LAURINBURG — The Laurinburg City Council is expected to take a hard look at the city’s electric rates before the end of the year.
The city has commissioned a rate study to determine the ideal level for city electric rates following Duke Energy’s purchase of generating assets from the N.C. Eastern Municipal Power Association. Laurinburg is among the 32 NCEMPA members.
The purchase reduced about 70 percent of the association’s debt load, resulting in a lower wholesale energy cost to its member cities. Based upon the new cost, among other factors, energy consultant Progressive Engineering will recommend a new electric rate structure to city council.
The study, which City Manager Charles Nichols termed “a lengthy process,” began in earnest in early August after information became available about the new cost of energy to the city.
“(The consultant) is going to make a recommendation and going to be looking at where our finances are, where we’re financially positioned in our electric fund, and what our wholesale rates are,” Nichols said.
That recommendation is expected to come by the beginning of winter.
“You have to be making enough profit to be able to maintain your system; you don’t want the jeopardy of not being able to furnish electricity as an option,” said Mayor Tommy Parker. “You can’t sell power at cost. It’s run like a business: you want to be stable and financially responsible.”
Though some neighboring NCEMPA members have recently adjusted their electric rates — including a more than six percent reduction in Lumberton — the city’s goal is to implement a well-researched rate structure that will be in place for the foreseeable future.
“No city that’s changed their rates has gotten a rate study back … we want to make sure that we get rates where they need to be based on the new wholesale cost,” Nichols said. “When we do it, we want to make sure it’s done right.”
In January, the city raised electric rates by 3.5 percent to bring its electric fund to a break-even point after operating in the red for years. Without that increase, the city was projected to lose $500,000 in 2015.
“If you look at our rates, there was a period that we didn’t go up, then there was a period that we tried to go up just what it cost us,” said Parker, who hopes that the study will support a rate reduction of much more than 3.5 percent.
Last month, city council fielded complaints from a handful of electric customers faced with a sharp spike in their utility bills due to a 39-day billing period for the month of July. At that point, council members said that the excess charge may be distributed over several months and offered energy audits to provide those with high electric bills with strategies to reduce their energy usage.
“The city’s going to try to work with people,” Parker said. “We’re trying to be proactive in educating the consumer on how to manage their power bill in the most efficient way.”
Mary Katherine Murphy can be reached at 910-506-3169.