From Staff Reports

RALEIGH – The ElectriCities board of directors today approved a 14 percent increase in electricity rates.

The rate increase would affect 32 cities and towns, including Rocky Mount, which are part of the North Carolina Eastern Municipal Power Agency.

On June 27, the power agency's rate committee endorsed the hike.

The increase, in part, is tied to increasing fuel costs. The increase would have been 12 percent had it not been for a financial decision made by ElectriCities' board to convert fixed-rate bonds into variable-rate ones in 2004.

In 2004, the power agency's board expected to save about $10.5 million a year from going to variable bonds that fund power plants. Instead, the collapse of the subprime mortgage market caused those interest rates to climb unexpectedly.

The power agency's debt service payments are rising $12 million a year, or equal to a 2 percent hike in the wholesale rate.

Increases in the costs of coal, nuclear fuel, transmission, operations and maintenance also are factors in the proposed rate increase.

The power-agency coal plants in Roxboro and Mayo use Central Appalachia coal, which has increased in price from $30 a ton in 2002 to more than $100 a ton today.