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ELECTRIC CITY

by Eric Ginsburg

BY ERIC GINSBURG

When he first moved to High Point, Frank Tyler couldn’t tell the difference, but after 10 years of working here, he has no trouble pointing out the difference between power lines on opposite sides of Kivett Drive. The key is to pay attention to the insulators, he said, noting that the cone-shaped ones to our right look nothing like their counterparts across the street.

If you don’t live in High Point and someone asked you what makes the Triad’s smaller city unique, chances are high you’re going to say the furniture market. Residents would likely offer up the same answer. But something more powerful separates the “International City” from the two cities it’s sandwiched between: High Point’s electricity is a public utility. The conical insulators are one of the utility’s call signs, and Tyler is a public employee working as the substation technician lead.

“A lot of people don’t realize who provides their electricity,” he said. “Some people just don’t think about it.”

The Furniture Capital of the World was the first city in the state, though not the nation, to establish a public utility for electricity. While other Triad residents — and nearly everyone else in the state — pay Duke Energy each month for the ability to turn the lights on, High Point has an electric department governed by city council.

Yet despite the local control, residents currently pay more for electricity than Duke customers and have seen annual rate increases since 2005. The idea of the government providing electricity may sound foreign to people even a mile outside of High Point — in fact the electric department works to educate residents and council members about how it works — but the practice has deep roots throughout the nation.

High Point initially established its electric program in 1893, followed four years later by Charlotte outlier Monroe, which were the only two public providers in the state until Fayetteville and Waynesville climbed aboard in 1903.

The number of public power systems in the state swelled to about 70 after several decades, which is roughly how many remain today. At first High Point didn’t provide residential electricity — there wasn’t a demand. At the beginning the city needed to generate only 50 kilowatts. An electric rail system was established between Greensboro and High Point, and it’s still possible to find some of the track.

Initially running off steam and coal, the city owned its own generation equipment but sold it around 1909, opting to by from the recently established Duke Energy until 1965, according to electric department Director Garey Edwards.

That same year, ElectriCities was born as an umbrella organization for the state’s public power providers, with High Point as the largest user in the organization’s western region and the third largest in the state.

During the energy crisis in the 1970s, ElectriCities decided — with a weighted vote from High Point — to invest in the Catawba nuclear power plant in South Carolina, collectively owning a percentage of the energy generated. Duke Energy owns the transmission lines from the plant connecting it to the city and operates the plant through a contract, City Manager and ElectriCities board member Strib Boynton said. The plant is scheduled to be paid off around 2019 which should allow the city to pass on significant savings to customers, he said.

After construction began on the power plant, costs shot through the roof thanks to the unexpected nuclear meltdown at Three Mile Island in Pennsylvania in 1979, Edwards said, but the plant needed to be finished and they were stuck with the tremendous cost.

According to the National Energy Foundation, there are 2,000 public power suppliers in the country serving about 14 percent of users, barely more than the 12 percent who rely on rural electric cooperatives which were established to provide infrastructure in areas that weren’t considered profitable enough to extend services to, and which grew rapidly thanks to the Rural Electrification Administration, a New Deal program.

Most electric customers in the nation —68 percent — rely on companies like Duke Energy for their power, but some major cities like San Antonio and Los Angeles provide electricity too.

High Point now uses 280 megawatts of power; City Manager Strib Boynton sits on ElectriCities’ board of directors, and the electric department has a relationship with others in the country, providing emergency assistance to Kinston after Hurricane Irene and farther away in Massachusetts and Chattanooga recently and receiving help in turn.

Edwards said that 85 cents of every dollar customers pay goes directly to the wholesale energy cost. The department employs 68 people, only four of whom are administrators, manages four delivery points and is completing its 14 substations to provide power throughout the city.

The electric department pays for itself through customers’ electric bills, 90 percent of which are residential or commercial and 10 percent of which are industrial. The city has 40,000 customers including businesses, homes, schools and more, Boynton said, a figure that only covers the number of billable accounts rather than the number of people who rely on the city’s service.

Electricity rates in High Point remained flat from 1999 until 2005 and didn’t increase by more than $0.001 per kilowatthour annually until 2007. Every year since the rate went up from $0.091 to $0.095 it has risen at least $0.003 annually, resting at $0.117 in 2012.

The city of High Point pays the commercial rate and only the cost of street lights comes out of the general fund — despite some misperceptions, city employees don’t receive free electricity and residents’ bills do not subsidize city Christmas lights, Edwards said.

