A new energy contract for Concord began this month, and officials say it could save the city money over the course of its 20 years.
Concord decided five years ago that when its contract with Duke Energy ended in December 2018 that the city would switch providers. So on Jan. 1, NTE Energy took over, bringing a cleaner and more efficient product, City Manager Lloyd Payne said.
“That certainly is a big deal for us,” Payne said. “The way we figure it, it’s going to save us quite a bit of money over that 20-year time and have rates be more stable for us and allow us to continue investing in the system. We’ve got additional delivery points and substations we need to build and renovate, and so of course those things don’t come cheap.”
Duke’s contract with Concord didn’t give the city much control over or predictability in the cost.
“They would give an estimate of our energy costs and demand costs, and we’d budget for that,” Electric Systems Director Bob Pate said. “And at the end of the year, they’d run the numbers and see where the cost really came out. And then we’d have a true-up or true-down. It was very perplexing for a municipality having a rate like that. You budget for something and, oh my gosh, at the end of the year it comes in more.”
When Concord began looking at other utilities, city officials discovered other customers out there didn’t use the same system. NTE allows the city to control costs and has a consistent demand cost for the duration of the contract.
“There are no true-ups to this new contract,” Pate said. “We do have control over our cost. We know going into the year what our demand cost is going to be, and with some forecasting we can figure out our energy cost.”
NTE emerged as the clear favorite from about five or six other options. Pate said officials and staff evaluated them on a number of different things, but at the end of the day, NTE had the lowest prices.
“It’ll give us control of the cost,” Pate said of the new contract. “I think it’ll stabilize our cost. We won’t have swings in our costs each year for our customers. We can stabilize it for a long time, and I think that’s a benefit. I think it’s a great opportunity.”
NTE also provides for some purchase flexibility. Payne said the city can buy power wherever it’s the least expensive, even if that isn’t from NTE.
“The way NTE is set up, wherever the power is cheapest—whether it’s hydro or nuclear or even from another facility that’s not even NTE—we have the ability to go out and get that the cheapest rate possible,” he said. “So therefore we’re not stuck to like with Duke, we’re stuck to Duke. You’ve got to buy Duke. Whatever that cost is, you’ve got to pay for it. Whereas this contract we can go out and get whatever rate is cheapest. That in and of itself is going to save us money.”
The city will also save money in not having to replace generators used for peak shaving. Essentially, Concord would run generators to put more power on the grid and offset demand, and Duke would use that price for the rest of the year—which saved the city money. However, the generators have aged and are nearing the need for replacement. Pate said the NTE contract includes a credit along the lines of peak shaving without requiring the generators to run.
“We were going to have to spend some money just to keep that up and going, the savings there,” Pate said. “We were going to have to invest a lot of funds just to keep that going>”
Pate said the new contract also allows Concord to buy more demand at a higher cost early on in the contract, which will turn into savings down the road as costs increase.
All these savings, he said, will help the city maintain the utility system without having to raise customer rates to pay for it.
“Instead of putting it toward purchase power, we can actually put it towards capital improvements,” Pate said. “The savings is what we pay compared to what we paid Duke, so it’s intangible savings. Instead of putting it in purchase power, we can put it towards capital improvements on our budget.”
NTE Chief Executive Officer Seth Shortlidge said several municipalities have taken advantage of that very thing.
“NTE’s facilities are among the most efficient energy sources in the Carolinas,” he said in a release. “And that translates into tangible economic benefits for the communities we serve.”
On a different note, Pate also mentioned that switching away from Duke as an energy provider moves the city away from the environmental issues entangling the large utility at the moment.
“I’m into that,” Pate said. “So no more coal ash cost. The environmental issues surrounding that right now, there’s none with natural gas. If we buy from the market, there won’t be that environmental.”
NET has energy facilities in Cleveland County, N.C., and in Middletown, Ohio, both of which are 475-megawatt natural gas-fired plants. Another similar facility is under construction in Reidsville, N.C. NTE is also building a 1,500-megawatt facility in Anderson County, S.C., and the Fayetteville Solar Energy Center, a 30-megawatt facility.
“It is very interesting to see how we’re going to be able to sustain our energy for quite some time,” Payne said. “It’s a big deal for the city for the next 20 years to save us money. It’s amazing these days and times when you can save money on something like that because cost goes up on everything else, but to be able to save money on that is incredible. We’re pretty excited about it.
“If we can keep rates stable for a longer period of time and not have to raise rates to do some of these improvements, I think everybody wins.”
Despite the changing contract, Concord is still a Duke customer—just not for electricity. The city still pays a transmission fee to use Duke’s power transmission system. That cost was in the original contract, as well, and hasn’t changed since having NTE take over the production.