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If the Wake Forest commissioners approve
Town Manager Mark Williams’
recommendation, the fuel rider on town
residents’ electric bills will jump from
$3.60 to $11.00 for 1,000 kilowatt
hours.
The average residential use
is about 1,500 kilowatt hours a month,
Deputy Town Manager Roe O’Donnell said,
meaning the average household would see
the fuel rider increase from $5.40 per
month to $16.50. Households which use
gas for cooking or heating water will
have less use; those with heat pumps
will have more.
The town board added the
rider in May of 2005 in response to the
increase in coal prices that led to an
increase in the wholesale cost of power
to the town.
This proposed large increase
in the fuel rider, Williams said during
Tuesday night’s town board work session,
is triggered by the 10 percent increase
in the wholesale power rate
ElectriCities approved last month. That
increase was caused, in large part, by
increases in the cost of natural gas.
The commissioners took no
action during the work session, but
Commissioner Margaret Jones Stinnett
questioned Williams about the cost of
natural gas, referring to PSNC’s request
to the state Utilities Commission to
decrease the cost of natural gas for
residential customers by 11 percent.
“Progress Energy is buying
differently than you and I would buy to
heat our homes,” Williams said. Progress
Energy, through an agency and directly,
provides all the power the town resells.
“Is electricity a
money-making enterprise for the town?”
Stinnett asked.
“Not really,” Williams said.
“[The rates] pay for the electricity we
buy, for employees, for operating
costs.”
Money in the separate electric fund
budget that is not needed for the
operating costs is put into a capital
fund to be used for capital needs such
as the second substation that will be
built just off the second leg of the
N.C. 98 bypass.
The increase in the rider,
Williams said, “is needed to recoup what
are costs are now.
“We do not make a profit and
then spend that money on other things,”
he emphasized.
Commissioner Stephen
Barrington said he was glad Stinnett had
raised the subject because “I hear those
questions all the time.”
Williams and Mayor Vivian
Jones said the town chose to go with a
rider, not a rate increase, “because
it’s easier to get rid of,” she said.
“When costs begin to go back
down, we’ll be able to adjust the fuel
rider back down,” Williams said.
The town has not increased
its electric rates since 1992 although
there have been numerous wholesale rate
increases. The town has been able to
absorb the increases because of the
growth in town.
The town, through the
Eastern Power Agency administered by
ElectriCities, owns shares in four
Progress Energy power plants: Brunswick
and Shearon Harris nuclear power plants
and two coal-fired plants near Roxboro.
(The reason town electric
rates compare unfavorably with Progress
Energy’s and Wake Electric’s is because
the town purchased those shares in the
mid-1980s – as did other towns and
cities – when it was feared demand for
electricity would spike. Instead, the
Three Mile Island incident and other
forces greatly increased construction
costs at the plants. The town still owes
over $20 million for its shares; the
last payment will be made in January of
2026.)
Those four plants provide
between 65 and 80 percent of the town’s
power, depending on the time of year and
other forces. The rest is purchased
through a contract with Progress Energy
based on the market price of power.
“Because there are a lot of
gas-fired plants in the Progress Energy
system, the cost [of power] has gone up
significantly,” Williams said.
In addition, Williams said,
three unforeseen outages during the
summer at the nuclear power plants meant
the town had to purchase more power
through the Progress Energy contract at
a time when the town uses more power
that is more expensive.
Commissioner Frank Drake was
absent from the work session.
The board will act on
Williams’ request at its regular meeting
on Jan. 17, which begins at 7 p.m. in
town hall. |