The energy feeds into the city through four delivery points, transferring power from Duke Energy lines to city property and then back out to substations around the city. Any repair work to the substations requires a face shield and rubber sleeves, boots and gloves, and for good reason — arc flashes like one caught on camera at the Filter substation are no joke, Tyler said, suggesting a quick YouTube search of the term as evidence.

Walking through the barbed-wire gate surrounding the Jackson Lake Road, Tyler needed only safety glasses and a hard hat, but I took each step more cautiously than if I was walking through a cemetery, nervous that a misstep could have serious repercussions. Not everyone takes such precautions inside the gate though, Tyler said, explaining that copper thieves repeatedly broke into this more isolated substation about a year and a half ago before being caught and charged with felonies.

Once we reach the second substation nearby — Filter — I am much more at ease, the smaller equipment less daunting overhead and the initial images of the Iron Giant in my head subside. Tyler points to one of the breakers and saying one of their best customers is on it — High Point University.

While the city provides power to most residents in the area, Duke has several lines and is allowed to provide power to costumers within 300 feet of an existing line; the two providers work together when there is a problem with a shared poll, Tyler said.

There are several benefits of running electricity as a municipal utility even if the costs are slightly higher, Edwards said. Residents pay approximately 5 percent more than their counterparts who rely on Duke Energy, and the rate went up 4.9 percent in July after council approved a rate hike proposed by Boynton.

“The biggest thing is local control,” Edwards said. “We can move a lot quicker, that’s the advantage of being smaller. We’re more receptive…. What they do [at Duke] in their eyes is right for the shareholder and we do in our eyes what is right for the voters.”

It’s easy to empathize with people who are unhappy with higher rates, Boynton said, because he pays them too. Once he explains all the work the city is doing with maintenance, outage prevention, putting lines underground and response time, Boynton said residents understood the need for the slightly higher rate.

The city’s rates also generate money for economic development and the city provides funds to nonprofits to help people in need with their utility costs, Boynton said. A portion of the money generated from electric bills is used for energy-related economic incentives, he said, like standby generators at Thomas Bus that manufactures buses or dual feeds and a standby generator at Polo Ralph Lauren’s distribution center.

“Public power is why we’ve enjoyed so much economic growth,” said Boynton, who has been the city manager for 15 years. “We do it because they are our customers. New jobs can directly be traced to the fact that we’re in the public power business. I don’t see any downsides to it at all — none.”

Duke’s rates have gone up and down over the last two decades but are currently rising as well, but regardless of the supplier, energy rates are lower in North Carolina than much of the country, including significantly higher rates — some around double — in the Northeast, Midwest, California, Alaska and Hawaii.

Low rates in North Carolina are partially thanks to statewide regulation, Public Citizen’s energy program director Tyson Slocum said. Deregulated markets are manipulated by Wall Street banks like JP Morgan, he said, and are less accountable to consumers and the environment.

Like Edwards said, it’s about much more than rates. Tyler said his department responds to outages within 30 minutes while Duke takes longer, often sending workers in from Winston-Salem. Duke Energy spokesman Jason Walls said the company responds quickly to outages as well, noting their availability rate is over 99 percent.

“At the end of the day, every electric utility is similar,” Walls said. “Your focus is the same: to provide the customers you serve with power that is reliable and that is affordable so you can serve those customers in the way the state expects you to.”

More money stays in the local economy when power is provided by a public utility, Edwards said, and recent criticism of Duke, particularly over its merger with Progress Energy, raises the question of public trust.

“Theoretically there is more transparency and accountability in a locally owned utility but that depends on the transparency and accountability of the local government structures,” Slocum said. “I’ve never seen a corporate coup de etat the way that Duke pulled off against Progress.”

Hours after the merger between North Carolina’s two major electric suppliers, Duke’s board installed its CEO Jim Rogers after promising to keep Progress’ CEO at the wheel, a move Slocum and others said deceived regulators, the public, customers, the media and Progress.

“If they lie about this, what else are they going to lie about?” Slocum said, adding that it may technically be legal but was deceptive and unethical. “You’ve got corporations that think they’re more powerful than the government themselves, and in many cases they are.”

NC Warn, an environmentalist nonprofit, has legally challenged the merger since Day 1 because it said the move wasn’t in the best interest of the public, and director Jim Warren said Duke was dishonest in other ways too.

“It runs into the billions of dollars in terms of money we’re arguing they didn’t disclose in the merger,” Warren said. “We think that it’s bad public policy to have an even larger single monopoly controlling so much of the state’s electricity and environmental future as well.”

