Smithfield Herald

As Duke sale moves forward, towns studying how to lower rates

Johnston County towns will likely be able to lower electricity rates once Duke Energy Progress buys their shares in regional power plants.

But by how much? That’s a question the town managers in Clayton, Smithfield, Benson and Selma say they hope to answer in the coming weeks and months.

In December, the Federal Energy Regulatory Commission approved Duke’s plan to purchase the generating assets of 32 Eastern North Carolina towns. The utility still needs OKs from the state and the Nuclear Regulatory Commission.

The Duke purchase would go a long way toward erasing the $12.8 million Clayton still owes after borrowing money to buy shares in the power plants

Clayton Town Manager Steve Biggs said his staff will conduct its own analysis of how the sale will affect what the town charges for electricity.

“I feel confident the rates will improve,” Biggs said. “Everybody is going to see some degree of relief.”

On average, the 270,000 public power customers in Eastern North Carolina pay $240 to $600 more a year for electricity than Duke Energy customers. A Town of Clayton customer using 1,000 kilowatt-hours of electricity per month pays $135, or about $25 more than a Duke customer.

By studying internally how much the town will charge going forward, Clayton can avoid the cost of a consultant, Biggs said. If analyzing the various rate structures gets too complicated, he said, the town could always seek help from ElectriCities, the Raleigh-based company that serves public power towns.

Biggs said if everything keeps going to plan, it’s quite possible to have lower electricity rates starting next fiscal year, or July 1.

In Smithfield, the town is considering paying ElectriCities to conduct a comprehensive study of the town’s rates. Town Manager Paul Sabiston said since many of the 32 towns affected by the sale will likely do the same, it’s important to act quickly.

“My thought is to be ahead of everyone else,” he said.

Ken Griffin, the town’s public utilities director, said the study by ElectriCities would likely take four to six months to complete.

“It’s different from rate setting and rate making, which is more subjective,” Griffin said. “It provides more of an objective look at what it costs to serve each group of residents.”

Griffin said the town initially got quotes from two rate-study firms, which quoted the town about $33,000. Smithfield is still working out terms with ElectriCities, he said.

Town of Smithfield customers who use 1,000 kilowatt-hours of electricity a month pay about $20 more than Progress customers.

As for Benson, Town Manager Matt Zapp said his staff, too, will look to analyze rates. Prior to a rate adjustment, an analysis would be needed, he said.

“The Town of Benson is optimistic that the Duke Energy Progress and (public power town) asset merger will close,” Zapp said in a statement.

“As the deal moves forward, we will certainly look to provide the most competitive commercial and residential rates possible,” he said.