History of the Power Agencies
In the late 1970s and early 80s, electric utilities and state legislators became concerned that there would not be enough electricity to meet the North Carolina's future needs. The state's two investor-owned utilities (IOUs) had plans to build more plants, but high interest rates and rising fuel costs put the companies in a financial bind. They were concerned they did not have the capital to complete the projects.
In its October 1981 inaugural edition, Business North Carolina's cover story focused on this issue and quoted CP&L's Sherwood Smith as saying, "Utilities are facing their greatest crisis" in more than 25 years. The article, predicting a possible electricity shortage in the state by 1990, stated that construction of new generating plants had come to a near standstill because the state's IOUs did not have enough money to build the generating plants at a time when rates had increased 300 to 400 percent.
The cities, which then purchased wholesale power from Duke and CP&L, were equally concerned that those utilities would not be able to supply enough power for the cities' citizens.
The municipalities were significant providers of electricity and had an obligation to serve their customers. In an effort to ensure an adequate, reliable and economic supply of electric power and energy to the citizens of the state, NC voters approved a 1975 legislative amendment to the state constitution that authorized the municipalities to jointly build, finance, own and operate electric generation and transmission facilities with the IOUs. 51 cities chose to form power agencies and issued electric revenue bonds to help finish construction of the plants.
At the time, demand for electricity was projected to increase at a rate high enough to allow the cities to pay off debt, service their electric systems and provide for other municipal services. Because the municipalities helped build the plants, the state of North Carolina has enjoyed a plentiful and reliable source of power to spur economic growth.