LANDIS —Town officials here are watching and waiting to see what the future holds for
the town’s electric utility and its $27 million debt.Mayor Fred Steen said a decision may be
several months away, and, unfortunately, the town may not have a lot to say about the
final outcome.
“The future of Landis
Electric is up in the air,” said Steen.
Landis is part of ElectriCities,
which is trying to deal with $5.8 billion in debt and pending deregulation of utilities
nationwide.
Landis is one of 51
municipal-owned utilities across the state trying to solve the problem of debt and
determine what its future may be in a deregulated marketplace.
Experts expect competition from
deregulation to drive down rates, making it even more difficult for ElectriCities members
to pay off their debt.
More than 150 representatives from
the association met with Duke Power and Carolina Power & Light last week to consider
ways to resolve the debt issue.
The $5.8 billion debt was incurred
in the late ’70s and early ’80s to help Duke and CP&L finish building the
last and most expensive nuclear plants in the state.
Among the plans is a proposal that
individual utilities sell their ownership in the plants and their distribution systems to
help pay the debt.
Steen said that Landis owns
slightly more than 1 percent of the facility. As a result, the town’s debt has been
calculated at $27 million.
At the meeting last week, many of
the ElectriCities representatives said they want to stay in the electricity business.
ElectriCities presented its
proposal in January for a statewide rate freeze for all electric rates. The plan would
involve freezing electric rates for a period of years as part of the solution to help pay
down stranded costs for all N.C. Utilities.
Selling the systems could also be
a part of the plan, but ElectriCities has taken the position that cities should be able to
keep their distribution systems if they choose.
A special study commission of the
N.C. General Assembly is looking at several options to deal with the debt and
deregulation. The commission is scheduled to reconvene in January.
The Landis system serves around
3,000 customers, about half in the north Kannapolis area.
Steen said that the town charter
stipulates that town voters must approve the sale of the utility. But he said town
officials have been advised that the General Assembly can override that.
“We want to do what is best
for our citizens and our customers,” said Steen. “We’ll have to deal the
hand that is dealt us.”
It is unlikely the sale of the
power plants and the distribution system could resolve all of the town’s debt, Steen
said.
Another choice that towns may face
is the prospect of the utility being sold at a public auction, with companies from across
the country bidding.
Under that scenario, cities would
have the opportunity to buy back their utility.
“It would be a hard sell to
buy back a system our customers have already paid for,” said Steen. |
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