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House Bill 117 Statement

The ElectriCities Board of Directors passed a resolution opposing House Bill 117 - Electric Cities/Uses of Rate Revenue (HB 117) during its meeting on Friday, February 25. The North Carolina Eastern Municipal Power Agency (NCEMPA) Board of Commissioners passed a similar resolution opposing HB 117 during its meeting on Wednesday, February 23. The North Carolina Municipal Power Agency Number 1 (NCMPA1) Board of Commissioners is expected to pass a similar resolution at its March meeting.

If enacted, HB 117 would immediately prohibit a municipality owning or operating a municipal electric system from transferring revenue from its electric utility fund to any other municipal fund unless explicitly authorized by law. The bill mandates that revenue derived from rates for electric service be used for paying the costs of operating the municipality’s electric system and making debt service payments.

The Board of Directors opposes the legislation for several reasons, including, among others:

  • The Local Government Commission of North Carolina in 1995 published suggested guidelines for municipal electric fund transfers that set a standard followed today by most municipality’s owning or operating municipal electric systems. Electric fund transfers enable municipalities to make necessary capital investments in their communities;
  • North Carolina municipalities with electric distribution systems have been making transfers from their electric funds to their municipal funds for many years. Given the current financial climate and the budget challenges facing municipalities, prohibiting transfers as provided by HB 117 could endanger the financial well-being of municipalities in North Carolina and impose additional financial hardships on the citizens of such municipalities.
  • Transfers between a municipality’s electric fund and other municipal funds are best governed at the local level by that municipality’s local officials, not by State prohibition.

Members of the Board of Directors, as well as other officials from public power communities, are currently contacting legislators about their opposition to HB 117 and its potential effect on their communities.

Resolution
HB 117 Background