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What will happen if your electrical rates double, triple or more?
By: Beaufort Observer Editorial Team ( More Entries )
Publisher's Note: This article originally appeared in the Beaufort Observer.
Hearings in Raleigh this week portend just that. And what is being done about it????
As we have reported here on several occasions in the last several months, your electrical bill is headed up, up and up. Now we learn that the proposed merger of Progress Energy and Duke Energy will make them go up even more.
A merged Progress/Duke conglomerate will be the largest electric utility in the nation.
The Raleigh News & Observer is covering hearings this week before the N. C. Utilities Commission and yesterday (8-20-11) we learned from the CEO's of both energy giants that they will have to raise rates to pay severance pay to employees who will lose their job in a merger.
But hidden in the testimony is another fact that we have previously reported. Rates will be going up because as the CEO's reported: "utility rates will increase as their companies embark on a multibillion-dollar phase of power plant construction and other costly upgrades, including compliance with stricter environmental rules." Click here to read more from the N&O.
Click here to read the Charlotte Observer's report.
The hearings are of special significance to electrical customers in the Washington Electrical Utility service area because as a member of Electricities, WEU is already struggling with exorbitant debt payments on electrical generation facilities operated by the huge utilities. Electricities several years ago entered into long-term agreements to purchase a share of Progress' generating plants. Thus, as these plants are "modernized" the cost to Washington and other Electricities will by necessity go up, thereby raising electric costs to WEU and to its customers.
It is significant that Electricities did not speak at the hearing and is not expected to do so. ElectriCities has already entered into a secret, "confidential" agreement with Progress and Duke to not oppose the merger. Thus, they will be left out of any possibility of being players in deciding how the merger might impact electrical customers in the municipal power agencies Electricities 'serves'. Put another way, there does not appear to be any advocate in these hearing looking after the interests of Washington Electric Utility customers.
Commentary
Well, the above paragraph is actually commentary. But here we will make it plainer.
Washington electric customers got the shaft several years ago when they entered into a deal to purchase generating capacity, rather than simply purchase wholesale power on the open market (whatever that might be) and then after the agreement was made the cost of that generating capacity skyrocketed. According to Electricities officials this was because the cost of nuclear power went up as a result of new regulations after the Three Mile Island incident. While there is much debate about whether this is actually true or not, what is not debatable is that Washington and other municipalities got stuck with long term contracts that now bind them and reduce their options, either to purchase power from cheaper sources or to negotiate better deals with Electricities, Progress, Duke or whomever.
And it's going to get worse. That is what these highly paid CEO's were warning Tuesday. This is because of more stringent government imposed regulations related to coal-fired power plants and nuclear power. And of course, environmental regulations virtually prohibit expanding hydroelectric capacity. Wind and solar generation are not practical at this point, or at any point in the foreseeable future. Add to all that the ever increasing cost of petroleum (oil and natural gas) and we have a 'perfect storm' scenario.
We believe the fundamental flaw in all this is that in North Carolina we are headed toward less competition among wholesale power generators at a time when we should be looking at ways to de-regulate electricity generation but we are going in the opposite direction.
And Washington is sitting on its duff quibbling over "load management" while the strategic decisions that will shape the future of Washington and much of Beaufort County in the future are made by others. Washington will simply have to take what others decide for us. Load management is a great idea if it can effectively cut peak demand but it is peanuts compared to what they are talking about in Raleigh this week, while Washington takes a walk on the waterfront.
At the recent Washington City Council candidates' forum every one of the candidates present identified "electric rates" as one of the top issues facing the city now and into the future. And some of them had good ideas.
But what was glaringly absent was a comprehensive approach to reforming the way electrical power is provided in North Carolina, and nothing short of that will suffice against the impending problems they were talking about Tuesday in those hearings.
We would suggest that Washington made a serious blunder when it chose not to join with Kinston, Rocky Mount and some other municipal power cities to take a more assertive stance with Electricities in restructuring the absurd structure that now exists.
We're not experts in electrical power systems, but we do know a stink when we smell it. And this situation stinks to high heaven.
The fundametal problem, as we see it, is that we are headed in the opposite direction from that which we need to be headed. We are headed toward less competition and choice when we should be moving toward retail electric customers (consumers) having a choice of who they buy wholesale power from, just as we now have a choice which telephone carrier we want to do business with. But we don't hear our leaders even talking about more choice, much less alternative means of generation.
We read recently about a proposed wind farm in Beaufort County. But we don't see any movement toward the power it would generate helping Beaufort County and particularly Belhaven and Washington Electric customers. Why is that?
