The town can now offer a temporary discount on electricity to some expanding businesses.
Smithfield’s public utilities department helped create an economic development electricity discount for local businesses looking at expansion. The idea is that if a business agrees to expand within town limits, the town will lower the company’s electricity bill for a while as an economic development incentive.
Public utilities director Ken Griffin said his department created the plan because a local company is considering bringing all of its in-state operations to Smithfield or relocating entirely.
He said he hopes the electricity incentive will be enough to convince that company, and others, to stay and grow here.
The plan applies to Smithfield’s medium- to large-sized industrial businesses that take advantage of the town’s load shedding program, which automatically switches power over to a generator during peak power demand times.
Existing businesses that agree to invest at least $1 million up front for expansion will get a discount of a penny and a half per kilowatt-hour, with a cap of 2 million kilowatt-hours per year. Those businesses must “shed” a minimum of 75 percent of their power during peak times to be eligible.
The savings can last for up to five years, depending on how many new jobs are created. Ten new jobs get a business one year of savings; 20 jobs get two years, and so on.
According to a proposal submitted by Griffin to the town council, the plan and the load-shedding rate offer “some of the lowest electric rates available in the state and region.”
The council approved the rider at its regular meeting Nov. 5, after tabling it in October.
Councilman Emery Ashley asked Griffin if he looked into incentives that could help convince businesses to stay in Smithfield. Griffin said he hadn’t, but that he would be open to working on something like that.
The high cost of power in eastern North Carolina has been an issue for decades. Power costs are high because Smithfield and 31 other eastern North Carolina towns buy it wholesale from five power plants they own.
The 32 cities are currently in talks to sell their shares of the plants to Duke Energy Progress for $1.2 billion, which could lower the cost of electricity for consumers as early as next summer. In October, Duke Energy filed with the federal government to gain approval for the deal.
Once the deal with Duke goes through, the town council will have to evaluate how to pass on its probable electricity savings to customers. It will be possible to keep the rate-reduction plan after the deal is finalized, Griffin said.
“If we have a significant reduction in that purchase power cost, the council can decide how to pass on those savings to customers,” he said.
This past summer, an ElectriCities assessment showed Smithfield residents pay nearly 18 percent more for power than Duke Energy customers, but that Smithfield has the second lowest residential power rate compared to the 31 other towns.
Commercial and industrial rates are more complicated because they’re based on usage and demand. A medium- to large-sized business in Smithfield using 37,000 kilowatt-hours per month pays $4,415.37 for electricity – 42 percent more than the $3,118.50 a Duke customer pays.
Smithfield businesses that use less than 1,000 kilowatt-hours per month are considered small businesses and pay about $160.11 a month, or 26 percent more than a Duke customer’s $127.07 monthly bill.
An industrial business using the load shedding program can expect to pay just 62 percent of what Duke customers pay, and the economic development incentive could reduce that further.