Edenton must pay electric supplier additional $715K

The town of Edenton must pay its electric supplier $715,020 over the next two years because of higher-than-anticipated energy costs in 2022.

The city of Elizabeth City and the town of Hertford also must pay the N.C. Eastern Municipal Power Agency almost $2.1 million and $168,139, respectively, because of those added costs.

That’s because NCEMPA, which is the electric supplier for the three municipalities, has an agreement with Duke Energy Progress to “true-up” the cost of electricity production every year so it reflects the actual cost of its production.

Sometimes the true-up requires the power agency to pay Duke extra money, usually a few million dollars that the power agency covers. The power agency could also receive a credit in any given years which it uses as a cushion when the 32 NCEMPA members have a minimal true-up. NCEMPA is part of the statewide ElectriCities.

ElectriCities Vice-President for Communications Elizabeth Kadick said Thursday that the true-up cost for 2022 was $53 million.

“In 2022, the estimated rates DEP (Duke Progress Energy) billed NCEMPA were lower than the actual costs,” Kadick said. “Actual costs were higher due to higher natural gas fuel prices in 2022 and higher purchased power costs in 2023. The most significant event impacting DEP’s costs was Winter Storm Elliott in December 2022 and January 2023.”

NCEMPA has not received the 2023 true-up costs from Duke but Kadick anticipates actual costs will be higher than the billed rates.

“The total NCEMPA 2023 true-up is projected to be $40 million but the actual true-up cost will not be known until the fall,” Kadick said.

All three municipalities have a 24-month payback for the 2022 true-up, which started April 1. The true-up for 2023 will begin in October and will also be 24 months.

For Elizabeth City the monthly breakdown for the 2022 true-up is $91,274 a month. For Edenton it is $29,793 a month, Hertford $7,006.

The Greenville Daily Reflector newspaper recently reported that city’s share of the true-up was $12.8 million for 2022 and city leaders are proposing a 3.3% increase in electric rates to cover the unexpected payout.

Elizabeth City Manager Montre Freeman said in his annual budget message to City Council on April 8 that utility users would not face a rate increase “at this time” in the 2024-25 fiscal year but alluded to the impending true-up by NCEMPA.

“However, the electric rates are under review by ElectriCities and I will provide a full report to Council upon my receipt of those findings with a recommendation,” Freeman wrote. “There is currently a lot of development occurring in the city and numerous other projects are being proposed. This puts a strain on the ability of the electric fund to meet those needs.”

Edenton Town Manager Corey Gooden said the town anticipated the true-up and factored that into last year’s rate change. Gooden said the town was notified in January 2023 that a true-up bill was coming.

“For the 2022 true-up cost, the Town of Edenton included true-up estimates during the July 1, 2023 rate change for the Electric department’s fiscal year 2023-24 budget,” Gooden said. “The 2022 cost is anticipated to be absorbed with that rate structure. The town has also been performing improvements around electric generation efficiencies to help curb the soon-to-be-known 2023 true-up.”

Gooden said a rate increase is not being considered at this time with another true-up looming this fall.

“However, we will monitor the wholesale power bill from April to October of 2023,” Gooden said. “We would like to see how the impacts are affecting the cost to residents. If a change is needed we would likely start reviewing the town’s cost early 2025 as we approach the new budget season.”

Hertford Mayor Ashley Hodges said the town’s true-up for 2022 will be $168,139, which amounts to $7,006 a month beginning in April. The town’s true-up for 2023 beginning in October will be $142,526, which will be an additional $5,939 a month.

Hodges said the true-up wasn’t a surprise.

”The town was notified last year of the pending increase (September 2023) and then again in February of this year, so we weren’t surprised,” he said.

He also indicated it’s too soon to say what impact the true-up will have on rates.

”We look at rates and expenses every year as part of the budget exercise, and this year will be no different,” he said. “Our staff are working hard to cover all expenses while minimizing the impact to our residents, so we’ll see what they come up with in the budget presentation in a few weeks.”

Kadick said that once Duke reported the true-up amount for 2022 that NCEMPA members were notified at their annual rate committee meeting in January 2023 and at their quarterly board meetings about the status of the true-up.

“In September of 2024, NCEMPA members will meet to discuss the actual true-up numbers for 2023 and at that time determine how to recover the costs,” Kadick said.