The answer is that Washington is hog-tied to ElectriCities.
And of course, there is the ever-present issue of Robbing Peter to Pay Paul....that is, transferring money from the Electric Fund to the General Fund. That's a buggy whose horse died years ago.
What Washington needs to do is step up to the plate and take a leadership role in a systemic reform of Electricities. That will undoubtedly cost some money. But those costs will pale in comparison to what we are facing if we do not find a better system. We would suggest that the legal issues must be addressed and if that is going to be done effectively it will take some real expertise in utility regulatory matters. And that does not come cheap. However, it will be more expensive not to find a way to restructure the existing contracts.
And Washington needs to put lobbying the political players as a top priority. This issue will have to be solved by the General Assembly and probably by Congress and to have any hope at either place will require sophisticated advocacy, probably coupled with the club of the specter of default.
What Washington must not do is what happened on the Hospital...wait until we are in such bad shape that we have to beg somebody to take the problem off our hands. The time to act is now, knowing that we are already too late to the dance but that must not deter us from showing some leadership going forward.
What is obvious to us and should be to anyone who watched the candidates at the Forum is that Washington is being entirely too passive. And if that does not change and change soon and dramatically we're going to be left in the dark.
At the Forum, Doug Mercer made an excellent point when he said: "Washington needs to get out of the electric business." While we absolutely agree with that, it still leaves unanswered what will be the best way to structure the electricity system in this state. And be them an owner or not, Washington, Belhaven (as Electricities) and all of Beaufort County as well as the state have a compelling reason to get a handle of this issue. Most of us simply cannot afford to go where we are headed.
The remainder of this campaign for the November election should focus on this issue of systemic reform of the electrical system as the number one, and we might suggest exclusive, issue to be addressed. The candidates must become better informed and they must educate the public on the issues. And hopefully somebody will come up with some options we might consider.
Nothing else facing the City of Washington is more important at this time nor will anything become more important in the foreseeable future.
And just as a side note....We spend a ton of money in this county and state on "economic development incentives." Yet nobody was at this hearing advocating for the Tier 1 counties being able to use electric power to attract new and expanded industry. But other than a solid labor force, few things are more important to economic growth and development than reasonably priced power. Where is our Economic Developer and the EDC in all this?
Go Back
Hearings in Raleigh this week portend just that. And what is being done about it????
As we have reported here on several occasions in the last several months, your electrical bill is headed up, up and up. Now we learn that the proposed merger of Progress Energy and Duke Energy will make them go up even more.
A merged Progress/Duke conglomerate will be the largest electric utility in the nation.
The Raleigh News & Observer is covering hearings this week before the N. C. Utilities Commission and yesterday (8-20-11) we learned from the CEO's of both energy giants that they will have to raise rates to pay severance pay to employees who will lose their job in a merger.
But hidden in the testimony is another fact that we have previously reported. Rates will be going up because as the CEO's reported: "utility rates will increase as their companies embark on a multibillion-dollar phase of power plant construction and other costly upgrades, including compliance with stricter environmental rules." Click here to read more from the N&O.
Click here to read the Charlotte Observer's report.
The hearings are of special significance to electrical customers in the Washington Electrical Utility service area because as a member of Electricities, WEU is already struggling with exorbitant debt payments on electrical generation facilities operated by the huge utilities. Electricities several years ago entered into long-term agreements to purchase a share of Progress' generating plants. Thus, as these plants are "modernized" the cost to Washington and other Electricities will by necessity go up, thereby raising electric costs to WEU and to its customers.
It is significant that Electricities did not speak at the hearing and is not expected to do so. ElectriCities has already entered into a secret, "confidential" agreement with Progress and Duke to not oppose the merger. Thus, they will be left out of any possibility of being players in deciding how the merger might impact electrical customers in the municipal power agencies Electricities 'serves'. Put another way, there does not appear to be any advocate in these hearing looking after the interests of Washington Electric Utility customers.
Commentary
Well, the above paragraph is actually commentary. But here we will make it plainer.
Washington electric customers got the shaft several years ago when they entered into a deal to purchase generating capacity, rather than simply purchase wholesale power on the open market (whatever that might be) and then after the agreement was made the cost of that generating capacity skyrocketed. According to Electricities officials this was because the cost of nuclear power went up as a result of new regulations after the Three Mile Island incident. While there is much debate about whether this is actually true or not, what is not debatable is that Washington and other municipalities got stuck with long term contracts that now bind them and reduce their options, either to purchase power from cheaper sources or to negotiate better deals with Electricities, Progress, Duke or whomever.
