Energy Panel Gets to Work

A North Carolina subcommittee was to meet for the first time this week to “study potential options to provide relief to customers of the joint municipal power agencies from high electric rates.”

The joint municipal power agency relief subcommittee is assessing options such as the feasibility of refinancing or restructuring the power agencies’ debt, as well as selling assets to lower electric rates or the total amount of debt.

The panel will study two of the state’s largest municipal power agencies, which are managed by ElectriCities of North Carolina Inc.

The North Carolina Eastern Municipal Power Agency provides wholesale power to 32 cities and towns in the eastern part of the state.

As of June 30, it had $2.25 billion of outstanding bonds rated A-minus by Fitch Ratings and Standard & Poor’s, and Baa1 by Moody’s Investors Service.

Also included in the study is North Carolina Municipal Power Agency Number 1, which provides wholesale power to 19 cities and towns in western North Carolina. It owns a portion of the Catawba Nuclear Station operated by Duke Energy.

It had $1.54 billion of outstanding bonds rated A by Fitch Ratings and Standard & Poor’s, and A2 by Moody’s Investors Service.

“We, too, are concerned about electric rates and have always sought to take prudent steps to manage the cost of power for our member cities,” ElectriCities chief executive officer Graham Edwards said in an Oct. 4 letter to the subcommittee. “As you are aware, the most significant component of our rates is debt service.”

Edwards said debt has been reduced “considerably” over the years through refinancing to lower the cost of borrowing, though debt service remains an impediment to achieving competitive wholesale electric rates.

The sale of assets also has been evaluated, he said, offering to work with the legislative subcommittee.

NCMPA’s debt load keeps the average municipal customer’s electric costs 20% to 50% higher than some other energy bills, according to the Winston-Salem Journal.

The subcommittee is expected to meet four times before reporting its findings to the Legislative Research Commission.

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