Global economic forces are aligning to usher in a period of sharply higher electricity rates in North Carolina, which has long enjoyed access to some of the nation's cheapest power.

Many energy experts agree that North Carolina's era of cheap electricity, in which some customers have grown accustomed to paying as much as 25 percent below the national average, is coming to an end. Electricity costs are destined to surge as customers are called on to pay for new multibillion-dollar power plants and alternative energies. Meanwhile, electric utilities are trapped between growing energy demand and global warming.

Cost predictions are not widely available, but enough information has dribbled out from the power industry recently to suggest that in North Carolina, electricity costs could surge by 50 percent in the next decade. That would be nearly $50 a month added to a typical monthly bill of $97 for a Progress Energy residential customer.

Bigger electricity bills will increase the cost of living, pinching household budgets and increasing the cost of doing business, especially for energy-intensive industries. The state could lose one of its draws for recruiting new businesses: relatively inexpensive power that yielded annual savings of tens of thousands of dollars a year on an annual corporate budget.

"When these price-increase storms hit, they can have a lot of consequence, and a lot of damage can be left in their wake," said Lawrence Makovich, a senior power adviser at Cambridge Energy Research Associates near Boston. "This is material for many families. Electricity is a necessity. It's not a nonessential item that you can live without."

Based on the most recent cost estimates from Progress Energy of Raleigh, building two new nuclear plants would top out at $25 a month on a typical residential bill, while the expected legislation from Congress to control greenhouse gases from coal-burning power plants could add an additional $20 to a monthly bill. In this state, investment in renewable energy and efficiency programs could add nearly $3 a month. Those costs would phase in over a decade.

Driving those cost estimates are plans for new multibillion-dollar power plants, higher fuel costs to run the plants, new alternative energy requirements and widely expected penalties on coal-fired power plants that exceed greenhouse gas emissions allotted by Congress.

Utility economic forecasts over the years have been spectacularly inaccurate when it comes to estimating power plant costs. Just in the past few years, nuclear plant cost estimates have tripled to about $7 billion at Progress. The projected cost for Duke Energy's coal-burning unit at the Cliffside Steam Station nearly doubled last year to about $2.4 billion. The costs of power plants is paid by customers through monthly bills.

Florida law required Progress to disclose nuclear cost estimates for two reactors in that state. But the company has not discussed the estimated cost of two North Carolina reactors under consideration.

The cost of the company's Shearon Harris nuclear plant in Wake County increased residential customer bills by about 16 percent after regulators rejected the utility's original request for a 26 percent increase. Customers are about halfway through paying for the nuclear plant, which began operating in 1987.

Officials at Progress are reluctant to discuss how power rates might look in the coming years.

"To speculate on that is folly at this point," spokesman Mike Hughes said. "The only thing I can say for certainty is that rates are going to go up, and we're going to do everything in our power to limit that."

Next page >

Get $150+ in coupons in every Sunday N&O. Click here for convenient home delivery.