Wholesale power price up 14 pct in east N. Carolina

WILMINGTON, N.C., July 31 (Reuters) - The wholesale price of electricity paid by 32 municipal power systems in eastern North Carolina will increase 14 percent on Friday.

The final approval for the increase, proposed in June, came on Wednesday in a unanimous vote of the North Carolina Eastern Municipal Power Agency's (NCEMPA) board of commissioners, according to Ken Raber, the ElectriCities North Carolina senior vice president responsible for the power distribution agency.

NCEMPA provides electricity to 32 eastern North Carolina towns and cities that own and operate their electric systems.

Most of the power is provided from NCEMPA's ownership in three nuclear power plants and two coal-fired power plants operated by Raleigh-based Progress Energy (PGN.N).

NCEMPA purchases the rest through contracts with power plant operators in the Carolinas and Virginia.

Oversight of NCEMPA operations is provided by the ElectriCities Board of Directors.

Raber said two percentage points of the 14 percent rate increase was due to NCEMPA's mid-May refunding which replaced $400 million of variable rate bonds with fixed rate bonds.

This raised the overall interest rate on the agency's $2.6 billion of tax-free debt to 5.8 percent from 5.6 percent, adding about $12 million per year to NCEMPA's yearly interest cost, Raber said.

The variable rate debt was sold in 2004, providing savings of about $10 million per year and postponing the 2 percent rate increase to 2008 from 2005, he added.

The rest of the rate increase reflects increased coal and nuclear fuel costs, he said. (Editing by Marguerita Choy)