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Friday, December 26, 2008 10:39 AM Area towns still reap energy decision rewards By Rochelle Moore Daily Times Staff Writer Residents living in Black Creek, Lucama, Stantonsburg and Sharpsburg have benefited from some of the lowest electric rates in the area for years. But recent trends in the utility industry that have lead to higher electric rates nationwide are starting to have an impact on these towns and the price their residents pay for electricity. In January, Sharpsburg residents will experience a 16 percent increase in electric rates, and Black Creek residents will receive a 10 percent increase. Residents in Lucama and Stantonsburg are expected to face a similar fate, with a possible 10 percent increase in the new year, said Kevin O'Donnell with Nova Energy Consultants. "We've been hit with the same things that (other electric providers have)," O'Donnell said. "The price increases we're seeing today are directly related to the prices of coal and natural gas." Other larger utility companies, including Wilson Energy and Progress Energy, have all experienced increases in electric rates this year and expect more in 2009. The difference for the four towns was their ability to lock into low electric rates for 10 years, until the town's contract with Dominion Power expired in 2007. As electric rates were increasing in 2004 and 2005, the towns were unaffected and had some of the lowest electric rates in the state. But, at the same time, those towns started preparing for future increases in the cost of wholesale electricity. In 2005, O'Donnell, an energy consultant for the towns, started recommending rate increases to prepare for future years when low electric wholesale rates would be harder to come by. Officials in Black Creek, Lucama and Stantonsburg agreed and increased electric rates 10 percent in 2006 and 2007. "We were basically getting ready for what was coming," O'Donnell said. "We had 10 years of really low power costs, which has really helped out towns and helped them operate." Sharpsburg officials declined to raise residential rates in 2006 and 2007. But by May, town officials realized that higher rates were necessary and raised them 12 percent. The rates will go up another 16 percent in January. "We didn't have enough money to operate," said Robert Masters, Sharpsburg town administrator. "We were losing money, and we had to go back and recoup what we were losing. We're not making anything from this; we're just trying to break even." Even though the towns are experiencing rising electric costs, they still are able to sell electricity to residential customers at a lower rate than Wilson Energy and at a comparable rate offered by Progress Energy. What sets the towns apart from other small towns and cities in the area was a deal the towns of Lucama, Black Creek and Stantonsburg struck in 1997. The towns, which were initially buying electricity from Wilson Energy, borrowed $2.35 million and built their own electric substation. They stopped receiving electricity from Wilson Energy and signed a contract with Dominion Power to purchase and receive electricity from 1998 through 2002. The contract had in place a set electric wholesale rate for five years. In 2002, the towns signed a second five-year contract that lasted through 2007. In January, the towns agreed to buy electricity from Progress Energy. Sharpsburg, in 1999, became a partner with the three towns and started buying electricity at the same wholesale rates. Sharpsburg also built a substation and serves its customers independently. "The whole purpose of doing it was to get a better rate," Masters said. The overall savings of building independent substations has saved an estimated $12 million in wholesale costs for Lucama, Stantonsburg and Black Creek and almost $5 million in Sharpsburg, O'Donnell said. Residential electric rates in the 1990s were close to 12 cents per kilowatt hour when electricity was provided by Wilson Energy. In 1999 when the towns sold their own electricity, residential customers paid about 7 to 8 cents per kwh. "We cut our rates 35 percent right off the bat in the first year," said Gary Davis, Stantonsburg town manager. "It's probably the best move economically these towns have made. Not only was it a great move for the towns but also for the citizens. It's saved them millions." In 2006, the Tri-Town substation, owned by Black Creek, Lucama and Stantonsburg, was paid off, six years early. The early payoff has given the towns the ability to maintain low electric rates in comparison with other area utility providers. "Even with the increases, we still have some of the lowest electric rates in the area," Davis said. In January, residential electric rates in Black Creek will be close to 11 cents per kwh. Sharpsburg rates will also be close to 10 cents per kwh. Lucama residents are now paying 9.4 cents per kwh and Stantonsburg residents are paying 9.5 cents per kwh. Wilson Energy customers are paying 13.3 cents per kwh during the winter months and 14.6 cents per kwh during the summer months. Wilson Energy customers will experience a 4 percent electric rate increase in February. Progress Energy rates just increased Dec. 1 to 9.63 cents per kwh for November through June and 10.63 cents for July through October. rochelle@wilsontimes.com | 265-7818 |
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