RALEIGH ? Members of a special legislative committee ? formed to find solutions to municipal residents? high electric bills ? reviewed a draft copy last week of the report they plan to present to legislative researchers this year.
The 11-page draft covered the members? findings since the Joint Municipal Power Agency Relief Legislative Study Committee began holding meetings last October. The next meeting is scheduled for April 5.
Their findings included how the debt ? taken on by the N.C. Eastern Municipal Power Agency in the late 1970s and early 80s to build power plants ? has driven the average bill of a municipal electric customer in Eastern North Carolina 38 percent higher than the average customer of an investor-owned utility such as Progress Energy.
The NCEMPA is comprised of 32 cities, including Kinston, which jointly own several coal and nuclear power plants with Progress.
Power generated at those plants is sold to the cities wholesale, which then supply it to their residential, commercial and industrial customers.
The outstanding debt is more than $2.25 billion, and each city owns a portion of that debt. The high electric bills have hurt economic development in Eastern North Carolina municipalities, especially those that are feeling the loss of industry.
There are few options for reducing the debt, however. The current state of the nation?s bond market makes restructuring the debt difficult.
The report also states: ?Due to federal tax regulations and the structure of the bonds, a large portion of the debt cannot be refunded at this time. Approximately one half of the debt cannot be called before its maturity date.?
The report recommends selling generation assets owned by NCEMPA, but would be difficult to do currently because of ?potential regulatory changes faced by the investor owned utilities in the State.?
In its draft report, the committee recommended ?further study? of the issue, specifically ?in-depth study? of the economic impact of high electric bills on Eastern North Carolina and the whole state; the value of NCEMPA?s generation assets; the effect of ?rate preferences? on rate payers such as small and medium businesses and residents, and more.
Committee members also discussed a provision which would limit how cities spend their electric revenues ? a larger version of Session Law 2011-129, which was passed last year and required the Johnston County towns of Clayton, Selma and Smithfield to only spend electric revenues on costs related to the electric system, to pay down debt, or provide a ?set rate of return? on electric capital investment.
Transfers from electric funds to offset deficits in the cities? general funds are prohibited.
?If we ever do find a way to pay down the debt . . . then I want to make sure that the cities have to basically bring their rates down,? Committee co-Chairman Sen. Buck Newton, R-Wilson said Wednesday following the meeting.
He said the provision on how revenues can be spent could help remove an incentive for cities to keep electric rates high.
The provision would need to be submitted as legislation and voted on by the full General Assembly when it reconvenes in mid-May, Newton said.
He said the legislation would go to a vote if the larger Legislative Research Commission, which his committee reports to, approves the full committee report.
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David Anderson can be reached at 252-559-1077 or danderson@freedomenc.com. Follow him on Twitter at DavidFreePress.
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BREAKOUT BOX:
Click here, for more information on the electric rate relief committee?
Source: http://www.kinston.com/news/assembly-80656-revenues-general.html
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