An intolerable monthly jolt for Eastern NC

April 13, 2013 

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That low-wealth residents of some of North Carolina’s most struggling communities are powerless in the face of exorbitant monthly electric bills is shameful. In the dead and dark of winter, those who live in Red Springs in Robeson County with mortgages and rents under $500 can pay $800 a month just for heat and light.

More than 270,000 Tar Heels and businesses are trapped this way today, caught inside a tangled, decades-long tale that includes an energy crisis, a nuclear disaster, a massive debt and repeatedly unfortunate decisions by officials representing the 32 towns that comprise the N.C. Eastern Municipal Power Agency.

State Sens. Buck Newton, a Republican from Wilson, and Angela Bryant, a Democrat from Rocky Mount, have sponsored Senate Bill 720 to bring some relief to NCEMPA customers – their hometowns included. They want the agency to sell its assets or to renegotiate contracts to lower its $2 billion debt. Currently that burden is being carried by hamstrung customers paying rates 40 percent higher than the state average and over 50 percent higher than Duke Energy’s.

Some towns have it even worse. Scotland Neck, Robersonville, Red Springs and Farmville residents pay 60 percent to 75 percent higher than the state average.

“I’m trying to find a way for the cities to get out of this debt and the bad deal they’ve gotten into,” Newton said.

It’s a weight that will last until 2026 unless these lawmakers prevail.

The tale begins after the Arab oil embargo of 1973, when many municipalities decided they wanted more reliable sources of power and worked to get into the electricity-producing business. Eastern North Carolina towns banded together and formed the N.C. Eastern Municipal Power Agency, which then bought a minority stake in the planned nuclear plants of CP&L (which became Progress Energy).

Unfortunately, the agency borrowed $3.5 billion to help build those plants right as the Three Mile Island nuclear disaster spurred a plethora of new federal regulations, which caused massive cost overruns for the Shearon Harris and Brunswick nuclear plants. The interest rates at the time, following a recession, were also very high.

By 2000, the cities were negotiating with CP&L to try to shift most of their debt to the rest of the state. Spreading the remaining $3 billion debt as a surcharge on all electricity customers would have meant adding $2 to $3 per month to each residential bill for 17 years. To seal the deal, the cities had to sell their interests in the power plants and their electricity-distribution systems.

Unbelievably, they said no.

‘I never faced anything like this’

For Linda Moore of Scotland Neck, that long-ago decision she had nothing to do with meant a debilitating $771 electric bill in February. Her friend, Lillie Whitaker, paid $575.60.

“I pay these outrageous bills, and I’m freezing,” Whitaker told Gene Nichol, a UNC professor whose series on state poverty is running on The N&O’s Other Opinion page the last Sunday of each month this year. “I sleep in bed with a hood on. I never faced anything like this, even in the Army.”

It’s not as if our neighbors in these straits can just choose to get their electricity elsewhere. And it’s not as if they all voted for the officials who struck this path. Many NCEMPA communities sell electricity to customers outside their municipal boundaries who can’t even vote in their elections.

And this personal pain says nothing of the economic effect these electric rates are having on areas of the state that can least afford another mark against them. No job-bearing business is going to take up in a town that charges half again as much for electricity as most of the state.

Last year, the General Assembly’s Municipal Power Agency Relief Committee – a subset of the Legislative Research Commission – looked at restructuring NCEMPA’s debt but found that federal tax regulations and the current bond market made any advantages minimal. Selling the agency’s power-generating assets, however, remained a potential partial solution.

The committee also recommended an exhaustive study of many aspects of electricity in North Carolina, including how the agency’s high rates affect residents and economic development – a study that should be conducted “when feasible.”

Maybe in the meantime, someone can help Felicia Sanders of Rocky Mount figure out which of her choices is more feasible: “I had to decide whether to have insurance for my daughter or have my lights on.”

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