Smithfield leaders want residents to know how a likely buyout of the town’s share of five power plants could affect what households and businesses pay for electricity.
At a forum on Tuesday, the Town Council also wants to hear the public’s thoughts on the proposed deal, which Smithfield leaders think could lead to lower electricity rates.
The forum, at 6:15 p.m. at Town Hall, will begin with an introduction by Town Manager Paul Sabiston and public utilities director Ken Griffin. Next, residents will hear from ElectriCities, the organization that provides management services to public power towns in the Carolinas and Virginia. The council will then open the floor to questions from the public.
Smithfield and North Carolina’s other public power towns get their electricity from plants they partly own. Duke Energy Progress has proposed to buy the towns’ shares of those plants. Essentially, the deal would erase most of the debt the towns incurred in buying the shares, and that could lead to lower electricity rates.
Talks with Duke have gone smoothly so far, and if all goes as planned, cheaper rates could come to Smithfield by next summer, Sabiston said.
“It’s moving along as planned, surprisingly,” Sabiston said. “There haven’t been any delays.”
Already, Duke has made filings with various regulatory agencies, Sabiston said. The town, meanwhile, is “trying to keep the rates as low as possible in terms of the cost of power that we pay,” he said.
On Tuesday, “we will give the public a good picture as to where we are,” Sabiston added.
Partly because of debt, all public power towns charge more for electricity than Duke. Smithfield’s residential rate is closer than most to Duke’s. A Smithfield household using 1,000 kilowatt-hours a month pays $126.68. A Duke customer pays $109.27, or 17.76 percent less.
ElectriCities is working with Smithfield and other public power towns on a similar comparison of rates paid by commercial and industrial customers. Griffin, the public utilities director, said those rates are more complex because customers pay not only for the power they use but also for when they use it. In short, commercial and industrial customers pay more for electricity purchased during hours of peak demand.
At the Town Council’s Sept. 2 meeting, Griffin asked for money to hire an outside firm to see what Smithfield’s residential, commercial and industrial rates could look like if the deal with Duke goes through. The study would look not only at the cost of power but also the expense of operating and maintaining Smithfield’s electric system.
Griffin wanted approval that night, but the council will likely consider his request in January, when a possible deal with Duke is closer. Sabiston said that was plenty of time.
“Given the fact that this could be a full-scale rate reduction, we’re trying to do (the study) before it becomes a reality so we can hit the ground running three or four months (before the deal),” he said.
Griffin said waiting to the first of the year was fine with him. “I understand (the council’s) reasoning in waiting a little bit,” he said.
Smithfield’s electricity rates are second-lowest among North Carolina’s 32 public power towns; that’s mostly because of low operating costs, Griffin said. This fiscal year, 84 percent of Smithfield’s $19.4 million electricity budget will go to purchase power, while 16 percent will go to salaries and equipment, Griffin said.
In the 1970s, many U.S. cities were experiencing brownouts. To ensure a steady stream of power to their communities, Smithfield, Selma, Clayton, Benson and 28 other North Carolina towns formed the N.C. Eastern Municipal Power Agency and bought into five power plants, including Shearon Harris in Wake County. Soon after came the Three Mile Island disaster, which led to an exponential increase in the cost of building and maintaining nuclear power plants.
The 32 towns still owe $1.8 billion in debt, $37.5 million of which is Smithfield’s responsibility. Debt repayment is built into the wholesale rate the towns pay, and they pass that cost onto their consumers.
Without the Duke deal, the earliest Smithfield could hope to retire that debt would be 10 to 12 years from now, Sabiston said. That assumes no new regulatory burdens and no costly maintenance at those power plants, he said.
The deal with Duke makes sense, Sabiston said. “We can be more competitive now, or we can hope to be more competitive in 10 or 12 years with no guarantees that that will happen,” he said. “This is maybe a onetime opportunity to try to reduce that debt and try to become more competitive now.”
Added Griffin: “We are on the doorstep, we do believe, of beginning to have lower electric rates, which we’ll greatly appreciate, as will our residential and commercial customers.”