in April that NCEMPA will not have an electric rate increase the next two years in 2010 and 2011.

"The public does come to the meetings and the public does comment on this," said Ken Raber, senior vice president of NCEMPA and ElectriCities Services. "There's this concept that putting (NCEMPA) with the Utilities Commission will lower rates. We have customer-based rates so the rates are set to simply recover our cost."

When a rate increase is approved for investor-owned utilities, like Progress Energy or Duke Energy, it includes a rate-based rate of return, which allows the companies to recover the cost of any investments or expenses, Gruber said.

Wilson City Councilman Donald Evans, a member of the NCEMPA board, understands the structure of the public-power agency and doesn't think rates could be any lower because of NCEMPA's $2.4 billion debt, which was assumed by the 32 cities due to partial ownership in nuclear and coal plants. The debt, which includes $379 million for Wilson, is set to retire in 2026 but impacts the cost of electricity for ratepayers.

"Basically, it's operated like a business," Evans said. "We've got certain costs and expenses and that sets our rates. I just don't know how the Utilities Commission could help make our rates lower." Evans is concerned about the debt, which is factored into residential and commercial bills. But he's also concerned about the 118 employees at ElectriCities, which he doesn't see as necessary.

"They have economic development and they have lobbyists," Edwards said. "What I'd like to see is some way we can dismantle ElectriCities. They keep taking on responsibility they say will help the cities. Wilson doesn't need their help. They've built an organization that's beyond reason. They'd like us to think we can't do without them. The smaller cities might not be able to but the city of Wilson can."

 
 
 
Article written by By Rochelle Moore and appeared in the Wilson Times