City: Study vital to electric rate reduction

By Scott Witten - [email protected]

LAURINBURG — The city of Laurinburg could lower its electric rates by 7 percent as soon as next month.

The Laurinburg City Council is expected to set a public hearing on the matter when it meets Tuesday at 7 p.m.

“We’re excited to be able to pass this on to the customers if the council takes action,” City Manager Charles Nichols said.

But critics argue the reduction could have come sooner after Laurinburg and 31 other municipalities agreed to sell their power-plant assets to Duke Energy in August in return for lower wholesale electricity costs.

Matthew Block, a candidate for mayor of Laurinburg, placed an advertisement in The Laurinburg Exchange earlier this week chiding the city for the delay.

The ad said places like Lumberton have already reduced its rate by 7 percent and Wilson cut as much as 17 percent.

“Of note, all of these cities, except Laurinburg, reduced their rates before the results of their rate study were known,” Block said in his ad.

It is true that several member-cities of the N.C. Eastern Municipal Power Agency voted to decrease electric rates thanks to the deal. But there were also municipalities that insisted that they wanted to wait “to get it right.” One of those towns was Kinston where City Manager Tony Sears urged his town board to be patient despite pressure to quickly reduce rates.

“What we are doing here in Kinston is finalizing that rate structure and making sure our customers are getting the best possible reduction,” he told the News and Observer newspaper.

The town of Selma also commissioned a study on its electric rates, but did not wait for the work to be completed before voting to slash rates by 10 percent, starting in August.

But after getting the study’s results earlier this month, the Selma board had to reverse itself and vote to hike its rates by 5 percent.

Tommy Parker, the incumbent Laurinburg mayor also running in November, said the city took its time because it wanted “to be prudent.”

Parker said when the city council approved a 3.5 percent rate in January to keep the electric fund solvent, it was done with the understanding that officials would revisit the issue after it could be determined what was the best way to pass the Duke sale’s savings on. The study of Laurinburg electric rates by Progressive Engineering began in August and was expected to take five to six months.

“We are actually ahead of the schedule that we set,” Parker said “Our intent all along was to give the customer the best rate that we could.”

Parker added that it was unwise to compare Laurinburg with other cities.

“Each of the 32 municipalities had a different scenario,” he said. “Everybody is different. Some people reduced rates significantly and some didn’t. Apex is going to have to go up. It is just a complicated issue which is why we wanted to take our time.”

To determine the new rate, the study considered the what the electric department would need to cover its operating expenses, depreciation of equipment and to keep up with inflation. The proposed rate would also have to help the electric fund maintain a healthy reserve.

“We really wanted to do our due diligence to make sure we got it right,” Nichols said “We had consultants come in at beginning of August to look at our capital needs and some things that have been kicked down the road.”

Ed Tucker, a consultant with Progressive Engineering, said he would also like to look at simplifying the city’s overall electric rate structure, but that would take more time. The document outlining the city’s electric rate structure is 37-pages long.

“You have a lot of electric rates and what we would like to do is get it where it is more in line with what other cities use and combining a lot of the rates. But that is going to be a fairly detailed process.”

Several council members said utility customers might have seen better rate reduction, but city officials have been reluctant to go up on electric rates even as the city’s own power costs have increased.

“I think people should know why it is not 10 percent,” Councilman Drew Williamson said. “We talked about how our electric fund went essentially to zero and we chose not to pass the cost on to citizens. I think it is important to share that history.”

By Scott Witten

[email protected]

Reach editor Scott Witten at 910-384-6949.

Reach editor Scott Witten at 910-384-6949.

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