Duke Energy deal would help smaller towns

February 14, 2014 

  • Public forums

    The environmental nonprofit NC WARN is working with the conservative nonprofit John Locke Foundation to sponsor two public forums calling for increased competition in the electricity market.

    When: 4:30-6:30 p.m., Feb. 26 and March 20

    Where: Brownstone Inn in Raleigh

    More information: Email Jim Warren of NC WARN at Jim@NCWARN.org

In the 1970s, some 32 towns and cities in Eastern North Carolina feared that a shortage of electric power would leave them out in the cold, literally. So these communities, including four in Johnston County (Benson, Clayton, Selma and Smithfield) formed a power agency and bought shares in power plants.

The tradeoff was that citizens in the towns would have to pay higher rates in order to pay off the investment. But rates in some places now are out of hand because the expenses of building and operating the plants went way up, and with it the costs to the towns that bought shares. For some customers in those towns, that’s meant monthly bills that exceed their mortgages.

Now Duke Energy Progress is looking at a deal that sounds like a good one for those communities in Johnston and elsewhere. The company is considering buying those shares in plants from the towns and cities, with the plus side for Duke being sole ownership and perhaps a greater efficiency in running a wholly owned plant.

For the communities, the benefit would be, absent the need to pay off the shares, that rates could drop as much as 30 percent.

What has to happen, of course, is that Duke would have to agree to a deal to sell the towns electricity. Without that, the towns would be taking a huge risk.

Duke is making no secret of its interest in buying the shares, although apparently these sorts of deals are, in the power business, like turning a battleship. Customers in the towns and cities might be looking at a two-year wait for completion of the deal.

Arrangements such as those made by these communities were smart at the time. Power was in shorter supply, and in growing areas, demand for it was ever greater. Also of concern was that the big cities would use their clout to get all the power they needed, with smaller communities having difficulty.

But then the Three Mile Island accident came along, and suddenly nuclear plants, for example, were facing a lot of new regulations, from how such plants were constructed to what had to be done to maintain them to the satisfaction of regulators.

Cost went up, and so, of course, did rates. Under the deal reached by those 32 communities, for example, Smithfield’s rates were 30 percent higher than Duke Energy’s.

Obviously a lot of different places were involved in the investment deal, including those in Johnston, and all would have to agree to any final arrangement reached with Duke Energy Progress. At first glance it would appear daunting to try to get the leaders of 32 different places to agree to something, but this sounds like a move that would be in the best interest of all concerned.

It’s hard to believe that mayors and council members who run the communities would not agree to a deal that might save their citizens money on power bills.

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