02/17/09 — North end residents see more expensive electricity

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North end residents see more expensive electricity

By Nick Hiltunen
Published in News on February 17, 2009 1:46 PM

Wayne County municipalities that are part of the ElectriCities energy association have suffered for years because of high electric costs, and the news recently got worse.

With higher production costs, ElectriCities has been forced to pass on rate increases to towns such as Pikeville and Fremont, which are part of the network.

Ken Raber, an ElectriCities senior vice president who helps oversee the North Carolina Eastern Municipal Power Agency, said his costs have increased.

Raber said the increases are due to maintenance expenses, fuel costs and keeping what he said is a bare minimum $5 million in cash reserves. But he added, NCEMPA is not the only organization feeling the pinch.

"Our fuel costs are rising. Whether (people) are served by NCEMPA or not, their energy costs are rising," he said.

"We've seen this throughout our industry. You've got a worldwide demand on these resources, and we're seeing significant increases in transformers and copper wire. We're trying to pass along the least amount that we have to," Raber said.

But the fact that energy costs are rising worldwide is little comfort for small ElectriCities towns like Pikeville, where many homes are older and lack good insulation.

"I don't have anything good to say about ElectriCities. It's the worst deal this town has ever had," Pikeville Commissioner Dennis Lewis said. "We've invested in power plants where the closest one is 60 miles away."

Commissioner Vance Greeson is another critic of the deal, although he said the town has little choice but to pass on the increases to consumers.

Town officials chose to absorb 6 percent of the total 15 percent increase this year, after much debate.

"We got a bad deal whenever we set up, sure," Greeson said. "But we've got to manage the resources that we have at the time -- we can't just keep giving arbitrary raises and just spending like it's coming out of the cookie jar."

Greeson has been advocating energy efficiency checks for residents who complain about their rising costs. The commissioner also advocated using a system of regulators that shut off residents' air conditioners and water heaters during peak demand times.

That could save money, Greeson said, but the town's mayor, Herbert Sieger, said another city is already scaling back regulation of peak demand.

Sieger reported that Tarboro, cited as a model for the regulation of peak demand, had stopped using the devices on air conditioners.

During the hot months, Tarboro residents didn't care for their air conditioners being turned off for peak demand, Sieger said, and are now only using the system with water heaters.

But Greeson said the mayor and some other officials simply don't care for the idea.

"Every time I bring them up, I get kicked in the teeth," Greeson said.

Pikeville has just over 700 residents, according to the last U.S. Census, and the increases can be pretty hard to stomach, officials say.

Pikeville still owes $5 million for its share of the four Progress Energy plants -- more than the town could ever hope to pay off quickly, Lewis said.

In the meantime, the cost of electricity has forced the town into changes in the way it does business.

Pikeville officials had to raise their renters' electricity deposit from $200 to $400, because overdue renters' electricity bills were always above $400.

Renters were simply racking up the bills, moving out, and cashing in on the difference between their electric bill and the $200 deposit, Sieger said.

The mayor has said the town may seek annexation -- adding homes and businesses to the town's tax base -- even if the annexation must be forced.

Although some lament the town's involvement in ElectriCities, Pikeville Com-missioner Lyman Galloway defended it.

"We are ElectriCities," Galloway said, adding that he had become tired of negative comments about the public power trade association.

"I'm a commissioner in ElectriCities, Herb (Sieger) and I vote with ElectriCities," Galloway said at a recent meeting. "They got caught (on price increases) just like everybody else who got caught."

But others say ElectriCities got "caught" to a greater degree than most.

ElectriCities members purchased shares in four plants, including the Harris plant. Towns like Pikeville, Fremont, Apex, Clayton, Kinston and LaGrange collectively owe about $2.5 billion on the deal.

In Kinston, electric bills are 25 to 30 percent higher than neighbors who pay Progress Energy directly, Director of Public Services Rhonda Barwick said.

Kinston officials passed on their recent increase of 4.8 percent directly to their energy consumers, Ms. Barwick said.

"There was no room to absorb a wholesale increase," Ms. Barwick said. "We're running very lean, like most public power communities. We just have to change our retail rates."

In the meantime, the public services director said, the town must wait until 2010, when payment of its debt services starts to decrease.

"In 2010, slowly, we'll start to see it drop," she said.

In a changing industry, Raber admits NCEMPA faces more challenges than most power providers.

"When you look at the challenges that we're facing, I think it's twofold," Raber said. "We bought into Harris, the most expensive plant on the Progress Energy system."

The other half of the challenge is the one most suppliers of energy are facing, Raber said.

"If you put aside the current cost of fuel and materials, we've also got Congress looking at clean air and carbon footprint," Raber said.

Those requirements may raise the cost of ElectriCities energy even higher, the public power executive said.

In Pikeville, Lewis said the situation can be summed up simply.

"The cost of electricity, it's killing Pikeville," the commissioner said.