The General Assembly has passed and Gov. Pat McCrory has signed the bill – with some flourishes and doing it in Wilson –that will allow that city, Wake Forest and 30 other North Carolina towns and cities to reduce the electric bills their customers pay.
Do not expect to see that cut in the next few months, however, Wake Forest Town Manager Mark Williams said.
“The effect is that Wake Forest’s wholesale bill from NCEMPA (North Carolina Eastern Municipal Power Agency) will be reduced and we will be able to pass those savings on to our retail customers. Exact changes in rates are hard to pin down at this time and I would not want to promise something too early,” Williams said. “I am recommending that the town do a full rate study next budget year to determine the best way to pass on the savings to all of our customers, both residential and commercial. It is safe to say that rates will go down initially, probably sometime in 2016.”
That time frame means Williams, who has struggled with rising wholesale power costs all through his 22 years as manager, will be retired and a new manager will be in place when the reduction takes place. Williams is retiring April 30.
He said the asset sale – selling the shares the 32 municipalities own back to Duke Progress Energy – will reduce NCEMPA’s debt by over 70 percent. The amount of debt the 32 towns and cities owe will then be between $400 and $500 million, Williams said, and the towns and cities will pay that debt off over 10 years after NCEMPA sells new defeasance bonds. The authority to issue those new bonds was included in the legislation that was just approved.
“The debt will last for ten years, so the pay off date is about the same as the old debt (2026). As with the old debt, all 32 towns will have a proportionate share of the new debt and will pay their share each month as part of the wholesale bill from NCEMPA.”
Wake Forest will continue to operate its wholly-owned electric distribution system, Wake Forest Power, and apparently many others will also do so. (Many established the systems in the early 1900s – Wake Forest in 1909, Louisburg in 1906, the same year it completed installing a water and sewer system. Wake Forest waited until 1922 for that refinement.)
The 32 towns took on the debt in 186 after being told there would soon be a heavy surge of demand for electricity and owning part of the plants built by what was then CP&L would lower their costs. Instead, the cost of nuclear plants such as Shearon Harris ballooned after the Three Mile Island accident.
Wake Forest owns a 0.7262 share in each of five plants: Brunswick Nuclear Plant Units 1 and 2, Mayo Plant Unit 1, Roxboro Plant Unit 4, and Shearon Harris. The Mayo and Roxboro plants burn coal.
Williams has said that towns such as Wake Forest and Apex will not see the dramatic rate reductions to customers that cities such as Wilson will experience because the two Wake County towns have been undergoing increases in area and population during most of the 29 years since the debt was incurred. Wake Forest has managed to absorb the wholesale power cost increases because of that growth except in August of 2008, when the increase to customers was 12 percent with the town absorbing another 2 percent, and in March of 2009 when the increase was 4 percent. In 2009 the town had about 5,800 electric customers, most of them residential. The majority of the current 6,894 Wake Forest Power customers are still residential. Wake Electric serves a large part of the northern and eastern town areas and Duke Progress Energy has some customers on the western side of town.
