The Town of Lucama has operated an electric distribution system for the benefit of its citizens and neighboring residents for well over seven decades. The purpose in the town’s distribution system is to provide top-notch electric service at a fair price while also providing the town with a revenue source from which other town functions can be funded.
Lucama is one of approximately seventy-one municipalities within North Carolina that own their own electric distribution systems. Most of these electric distribution systems are like Lucama in that they serve only a few thousand customers. There are, however, some larger municipal electric systems such as Wilson and Fayetteville that serve many thousand customers.
Lucama is, however, one of only a handful of municipalities in North Carolina that do not take their power supplies from one of the state’s two large municipal power agencies. These two power agencies, which are called the North Carolina Eastern Municipal Power Agency (NCEMPA) and the North Carolina Municipal Power Agency No. 1 (NCMPA1), are both heavily indebt and have rates that are, in general, 20% to 30% higher than those of the state’s two large investor-owned utilities, Duke Power and Progress Energy Carolinas. Lucama’s largest neighbor, the City of Wilson, is a member of NCEMPA and has residential electric rates that are approximately 20% higher than those of Lucama.
Up until 1998 the Town of Lucama purchased its wholesale power supplies from the City of Wilson. In 1995, however, the Town of Lucama joined with the Towns of Stantonsburg and Black Creek to examine the possibility of the three towns leaving Wilson purchasing their power supplies on the open wholesale power markets. In February of 1998, Stantonsburg, Lucama, and Black Creek made their break from Wilson permanent when they began purchasing their power supplies from Dominion NC Power.
In order to begin to purchase wholesale power supplies from Dominion NC Power, the three towns first jointly built a substation with financing spread over fifteen year period. The end result of this power project resulted in each of the towns’ wholesale cost of power being decreased by roughly 50% less than the cost that it formerly paid to Wilson. Over the first five years of the project, the estimated joint saving for all three Towns was close to $7 million.
Lucama passed these savings onto its citizens by cutting retail electric rates by 35%. Since 1998, retail rates in Lucama have not changed until July 2005. The fact that retail rates have not changed in seven years, is almost as amazing as the initial rate cut of 35% when one considers that the cost of all energy products have skyrocketed in the past seven years.
It is important to keep in mind the estimated savings that Lucama has achieved through its access to the open wholesale power markets. Since 1998, Lucama’s citizens have saved approximately $3 million by accessing the wholesale power market.