And it's going to get worse. That is what these highly paid CEO's were warning Tuesday. This is because of more stringent government imposed regulations related to coal-fired power plants and nuclear power. And of course, environmental regulations virtually prohibit expanding hydroelectric capacity. Wind and solar generation are not practical at this point, or at any point in the foreseeable future. Add to all that the ever increasing cost of petroleum (oil and natural gas) and we have a 'perfect storm' scenario.
We believe the fundamental flaw in all this is that in North Carolina we are headed toward less competition among wholesale power generators at a time when we should be looking at ways to de-regulate electricity generation but we are going in the opposite direction.
And Washington is sitting on its duff quibbling over "load management" while the strategic decisions that will shape the future of Washington and much of Beaufort County in the future are made by others. Washington will simply have to take what others decide for us. Load management is a great idea if it can effectively cut peak demand but it is peanuts compared to what they are talking about in Raleigh this week, while Washington takes a walk on the waterfront.
At the recent Washington City Council candidates' forum every one of the candidates present identified "electric rates" as one of the top issues facing the city now and into the future. And some of them had good ideas.
But what was glaringly absent was a comprehensive approach to reforming the way electrical power is provided in North Carolina, and nothing short of that will suffice against the impending problems they were talking about Tuesday in those hearings.
We would suggest that Washington made a serious blunder when it chose not to join with Kinston, Rocky Mount and some other municipal power cities to take a more assertive stance with Electricities in restructuring the absurd structure that now exists.
We're not experts in electrical power systems, but we do know a stink when we smell it. And this situation stinks to high heaven.
The fundametal problem, as we see it, is that we are headed in the opposite direction from that which we need to be headed. We are headed toward less competition and choice when we should be moving toward retail electric customers (consumers) having a choice of who they buy wholesale power from, just as we now have a choice which telephone carrier we want to do business with. But we don't hear our leaders even talking about more choice, much less alternative means of generation.
We read recently about a proposed wind farm in Beaufort County. But we don't see any movement toward the power it would generate helping Beaufort County and particularly Belhaven and Washington Electric customers. Why is that?
The answer is that Washington is hog-tied to ElectriCities.
And of course, there is the ever-present issue of Robbing Peter to Pay Paul....that is, transferring money from the Electric Fund to the General Fund. That's a buggy whose horse died years ago.
What Washington needs to do is step up to the plate and take a leadership role in a systemic reform of Electricities. That will undoubtedly cost some money. But those costs will pale in comparison to what we are facing if we do not find a better system. We would suggest that the legal issues must be addressed and if that is going to be done effectively it will take some real expertise in utility regulatory matters. And that does not come cheap. However, it will be more expensive not to find a way to restructure the existing contracts.
And Washington needs to put lobbying the political players as a top priority. This issue will have to be solved by the General Assembly and probably by Congress and to have any hope at either place will require sophisticated advocacy, probably coupled with the club of the specter of default.
What Washington must not do is what happened on the Hospital...wait until we are in such bad shape that we have to beg somebody to take the problem off our hands. The time to act is now, knowing that we are already too late to the dance but that must not deter us from showing some leadership going forward.
What is obvious to us and should be to anyone who watched the candidates at the Forum is that Washington is being entirely too passive. And if that does not change and change soon and dramatically we're going to be left in the dark.
At the Forum, Doug Mercer made an excellent point when he said: "Washington needs to get out of the electric business." While we absolutely agree with that, it still leaves unanswered what will be the best way to structure the electricity system in this state. And be them an owner or not, Washington, Belhaven (as Electricities) and all of Beaufort County as well as the state have a compelling reason to get a handle of this issue. Most of us simply cannot afford to go where we are headed.
The remainder of this campaign for the November election should focus on this issue of systemic reform of the electrical system as the number one, and we might suggest exclusive, issue to be addressed. The candidates must become better informed and they must educate the public on the issues. And hopefully somebody will come up with some options we might consider.
Nothing else facing the City of Washington is more important at this time nor will anything become more important in the foreseeable future.
And just as a side note....We spend a ton of money in this county and state on "economic development incentives." Yet nobody was at this hearing advocating for the Tier 1 counties being able to use electric power to attract new and expanded industry. But other than a solid labor force, few things are more important to economic growth and development than reasonably priced power. Where is our Economic Developer and the EDC in all this?
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