How Morganton and Drexel's electric funds drive local economic development

Every year, taxpayers of the City of Morganton and the Town of Drexel who follow municipal budgets see line items referring to the nebulous topic, The Electric Fund, with sizable dollars attached.

Budget conversations with municipal leaders sometimes just brush past the budget line item; occasionally they will dive into the fiscal benefits of the Fund. Observers in the audience can see eyes glaze over at the discussion.

What is not well known to the casual reader is that The Electric Fund is a generator of important positive cash flow into the municipal coffers that enable projects, expansion, and other economic development.

In City Manager Sally Sandy's words, having an electric fund gives the City the ability to “create their own destiny.”

The Electric Fund is part of a strategy that allows the municipality to buy electricity at wholesale rates and sell it to residents at a mark-up through ElectriCities of North Carolina, Inc., which provides power supply and other services. See the related story about the background on page 8A.

In turn, the municipalities are responsible for maintaining the electric infrastructure in the city limits. Morganton and Drexel have in-house electric departments, on-call certified electricians, trucks, and equipment and consequently do not require contracts with outside parties. Electrical customer service is the municipal’s responsibility.

If a storm downs a powerline, you call the city. And its team handles it. Just as they do water, sewer, and other utilities.

Morganton has 8,529 electrical customers; Drexel has 1,244. All are spread across industrial, commercial, and residential users.

Generated funds are returned to communities through reinvesting, Sandy said.

“For our community, it’s been a great thing. It has allowed us to get involved in economic development and community development,” Sandy said.

For instance, a light pole at Catawba Meadows breaks and the City can call on their electric department with their bucket trucks to fix the light.

Another example is having electrical expertise for major projects such as the Historic Courthouse Square and local parks. Having someone in-house to guide the safe development and planning of major projects saves the City time and money.

If there is an unexpected power outage, the electric department has a 99.98% reliability rate and can restore power within hours,” Sandy said. During Hurricane Hugo in September 1989, the City’s customers had their power restored within six to eight hours after the storm while other areas did not have power until a week later.

“Having them here, we do not have to call in to get a contractor that’s working for Duke to come and do our work,” Sandy said.

The City offers lower commercial and residential rates than many other areas. Lower costs support local businesses and ease financial stresses on their residential customers. The rates help retain current and attract new customers/residents.

In downtown Drexel, the 95-acre old Drexel Furniture site, known as the Drexel Business Park, is being redeveloped into a modern industrial rail-served site.

Various local, federal, and state funding enabled the property to be cleaned up from environmental contamination over seven years ago. The $5 million cost was paid in part by money generated through ElectriCities. The site is designated as an ElectriCities Smart Site.

“Rail-served sites are in scarce supply as land availability and development pressures have seen potential rail-served properties taken off the market,” said Joe Stallings, director of Economic Development at the North Carolina Railroad Company. NCRR has invested $500,000 in redeveloping the Drexel Business Park.

“Having a rail-served site in today’s market can be a make-or-break situation for companies, especially those in manufacturing.”

IMPROVING CONVENIENCE

The City of Morganton is working on improving its software for online utility payments and processing. Once that is established, Sandy said utility customers can use the software for anytime payments and service requests. The new system will include messaging and automated notifications, eliminating the need for phone calls.

The system would be more user-friendly and with a lower convenience fee.

Additionally, the City is in the process of a cost-of-services study which was started in the fiscal year 2023-24. This study analyzes the current electric system and what exactly it costs to provide their services, with the assistance of financial consultants and the technical support of engineers.

The study will also achieve the following objectives:

• Break down the staffing levels
• Establishing rate decreases while maintaining operations and future investments

“Electric rates continue to climb throughout this country,” Sandy said. “We want to understand our costs and all of those projections so we can make a better-informed decision about those rates. It’s really important to us that we set our rates in a way that we meet our requirements so we can fund our system and we can reinvest in those assets that are old and keep up with our workforce.”

The study should be completed by fall 2024.

Saydie Bean is a general assignment reporter for The Paper. She may be reached at 828-445-8595, ext. 2011, or saydie@thepaper.media.