Waynesville shops for power providers

By Mary Ann Enloe | May 21, 2014

The Town of Waynesville expects to see a 15 to 20 percent increase in its power bill from Duke Energy when its contract expires in 2015, a situation that has the town shopping for other power providers.

The town's longtime energy consultant Kevin W. O'Donnell, president of Nova Energy Consultants, Inc., told the town's governing board he may advise against a contract renewal with Duke when his research is complete this September.

Waynesville is not officially designated a North Carolina "electric city," but it does buy electricity wholesale from Duke Energy and sells it retail to its residents.

The exception is the community of Hazelwood.  Shortly before the towns of  Hazelwood and Waynesville merged, Hazelwood's mayor signed a 60-year agreement with CP&L/Progress Energy which enabled Hazelwood's residents to buy directly from Progress instead of having to buy it through Waynesville, a third party.

That idea was considered visionary at the time but may prove less than stellar, now that Duke Energy has taken over Progress.

O'Donnell told Waynesville's governing board that other vendors have submitted preliminary proposals to sell wholesale electricity to the town but he is not yet ready to reveal those names.  At least one company offered significant savings.

"I'm not ready to reveal the names of the interested parties, but the numbers look good and I'm a numbers person," O'Donnell said.  He and Fred Baker, Waynesville's Utilities Director,  visited a South Carolina town in April to assess that town's experience with unnamed Supplier A. That supplier seems to be much more flexible to Waynesville's needs, said O'Donnell.

Obvious 'pros' for pulling away from Duke Power are immediate lower costs and less risk of being exposed to coal ash expenses.

"Cost is not everything, of course," explained O'Donnell.  One of the major 'cons' is the very real possibility that should the agreement with a new supplier not turn out to be what Waynesville needs, the NC Utilities Commission may not allow the town to return to Duke Energy.  "I see that as a realistic fear," said O'Donnell.

Another consideration is lack of fuel diversity and interstate pipeline capacity risk.  "New nuclear plants are cost-prohibitive.  Coal emissions will always be a concern.  That leaves natural gas," he said.
O'Donnell's recommendation to the governing board was to proceed as if Waynesville is going to leave Duke.

"You're looking at a 15 to 20 percent increase if you stay with Duke," he said. "We need to dig into this, and I certainly intend to, this summer, and review the contract proposed by Supplier A."

O'Donnell said after the meeting that he would present his formal recommendation before the board in September or October.

Duke Energy's representative attended the meeting but did not speak.  Richard Knight is with Duke's regulated utilities and wholesale power division out of Columbia, South Carolina.
After the meeting, Mayor Gavin Brown said, "This is a big, big decision.  Waynesville has had an excellent partnership with Carolina Power & Light and Progress Energy for about 90 years.  We'll do what's best for Waynesville, but this is not an easy one."

North Carolina is one of 26 states that deregulated its electric industry in the1990s.

The federal Energy Policy Act of 1992 encourages competition in the wholesale energy market, assuming that competition at the wholesale level benefits everybody.

In 1996 the Federal Energy Regulatory Commission issued rules that allowed access to the nation's transmission systems — a delivery method known as "wheeling," said Onieal.

"The transmission system is owned by Duke, so whatever is decision is made,  we will have a separate contract with Duke for the use of their transmission system," Onieal said.