Could lower rates in city, Red Springs

Last updated: February 05. 2014 9:21AM - 2141 Views
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LUMBERTON — The Lumberton City Council today will discuss potentially raising electricity rates by 3 percent, but there could be relief coming for Lumberton and Red Springs electrical customers burdened by already hefty bills.

Duke Energy announced Monday that it had entered into negotiations with the North Carolina Eastern Municipal Power Agency to potentially purchase ownership interests in four power plants that serve 32 cities and towns, including Lumberton and Red Springs, that operate their own electric systems.

The deal could lower utility costs for customers in municipalities that invested in those power plants, and would not affect the staff of local electrical departments or their day-to-day operations.

Red Springs Mayor John McNeill said the deal, if approved by the town’s Board of Commissioners and all other parties, could be a win-win for those involved.

“I would certainly give anyone good odds that they would all be in favor of doing anything to lower the rates for our consumers,” he said.

The North Carolina Eastern Municipal Power Agency has partial ownership interests in Shearon Harris nuclear plant in Wake County, the Brunswick nuclear plant in Brunswick County and two coal-burning power plants in Person County. If a deal were reached, Duke Energy would buy out those shares.

By a 2011 estimate, about 38 percent North Carolina Eastern Municipal Power Agency’s wholesale rates go towards paying its debt, which currently amounts to $1.87 billion. Most of that debt was incurred by the construction of Shearon Harris, according to ElectriCities, which manages the power agency. A sale could lessen that debt, and in turn reduce the amount each municipality must charge its customers.

McNeill said of the $4.2 million Red Springs spends on power each year, about $1.6 million goes towards debt, especially payments towards Shearon Harris. The cost to operate that nuclear power plant “quadrupled” after Three-Mile Island, a Pennsylvania plant, had a nuclear meltdown in 1979 and regulations tightened, McNeill said.

“We went from a deal that was going to save the cities and their consumers big money to one that was going to cost money,” he said.

McNeill noted Red Springs would have to cut its rates by 18 percent to equal rates offered by Lumbee River Electric Membership Corporation.

Linda Oxendine, director of Public Services for Lumberton, is uncertain but optimistic about how the purchase could affect Lumberton’s 10,800 electrical customers.

“I’m hoping it would impact rates and bring the rates down but we won’t know that until it happens,” she said.

Lumberton pays about 5 percent of the North Carolina Eastern Municipal Power Agency’s debt, according to ElectriCities.

The city charges 12.87 cents per kilowatt-hour, with a slight increase for higher usage. Oxendine said there hasn’t been a rate increase since April 2009. In addition, Lumberton customers pay a $7.95 monthly service fee.

The City Council meets today in a policy meeting to consider bumping up the electrical rate.

Customers in Red Springs pay monthly fee of $9.88, then 12.7 to 14.2 cents per kilowatt-hour depending on usage and the month.

Lumberton falls just above the national average of 12 cents per kilowatt-hour for residential services, according to the U.S. Energy Information Administration. The average American household uses about 903 kilowatt-hours of electricity each month — adding up to a bill of about $108.

Robeson County residents who do not get their power from Red Springs or Lumberton are served by either LREMC or Duke Energy.

Customers with the Lumbee River Electric Membership Corporation pay from 7.9 cents per kilowatt-hour during high-usage months to about 9.7 cents during low-usage months, plus a $20 monthly service charge. The company serves more than 40,000 people in Robeson, Scotland, Hoke and Cumberland counties.

Duke Energy charges about 9.7 cents per kilowatt-hour, plus a $12.19 monthly service charge.

If a deal is made, participating municipalities would still be a part of the North Carolina Eastern Municipal Power Agency, which would remain intact.

“Any potential transaction would take many months to complete, with various aspects of the transaction subject to approval by, among others, the boards of Duke Energy and NCEMPA, and appropriate state and federal agencies,” a Duke Energy statement said.

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