The wholesale electricity supplier for Elizabeth City, Hertford, Edenton and numerous other cities and towns in eastern North Carolina does not plan to raise rates next year and expects continued rate stability for several years after that.

The N.C. Eastern Municipal Power Agency Rate Committee met last week and heard a report from staff recommending that the agency increase its fund balance or “minimum fund equity” to $35 million. The most recent change in fund equity was in November 2008, when the committee raised the target from $5 million to $20 million.

Raising the rate to $35 million would improve rate stability, according to the staff report.

An executive summary of the proposed change distributed to rate committee members indicates that “based upon the current working capital outlook” the increase in fund balance should not affect rates.

The committee is not looking at a rate increase for 2011 and also expects rates to be stable for some time after that.

The NCEMPA increased wholesale rates 14 percent in the summer of 2008 and 4 percent in February 2009. Elizabeth City officials, citing a low fund balance in the electric fund, passed both increases on to the city’s customers, an effective 18 percent increase in the city’s electric rates in less than a year’s time.

This January, City Council reduced the residential electric rate by 1.65 percent. Mayor Roger McLean and some of the newly elected city councilors campaigned on the electric rate issue in last fall’s municipal election.

McLean told The Daily Advance this week that mayors of NCEMPA’s member cities have been meeting to develop recommendations for reducing rates. A primary focus of the mayors group is getting the state involved in keeping rates stable for NCEMPA member cities and towns, McLean said.

For the next two or three years, NCEMPA’s rate projection is “pretty firm,” said City Manager Rich Olson. Even up to five years, rates still look fairly stable, he added.

“Our five-year horizon is pretty good,” Olson said.

But after five years, rates become much less predictable, Olson said.

For now, the cost of fuel needed to generate electricity has dropped. But equipment maintenance and operating costs have increased, and those costs are expected to continue going up as the power plants age.

Olson said the agency is looking at financing capital improvements at the plants with short-term debt that could be paid off in five years or so, saving ratepayers on interest costs.