Smithfield, Selma and Benson hope to lower electricity rates by sharing equipment, administrative and computer-software costs. All three towns have adopted resolutions agreeing to work together to save money.
The arrangement is similar to one used by the county’s EMS squads, which are buying equipment together. Town leaders in Benson, Selma and Smithfield think they can do the same thing with municipal electric service and pass the savings on to customers.
In all three towns, electricity rates are higher than those charged by Duke Progress Energy, sometimes 30 percent higher, though a Duke rate proposal could close the gap a bit. Last month, the N.C. Utilities Commission approved the company’s first rate increase in 25 years. Starting in 2014, Duke customers’ rates will go up 7.5 percent.
Earl Botkin, the public-works director in Smithfield, said the Duke rate increase would help level the playing field.
“Our residential rates will be less than 10 percent different,” Botkin said. “That gap is gradually closing, especially on the residential side.”
But town leaders say they still want to bring municipal rates down. Smithfield Mayor Daniel Evans said the idea surfaced during county mayor meetings earlier this year. “Our community is interested in keeping our rates low and competitive with Duke Progress,” he said. “This is not a cure-all but the beginning of the discussion.”
Matt Zapp, Benson’s town manager, said his town is still a long way from narrowing the rate gap with Duke. The town’s rates are about 30 percent higher, he said, and he’s not sure how much difference a cost-sharing agreement with Selma and Smithfield will make.
“I don’t know how to answer that question right now,” Zapp said. “There is still a gap, and Benson is fully aware of it.”
Zapp said the towns could save a significant amount of money by buying meters in bulk. Town employees, meanwhile, can breathe a sigh of relief; Zapp said he can’t see the partnership leading to layoffs.
“There’s no way to reduce staff for electric,” Zapp said. “We’ve blended departments; we’ve blended roles; there’s no more reduction to do.”
Botkin said he thinks the partnership will help, but he can’t see it making a big difference in rates. The town’s biggest expense, he said, is purchasing the power – 85 cents of every dollar spent on the town’s electric system goes to buy power.
“Right now, with the concept of sharing some services, that would certainly help to some degree,” Botkin said. “But the biggest cost is our power bill.”
The real benefits, Botkin said, will be sharing expertise, manpower and facilities. That could help all three towns run their operations more efficiently.
Zapp said he’s optimistic his town can bring costs down enough to save its power customer money.
“If there’s a choice to do something in a more efficient manner, we’re going to do that,” he said. “We are working every day – literally every day – leaving no stone unturned.”