Warren said it was problematic that the energy system is driven by corporate profit, particularly in an industry that contributes greatly to global warming. According to Duke spokesman Jason Walls, less than 3 percent of the company’s energy comes from renewable sources, with most of it coming from nuclear and coal-fired power plants.

“Duke’s whole business plan is deeply flawed,” Warren said, calling on Duke to invest in solar and wind power in particular. “NC Warn is working to dramatically change Duke Energy’s business model.”

High Point is roped into the same concerns from watchdog groups because it relies on nuclear power and a contract with Duke itself. That doesn’t mean there aren’t things that High Point could do to save consumers money and decrease its negative environmental impact.

“We’d love to see a situation where High Point and other communities can invest in renewables without the… regulatory barriers,” Warren said, pointing to cities like Las Vegas that have made significant investments in solar power. “Their fate is closely intertwined with Duke by virtue that they’re mostly buying power from Duke. Customers in High Point and these other places are staring at rate hikes and these other problems too. [Duke is even] pushing the legisla ture to allow them to charge customers in advance for rates for new plants.”

Co-generation, a process that takes energy wasted in industrial plants, hospitals and schools and captures it for use elsewhere could be an option for the city, Warren said.

“That might be something that High Point could do without getting caught up in the utility,” he said. “That’d be an interesting project for a municipal utility. They might be able to help develop co-gen at some of those facilities and it could become a real money-saver for the city as well as a good environmental benefit too.”

It’s not all bad on Duke’s side of things — Southern Alliance for Clean Energy research director John Wilson said Duke has “rolled out a pretty aggressive energy-efficiency program” and retiring some of its dirtiest coal plants, though the company is putting the new coal-fired Cliffside power plant outside Charlotte into service. The alliance focuses on larger providers like Duke while public providers like High Point fly under the radar, but the criticism of Duke’s reliance on “dirty” energy holds true for the Furniture City as well. The Catawba nuclear power plant is licensed until 2040, and even then Edwards said he thinks the city will rely on a combination of natural gas and nuclear and renewable energy in the future.

“I’ve seen it change so much in 30 years,” he said, commenting that the United Kingdom has made significant progress with wind power. “They might find a way to store electricity. Who knows what the future will be.”

Boynton said a stronger investment in renewable energy wasn’t financially feasible yet, but that he expected the day to come soon and said it would likely be a wise decision. High Point offered ElectriCities land in the eastern part of town off Kivett Drive to develop a solar farm, but for now the organization buys renewable energy certificates to fulfill a clean energy requirement and High Point’s electricity is generated at Catawba.

Unlike the rhetoric of Duke’s critics, when Edwards talks of the enemy, he’s talking about squirrels. Adorning the wall in a technician office are several images of squirrels geared up for battle — one holding a bazooka — and another shows action figures standing triumphant on top of a road kill critter. Noticing they’ve caught my eye Edwards laughed and told me that around the office they’re called “Al Qaeda squirrels” because of their relentless terrorism towards power lines that keeps the department on its feet.

High Point has several green practices in place as well, like using expensive coated wires to protect lines from trees and avoid cutting vegetation in heavily wooded areas. The city also collects trees that fall on lines and, after cutting them up, lets residents take them for firewood. Electric poles downed by things like car accidents and old age are also kept for residents to use for things like fences, Tyler said.

Edwards said places like Greensboro or Winston-Salem are likely stuck with Duke Energy even if a public utility was desired because they would need to buy the entire system and employee training takes years. Even though there’s a strong line in the sand between who can provide power where, Edwards said High Point can expand the amount of power supplied through new urbanism practices of infill, increased customer usage and maybe even the return of an electric rail.

At-large High Point City Council candidate Elijah Lovejoy said residents are paying for a past policy mistake of ElectriCities buying into an expensive power plant, but said the city couldn’t privatize the program if it wanted to.

“I’m not campaigning on lowering electric because I think we’re over a barrel,” Lovejoy said. “If we’re highest in that area, surely we should give people a break in other areas [like property taxes]. In retrospect I would say it was a mistake to buy into our own electric.”

Lovejoy said the city had an excellent electric department but that it was an issue of policy, saying part of the reason the cost was so high is that costs — like the construction of the Catawba plant — were spread over many fewer customers than Duke’s base.

Regardless of rates, Lovejoy and Tyler both said they didn’t see the municipal power system going anywhere. And why would it, Tyler asked, given that it brings money to the city and their strong customer service? For better or worse, High Point is stuck with its public utility and the rest of the Triad is stuck with Duke Energy — the real question is what their respective customers will demand of them in the future.

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