RaceJunkie
08-01-2008, 11:15 AM
The city of Wilson's electricity provider approved a 14 percent rate increase Wednesday while slashing payments to some directors of its parent agency.
Wilson Energy customers, however, may escape some of the increase because city staff is evaluating whether Wilson can absorb some of the rate hike that was passed on to Wilson from the N.C. Eastern Municipal Power Agency.
"We're still running the calculators ... but if we can knock a percent off or something we're going to do it," City Manager Grant Goings told Wilson City Council shortly after the NCEMPA meeting. Goings expects to make a recommendation by the end of the week.
The NCEMPA board, which includes representation from NCEMPA's 32 member cities including Wilson, passed the 14 percent increase during its quarterly meeting in the Wilson Operations Center.
NCEMPA board members, including Goings, were reluctant to pass one of the highest increases in years and entered into a lengthy discussion about the rate hike during a presentation from ElectriCities staff. ElectriCities is the managing organization for NCEMPA and the state's other public power agency.
"In Rocky Mount, the overwhelming percentage of our electricity sales is to residential customers," said Andre Knight, a Rocky Mount city councilman. "At the same time, this demographic is the most negatively impacted by rapidly increasing costs of petroleum and energy and is finding it difficult, if not nearly impossible, to pay already high rates of utilities."
Knight asked if the power agency could absorb some of the rate increase and reduce it 1.5 percent.
Ken Raber, NCEMPA senior vice president, said that the increase was the bare minimum the agency could pass and still operate without digging itself into a financial hole.
"We have brought you the lowest possible increase we can for the agency to remain viable," Raber said. "We have no flexibility in these numbers to absorb any (of the increase)."
NCEMPA staff evaluated other rate increase options, including holding the rate increase until September to save customers the expense of high utility costs in August. The wait would lead the agency to then ask for a higher rate increase to make up for financial losses, Raber said.
An evaluation of the organization's fund equity, which includes excess revenue, and its working capital also showed that the agency has just enough to pay its bills and debt service, but not enough to offset any of the rate increase, he said.
The rate increase does not account for any energy plant shutdowns or other unexpected operating costs. Raber said that the Rate Committee will need to meet again in January to evaluate the agency's finances and determine whether another rate increase is needed.
"Our costs are projected to remain high," Raber said. "This is not North Carolina's problem. We're facing significant utility issues that all the power agencies are facing."
In his presentation, Raber discussed some of the reasons for the increase, including increasing costs of coal, nuclear fuel, the worldwide demand for energy resources and losses after entering the variable rate market for some of the agency's debt. That decision, which was make in 2004, cost the agency millions of dollars and contributed 2 percent to the 14 percent rate increase.
Wilson Mayor Bruce Rose, who serves on the ElectriCities board of directors, was the only member of that board to vote against the 14 percent rate hike. He asked the agency to absorb 2 percent of the rate hike.
"I just felt we could have absorbed some of the increase from the bonds that went bad," Rose said.
Rose attended Wednesday's NCEMPA board meeting in addition to City Councilman James Johnson III. Also at the meeting was Ricardo Dew, a Wilson resident and vocal critic of ElectriCities management and the rate hike. Rose, Johnson and Dew did not speak during the meeting.
In a move to save NCEMPA some of its costs, Sam Noble, Tarboro town manager and chairman of the ElectriCities board, which oversees NCEMPA, recommended that stipends for seven of the ElectriCities board of directors from eastern North Carolina, including himself and Rose, be eliminated starting January 2009. The annual savings is about $90,000, which includes a $1,000 monthly stipend for six board members and $1,500 a month for Noble. The other board members are Fred Turnage, former Rocky Mount mayor, Mark Williams, Wake Forest town manager, John Craft, LaGrange town manager, Ron Elks, manager of the Greenville Utilities Commission, and one non-power agency board member.
The NCEMPA board voted to eliminate the stipends but allow for mileage reimbursement to and from the board meetings.
"When I learned that the board of directors from ElectriCities received a stipend to serve on the board, it really upset me," said Richard Olson, Elizabeth City town manager. "I have some serious ethical issues with that. I do not believe we should be paying any of our board of directors."
NCEMPA's 32 member cities, including Wilson, will start paying 14 percent more for electricity at a wholesale cost from NCEMPA, starting Friday. The cities each decide whether to pass on the entire 14 percent increase. The city of Tarboro recently approved a 13.2 percent increase and Rocky Mount approved an 11.5 percent increase.
Wilson City Council originally approved the 14 percent increase but could be given a lower rate increase recommendation from Goings by the end of the week. Wilson energy customers will see the increase on September bills.
