The Way OUT of NCEMPA & ElectriCities

There’s no advantage to staying with ElectriCities

I read with interest your article “ElectriCities Opens Up on Debt Options” in the March 25 edition of the Telegram. I would like to submit a couple of options that were not mentioned, as well as expand on the comments by Mr. Michael Colo with Poyner and Spruill.

I work with one of the larger customers of Rocky Mount Utilities and happen to be far outside of the city limits of Rocky Mount. We have done quite a bit of research associated with this issue as it is very important.

First off, in my opinion, there is no larger issue facing Rocky Mount, Wilson, Greenville, New Bern and the many other municipalities who chose to become members of ElectriCities. These cities did not necessarily volunteer for membership, but due to projected electricity shortages, joined to ensure a stable energy source. This was approved through the N.C. General Assembly. The agency provided energy as projected until around 1999, after the flood.

Soon after the flood and in conjunction with numerous other causes, electricity consumption dropped in Eastern North Carolina.

The loss of several manufacturing facilities, which used large amounts of electricity, caused demand to drop. Unfortunately, the debt associated with ElectriCities remained as it does today. This burden on our communities will only continue to grow as businesses relocate out of the ElectriCities grid. No energy-intensive business will choose to locate a business on this grid when it can move only a short distance away and connect to a source that is at least 40 percent less. Assuming this is true, our utility rates will continue to grow, regardless of what happens to energy prices in general because fewer customers will be servicing the debt.

Around 1999, Bill Johnson, the current president of Progress Energy, led a team that made an offer to purchase ElectriCities. At this time, as is still true, the debt exceeded the value. The municipalities involved determined that paying off the additional debt would be an unfair burden and did not pursue this option. Eleven years later, the condition has deteriorated. Debt levels, as a percentage of consumption, continue to rise as do our rates. Our city leaders would have us believe that the best option is to stay the course and that we will have the debt paid off some day. The question is: Once the debt is paid off, what will we own?

The answer is: part of two nuclear power plants you have no control over that will continue to cost money as new regulations come in to play, costing more money. Moreover, our municipalities do not generally favor getting out of the utility business. The city of Rocky Mount will have to raise property taxes to cover lost revenue associated with the utilities.

I would suggest residents would still be better off under a system whereby you purchase your electricity from Progress Energy. There is absolutely no benefit to any municipality staying with ElectriCities.

In addition, the city of Rocky Mount continues to encourage conservation and ways to insulate citizens’ homes. Actually, this is what they do not need to occur. Electricity consumption needs to increase or rates will go up to pay off the debt. As a property owner, I recently rented a home out in a rural area. I ran an ad in the paper and out of around 30 inquiries that I received, at least 25 asked who supplied the power. We have a problem and everyone is aware of it.

The two best options for getting out of ElectriCities are as follows:

Sell the entire N.C. Eastern Municipal Power Agency (ElectriCities) to Progress Energy. Even if a short sale occurs, whereby the municipalities have debt remaining associated with ElectriCities, our utility rates will decrease dramatically. Estimates would be 20 to 25 percent rate reductions and still pay off the remaining debt.

The better option is to contact the members of the General Assembly and ask them to step in and broker a sale to Progress Energy. Allow the N.C. Utilities Commission to allow Progress Energy to raise rates enough to cover the difference between the “value” of N.C. Eastern Municipal Power Agency and the debt.

Both options would require all involved municipalities to agree to sell. My guess is if Rocky Mount, Greenville and Wilson agree everyone else wouldl agree. These three have more than 50 percent of the debt.

I would contend that no other program at the federal or state level would put more money in to Eastern North Carolina. Ultimately, $2.6 billion would be paid off by all customers of Progress Energy leaving more money for the residents.

Progress Energy would not be buying new assets, rather it would be taking control of assets it is already supplying power to. The incentive for Progress Energy is more direct customers, each of which represents long-term profit opportunities for Progress Energy.

The only way this will occur is if citizens demand this option through our representatives. The easy thing for our representatives to do is stay the course. The better option for the citizens is to sell N.C. Eastern Municipal Power Agency. It can and must be done for the future of Rocky Mount and the surrounding area.

Thomas Joyner

Rocky Mount

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About George Fisher

George is a freelance writer, an author and a Democratic political consultant. He has worked as Deputy Communications Director for a Senatorial campaign and Campaign Manager for several NC House races and one congressional race. He previously worked as a news producer for a local television station.
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