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Wednesday, 25 January 2006 00:00

Waynesville could be hostage to Progress Energy prices

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Two years ago, the future of Waynesville’s electric system — a lucrative cash cow for the town — was turned on its head by a single email that popped up in the inbox of an energy consultant in Raleigh.

Waynesville buys blocks of electricity and resells the power to homes and businesses in town limits. The town’s ability to shop around for the best deal on wholesale power could soon be drastically hampered, however.

Waynesville is an island surrounded by Progress Energy power lines. In the past, the town could buy blocks of power from anywhere and simply pay Progress Energy a small fee to cart the electricity over their lines to Waynesville’s doorstep.

Enter the ominous email: “‘We can no longer assure you we can bring in power from the outside after the year 2010,’” Kevin O’Donnell, the town’s energy consultant, recalled of the email.

Progress Energy predicts its transmission grid will be maxed out. By 2010, it will no longer be able to transport blocks of power from another power company across its lines. Coincidentally, the year 2010 is when the town’s current contract with Progress expires.

The news was troubling to O’Donnell, who is hired by the town to help manage its electric system. Last time the town’s electric contract came up, O’Donnell shopped wholesale power prices before securing the best deal, which ultimately was with Progree Energy. But next time, he won’t have that bargaining power.

“How are we going to negotiate when they are the only game in town?” O’Donnell asked. “If you only have one supplier what are you going to do?”

The Federal Energy Regulatory Commission is an oversight agency charged with ensuring power is bought and sold fairly.

“Since it was done on an open market basis, they typically gave it their stamp of approval and moved on,” O’Donnell said. “Now it will be a little bit different.”

O’Donnell has already made the Federal Energy Regulatory Commission aware of what the town will be facing. The Federal Energy Regulatory Commission will be in charge of deciding what is a fair profit margin for Progress Energy.

While the town’s current contract to buy wholesale from Progress isn’t up until 2010, O’Donnell plans to start negotiations on a new contract as early as next year. If the town doesn’t think it is getting a fair deal, its only recourse is to file a complaint with the Federal Energy Regulatory Commission.

“We think Progress is the only utility in the country that has no more transmission capacity,” O’Donnell said.

It makes O’Donnell nervous on one hand. But on the other, he thinks it is just matter of time until the energy market is busted wide open with technology he can’t yet imagine.

“As prices continue to go up, there is more interest in technology,” O’Donnell said. “Someone is going to come out with a breakthrough. I wouldn’t be a bit surprised to see in my lifetime all these overhead transmission lines are a thing of the past.

“Who would have thought two years ago I could tell BellSouth to just go away?” he added.

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