First Posted: 8/1/2014
LUMBERTON — Lumberton is already benefiting in its efforts to attract businesses to the community as a result of this week’s announcement that Duke Energy plans to purchase the generating assets of the North Carolina Eastern Municipal Power Agency, according to Robeson County’s economic developer and industrial recruiter.
“I’ve already had conversations with one company in Lumberton that says this is good news,” Greg Cummings said. “Now they can move forward with their plans to expand.”
The $1.2 billion deal between the two utilities is expected to eventually lower electric rates for both residential and business customers in Lumberton, Red Springs and 30 other municipalities in the eastern part of the state.
Electric customers in municipalities served by the municipal power agency have for years been struggling with high rates as a result of their share of the debt incurred by the North Carolina Eastern Municipal Power Agency’s shared ownership of the power plants — Shearon Harris nuclear plant in Wake County, the Brunswick nuclear plant in Brunswick County, and two coal-burning power plants in Person County — with the former Progress Energy. Duke purchased Progress Energy in 2012.
Lumberton, Red Springs and the other eastern North Carolina municipalities served by the power agency invested decades ago in the building of those plants. Customer rates in individual municipalities increased sharply as their debt on the projects escalated beyond what had been projected.
According to Cummings, decreased commercial rates for businesses already located in Lumberton and Red Springs, and those contemplating moving into the municipalities, will “be very positive.”
“This is definitely going to help strengthen the economies of Lumberton and Red Springs,” Cummings said. “I think we’re going to see some commercial growth, especially in the area of small business.
“High electric rates have always hurt us in our attempts to recruit new businesses to the area. Whenever businesses are looking to locate in an area they want to know about the infrastructure — water and sewer, natural gas, landfill, and electric. That’s the cost of doing business.”
Local officials, however, aren’t ready to say how much business or residential customers will see their electric bills decrease, or how soon that will happen. The agreement still has regulatory hurdles to pass which could take from nine months to a year.
“It certainly is going to be good if we can lower our rates for both our business and residential customers,” said Ray Pennington, mayor of Lumberton. “This is going to be big if, and when, it is finalized. This is going to help us be more competitive with our rates compared to other companies.”
Other companies providing electrical power in Robeson County include Duke Energy and Lumbee River Electric Membership Corporation. Rates charged by these companies will not be affected by the sales agreement.
John McNeill, the mayor of Red Springs, said it is difficult to project exactly how the agreement will affect commercial rates.
“There are just too many factors involved,” he said.
Ronnie Hunt, a retired CEO of Lumbee River Electric Membership Corporation, warns that the agreement may not bring as much of a decrease in electric rates as local officials expect.
“It all sounds good, but it may not be as good as it sounds,” he said. “There is still … debt that has to be paid and it will eventually still have to be paid by the customers … If an agreement is finalized, it will still take about a year from that time before any changes in the rates will be seen.”
The current debt owed by the North Carolina Eastern Municipal Power Agency membership is approximately $1.9 billion. After selling the assets for $1.2 billion and liquidating certain bond reserve funds, the member communities of the agency will still share the responsibility for outstanding debt of approximately $480 million.