I’ve posted the entire article below because most of the people I know can’t afford to pay the $30/month for the Wilson Times online access. –I’ve got my own issues with charging for online content, but that’s another story.
After reading the article, here’s my input that I think in noteworthy. You may not like it but I think this true. 1. ElectriCities isn’t the problem. I’ve look at this for the past 3 years, and I had preconceived notions about what I would find. I was looking for an ENRON. But, it isn’t there. No, I’m not on the ElectriCities payroll and I haven’t turned to the “Dark Side”. But, I at least admit when I’m wrong.
ElectriCities, the management company, that advises the eastern and western power agencies, has about an $8M budget. In the whole scheme of things, that’s a drop in the bucket compared to the $756M of NCEMPA. Keep in mind, that the $756M goes to pay for the wholesale electric and service the debt.
Are their problems with ElectriCities? Well, in the past the main problem was the former CEO, Tilton. In my opinion, he was an arrogant SOB that had the public relations skills of a alligator (without the smile). Somewhere in his career, he should have read the book, “How to Win Friends and Influence People”. His judgment wasn’t all that keen either. He could only see his hand in front of his face, not 5-15 years out. I could write a book on what I think Tilton did wrong and where it cost us money, but he’s out. The reign of tyranny is over and a new CEO (Graham Edwards) has hopefully come to the rescue.
But, what does Edwards have to rescue? Well, not much. After 3 years of research, I can tell you that Edwards, to me, is basically on the right track. He has his people doing what they are suppose to be doing—no more no less. He’s reigned in Esterine Davis (Lobbyist for ElectriCities in the NCGA) who, in the past, had free reign under Jesse Tilton to run wild in the NC Legislator. Don’t get me wrong, I still think it would be in our best interest to have her leave ElectriCities. But, as that hasn’t happed yet, at least her wings are clipped.
The Resorts: Myrtle Beach. In the last NCEMPA meeting, I looked Graham Edwards in the face and asked him why (in heaven’s name) would he continue to go to a resort such as Myrtle Beach for a retreat (Conference) when that money could be spend in eastern North Caronia.
I got my answer! Without a blink, Edwards told me he couldn’t get any elected official to come to a meeting that wasn’t at a “high class” resort. Plain and simple. Last year, Edwards said, they tried it in Raleigh, sent out the standard registration packs…and guess what? The return was so poor, they had to cancel. (Lost money on that one by the way).
Simple point: If you don’t hold the annual meeting at a resort (or one with at least 15 strip clubs in the local area) the elected officials won’t come. Is that ElectriCities fault? No! Don’t like it? Me either, but tell you elected officials that, not Edwards. He can do a lot but he can’t make them come. And, by the way, he’s not the pole dancer type.
The real formula that results in your per kilowatt hours is this: Wholesale price + debt payment + city cost + city premium costs = your retail rate.
Less break it down:
The NCEMPA part: Wholesale price of electricity + debt payment
City Part: City cost is the added amount of money needed for equipment, power lines, poles, payroll, etc. Basically, all the stuff the city needs to bring your electricity from the grid to your house.
The City Premium costs are the added increases (above and beyond the actual cost of the electricity) that each city uses to make additional money without increases in other services or increases in property taxes.
The point I’m trying to make is this…once NCEMPA determines the wholesale cost, it charges that wholesale cost to the 32 member cities. It’s up to each city what they end up charging their individual customers. So why?
Each city is in the power business to make money for the city. It’s really no secret. They’ve always done this from the start. The only reason NCEMPA (and for that matter ElectriCities) was created is to get the cheapest wholesale rate possible.
So, as we whine and complain about our $900/month light bill, we have a tendency to blame the “big dogs” at the top of the food chain: NCMEPA & ElectriCities.
What we need to understand, or rather make more transparent is the fact that each city sets their own prices above what NCEMPA charges.
As you look and “wrap your head” around the formula, keep in mind that to lower your light bill in a significant manner: in a way that will make a meaningful difference in your monthly payment, is to start to ask your city council to adapt ordinances that will decrease the amount of money (cents per kilowatt hour) they add on to your bill.
Once this simple fact is understood, you’ll see how ridiculous and totally ignorant it is for an individual city councilman…or Mayor (Elizabeth City) to jump up and down and want to dismantle ElectriCities. If they’re doing it because they just don’t understand where the “real” increases are coming from, we can teach them. But, If they’re doing it for political posturing (and they know better), then maybe we need to dismantle them. Because in this case, they certainly don’t have the ratepayers interest at heart. They’re only after political kudos.
Wilson Times Article:
(Source: The Wilson Daily Times)By Rochelle Moore, The Wilson Daily Times, N.C.
May 10–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.
t’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."
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