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Concord to raise electricity rates

By Karen Cimino Wilson | Independent Tribune

Published: April 9, 2009

CONCORD — Concord City Council voted Thursday to raise its electric rates by 9 percent because of increases in the cost of fuel and changes in the city's contract with Duke Energy.

Council members voted 6-0 in favor of the increase. Council member David Phillips, District 1, did not vote because he works for Duke Energy.

The rate increase will generate about $5 million per year for the city and will cost the average residential customer about $7 per month, said City Manager Brian Hiatt.

The city has been losing money on its electric sales due to increases in fuel prices and a new, more expensive contract with Duke Energy.

"It's all red ink," council member Hector Henry II, District 6, said about the electric department's budget. "I think the time has come for us to show some leadership and do what we can to preserve the service."

Henry made the motion to increase the rates. Council member Randy Grimes, District 7, seconded the motion.

The City of Concord's Electric Department purchases power from Duke Energy at a wholesale rate, and then sells it to its 27,500 customers. The city has operated under the same contract with Duke Energy since 1996.

A new contract was negotiated over the last year, resulting in a 6 percent increase in the cost to the city. That, coupled with increases in the cost of fuel, has resulted in a total increase of 18.5 percent in the cost to Concord this fiscal year, Hiatt said.

The economy also has affected the city's electric revenue. "We've seen flat growth this year, which is very unusual," Hiatt said.

Concord Mayor Scott Padgett said he's not happy about increasing the rate, but says it's necessary.

The city has already cut $2 million out of its electric department budget this year.
The city cut $9 million, or about 5 percent, from its $200 million budget this year because of the economic downturn.

"It's an unpleasant thing and it comes at a very unfortunate time," Padgett said.

Council member Jim Ramseur, District 2, said the city had to raise the rates.

"We almost had no choice because Duke keeps raising the rates on us," he said.

The Concord City Council also plans to study how changes in the industry will affect Concord's ability to deliver electric service to its citizens.