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Cornelius News

Rate hikes will generate income for Town-owned electric utility

Dave Yochum photo

Analysis | By Dave Vieser

In 2007, Cornelius commissioners turned down a chance to invest in the debt ridden Adelphia Cable System, a wise move as it turned out. However, the town still does own and operate another utility: ElectriCities, and it’s going to cost their customers a lot more during the next decade.

How did this evolve?

Brief history lesson

In the past century, it was common for many municipalities, including Cornelius, to operate their own electric utility. “In this manner, citizens and businesses could be assured of having electricity,” said Town Manager Andrew Grant.

In the late 1960s, the Cornelius Power Co., along with many other municipal electric companies, were merged to form the North Carolina Municipality Owned Electric Systems Association.

Eventually, Huntersville and Cornelius also combined their electric operations and ElectriCities, the trade organization for public power communities, was chosen to operate and maintain the combined electric system.

Meanwhile, when the Catawba Nuclear Plant began construction, Cornelius joined several other state municipalities to form the North Carolina Municipal Power Agency and purchased a portion of the plant. Why is that so important now? Because the debt for that ownership doesn’t end until 2032, so Cornelius cannot sell its utility until that debt rolls off.

Status of the system

Knowing that the electric utility would remain under control of the town for many more years, Cornelius conducted a System Study in 2019 which determined  that the electric system was at capacity.

Grant

When a system is at capacity, it is struggling to provide reliable service  and it hampers the system’s ability to grow through adding new customers.

“This was especially problematic as the Town Center area was poised for future development,” Grant added, referring to the Cain Center for the Arts and other downtown additions.

Rates

After no rate hikes between 2012 and 2019, a Cost of Service Study also completed in 2019 showed that the Town needed to raise electric rates an average 14.6 percent in order to ensure electric system reliability. Rather than having a one-time rate increase, a gradual approach of smaller rate adjustments over a number of years was preferred by the Cornelius Town Board.

After considerable discussion, the Town decided on  annual rate increases of approximately 4.5% for five consecutive years.

How much will that cost the average residential customer? The average monthly bill is currently $86.41, so they would see an increase of about $52 annually with the increase scheduled for this July 1, or $4.33 monthly, making the new monthly bill $90.74. This increase would be repeated during each of the following four years.

Where will the money go?

The additional revenue will allow the Town to invest in capital projects, including a second substation to provide additional electric capacity and redundancy. An additional substation will also provide resiliency so that a single failure cannot disrupt power to the Town’s entire electric system. Deferred maintenance and much-needed improvements would be implemented at the existing substation to further improve system efficiency and reliability.

Additionally, the Town plans to continue the conversion of overhead lines to underground lines along portions of Hwy. 115.

Is this a done deal?

Not completely. The first year of the increase was originally scheduled for July of 2020, but was pushed back one year due to the impact of the COVID-19 pandemic. The initial rate increase was then set to begin on July 1 of this year, but some town board members would like it delayed again.

Commissioners Tricia Sisson and Denis Bilodeau are recommending a delay of six months as “citizens and businesses deal with the impact of the pandemic,” Bilodeau, the mayor pro tem, said.

However, the remaining three commissioners don’t share those sentiments.

Ross

“I am an ElectriCities customer and I am  in favor of the rate increase now,” said Commissioner Thurman Ross.  “I would hate for something to go wrong with the system and we may be without power for a long period of time.”

Town officials concur.

“Delaying the rate adjustment would delay the needed capital improvements and cause any future rate increases to be larger,” said Grant.

So, as the Town puts together the upcoming 2022 budget, residents and businesses should be prepared to begin absorbing the first of five years in rate increases unless there’s a last minute change of heart on the board.

Who will be impacted?

Electricities serves the area east of I-77 in Cornelius, while Energy United and Duke Energy serve the area west of the interstate. The rates between the three utilities have been fairly comparable over the past decade, but with five years of rate hikes ahead, rates could get considerably higher for Electricites’ customers.

Who decides the rates?

The Cornelius Town Board is the governing board over the town’s electric utility.

Discussion

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