The increase will add to a 5 percent electric rate increase that started in Wilson July 1.
Wilson Energy customers, however, may escape some of the increase because city staff is evaluating whether Wilson can absorb some of the rate hike that was passed on to Wilson from the N.C. Eastern Municipal Power Agency.
"We're still running the calculators ... but if we can knock a percent off or something we're going to do it," City Manager Grant Goings told Wilson City Council shortly after the NCEMPA meeting. Goings expects to make a recommendation by the end of the week.
The NCEMPA board, which includes representation from NCEMPA's 32 member cities including Wilson, passed the 14 percent increase during its quarterly meeting in the Wilson Operations Center.
NCEMPA board members, including Goings, were reluctant to pass one of the highest increases in years and entered into a lengthy discussion about the rate hike during a presentation from ElectriCities staff. ElectriCities is the managing organization for NCEMPA and the state's other public power agency.
"In Rocky Mount, the overwhelming percentage of our electricity sales is to residential customers," said Andre Knight, a Rocky Mount city councilman. "At the same time, this demographic is the most negatively impacted by rapidly increasing costs of petroleum and energy and is finding it difficult, if not nearly impossible, to pay already high rates of utilities."
Knight asked if the power agency could absorb some of the rate increase and reduce it 1.5 percent.
Ken Raber, NCEMPA senior vice president, said that the increase was the bare minimum the agency could pass and still operate without digging itself into a financial hole.
"We have brought you the lowest possible increase we can for the agency to remain viable," Raber said. "We have no flexibility in these numbers to absorb any (of the increase)."
NCEMPA staff evaluated other rate increase options, including holding the rate increase until September to save customers the expense of high utility costs in August. The wait would lead the agency to then ask for a higher rate increase to make up for financial losses, Raber said.
An evaluation of the organization's fund equity, which includes excess revenue, and its working capital also showed that the agency has just enough to pay its bills and debt service, but not enough to offset any of the rate increase, he said.
The rate increase does not account for any energy plant shutdowns or other unexpected operating costs. Raber said that the Rate Committee will need to meet again in January to evaluate the agency's finances and determine whether another rate increase is needed.
"Our costs are projected to remain high," Raber said. "This is not North Carolina's problem. We're facing significant utility issues that all the power agencies are facing."
In his presentation, Raber discussed some of the reasons for the increase, including increasing costs of coal, nuclear fuel, the worldwide demand for energy resources and losses after entering the variable rate market for some of the agency's debt. That decision, which was make in 2004, cost the agency millions of dollars and contributed 2 percent to the 14 percent rate increase.
Wilson Mayor Bruce Rose, who serves on the ElectriCities board of directors, was the only member of that board to vote against the 14 percent rate hike. He asked the agency to absorb 2 percent of the rate hike.
"I just felt we could have absorbed some of the increase from the bonds that went bad," Rose said.
Rose attended Wednesday's NCEMPA board meeting in addition to City Councilman James Johnson III. Also at the meeting was Ricardo Dew, a Wilson resident and vocal critic of ElectriCities management and the rate hike. Rose, Johnson and Dew did not speak during the meeting.
In a move to save NCEMPA some of its costs, Sam Noble, Tarboro town manager and chairman of the ElectriCities board, which oversees NCEMPA, recommended that stipends for seven of the ElectriCities board of directors from eastern North Carolina, including himself and Rose, be eliminated starting January 2009. The annual savings is about $90,000, which includes a $1,000 monthly stipend for six board members and $1,500 a month for Noble. The other board members are Fred Turnage, former Rocky Mount mayor, Mark Williams, Wake Forest town manager, John Craft, LaGrange town manager, Ron Elks, manager of the Greenville Utilities Commission, and one non-power agency board member.
The NCEMPA board voted to eliminate the stipends but allow for mileage reimbursement to and from the board meetings.
"When I learned that the board of directors from ElectriCities received a stipend to serve on the board, it really upset me," said Richard Olson, Elizabeth City town manager. "I have some serious ethical issues with that. I do not believe we should be paying any of our board of directors."
NCEMPA's 32 member cities, including Wilson, will start paying 14 percent more for electricity at a wholesale cost from NCEMPA, starting Friday. The cities each decide whether to pass on the entire 14 percent increase. The city of Tarboro recently approved a 13.2 percent increase and Rocky Mount approved an 11.5 percent increase.
Wilson City Council originally approved the 14 percent increase but could be given a lower rate increase recommendation from Goings by the end of the week. Wilson energy customers will see the increase on September bills.
The increase will add to a 5 percent electric rate increase that started in Wilson July 1.