City power rate hikes likely to continue
High Point electric customers will probably continue to see rate increases in the coming years.
ElectriCities is projecting annual increases of 5 percent through 2016 in what it charges High Point and the other 18 cities that buy power from it.
The leader of the regional cooperative says the increases are needed because of rising expenses and debt associated with investments made in the Catawba Nuclear Station in South Carolina — where its power is generated — combined with lower consumer demand for electricity and other factors.
“We have told the (ElectriCities board) we’re going to have to have a series of rate increases, and we’re going to do our best to mitigate those,” Graham Edwards, CEO of ElectriCities of North Carolina, told the City Council at a recent briefing.
High Point constitutes about 19 percent of N.C. Municipal Power Agency No. 1, which had $1.43 billion in outstanding debt as of January. Edwards said the city’s share of that is about $175 million.
NCMPA1 has been saddled with heavy debt for decades, which stems in part from the energy crisis of the 1970s. Edwards said that, in the wake of the Three Mile Island nuclear accident in 1979, the cost to build the Catawba plant turned out to be almost three times higher than projected. Increased government regulation, construction delays, cost overruns, record-high interest rates and a decline in projected load growth all contributed to the high debt, with which NCMPA1 is still struggling.
NCMPA1 wholesale rates have increased a total of 33.77 percent since 2004, with residential rates for High Point customers going up about 5 to 10 percent annually during that time.
The agency’s rates are projected to continue to be higher than Duke Energy’s until about 2020, when its total debt is estimated to drop to about $600 billion. That should enable it to lower rates for High Point and other cities at that time.
“I realize getting to that point is always difficult,” said Edwards. “At that point in time, we become a lot more competitive from an economic development standpoint, even though we’re competitive today for industrial recruitment.”
Last summer, council adopted a budget that raised the electric rate 4.9 percent. The rate hike, which took effect July 1, 2012, translated into additional estimated $70 per year for the average residential customer’s electric bill.