The Fayetteville Public Works Commission plans a $439.1 million budget for the fiscal year that starts July 1, a decrease of $25.8 million from this year’s budget, which is $464.9 million.
The decrease in spending may be larger, since the PWC is estimated to finish the current fiscal year at $450.9 million instead of the $464.9 million it had budgeted.
According to the discussion at the PWC board meeting on Wednesday, a renegotiation in 2019 of the PWC’s contract to buy power from Duke Energy is a main factor in the upcoming year’s budget reduction.
The PWC is the electric, water and sewer utility for Fayetteville and some of the surrounding area. The city owns it. The budget includes a 2% rate increase for electricity that took effect May 1, and an 8.5% increase in water and sewer service rates that also took effect May 1.
The 2024-25 budget includes a payment of almost $12 million to the city, known as “payment in lieu of taxes.” Since the PWC is owned by the city, it doesn’t pay property taxes, while a private power utility, such as Duke Energy, would pay. This payment fills in for that.
The PWC gets 50.55% of its revenue from electricity sales, 15.15% from water service and 17.15% from sewer service — totaling 82.85% of its income, according to the budget document. The remaining 17.15% of revenue is from other sources.
Most of the PWC’s power is purchased from Duke Energy.
Contract renegotiation lowered PWC’s cost of buying electricity
“The largest change that you’re seeing between fiscal year ’24 and fiscal year ’25 is the change in our power supply costs,” said Jon Rynne, the chief operations officer for electrical systems. “It’s a $47.1 million reduction in our power supply costs from the previous years. This is driven by the 2019 amendment to the Duke Energy Progress contract. In that year, when we negotiated the changes, the majority of that impact was coming July 1 of 2024.”
The revision changed the terms of PWC’s contract to provide power to Duke Energy from the PWC’s Butler-Warner electricity generation plant, Rynne said. The Butler-Warner plant goes online when Duke experiences high levels of demand and needs more power in its grid.
While the PWC’s electricity costs are going down, its water and sewer expenses are rising, the budget paperwork says.
In part, this is due to federal Environmental Protection Agency mandates, said Mick Noland, the chief operations officer for water resources. Dams need inspection and maintenance, he said, and the agency needs to hire more engineers to keep up with the projects underway.
The staff had 131 projects in 2017, Noland said. “In 2020, there was 309. And as of today there’s 475 projects that are being managed by the engineers and technicians in the engineering department.”
The water and sewer service is budgeted at $171.8 million in fiscal 2024-25, vs. an estimated expenditure of $158.4 million this fiscal year.
Got something to say about the PWC budget? How to comment
The public is invited to review and comment on the proposed budget. Click here to view or download the budget document. A public hearing about the budget is scheduled for 8:30 a.m. Wednesday, May 22, at the PWC’s office at 955 Old Wilmington Road.
People who want to speak at the hearing must register in advance. To register, visit the PWC office between 8 a.m. and 5 p.m. weekdays to provide a name and address, or submit your name and address by emailing pwcboard@faypwc.com. People may also sign up on May 22 in the PWC boardroom between 8 and 8:30 a.m.
People may also submit written comments of up to 300 words. The deadline is 5 p.m. May 17. They must include your name, address and phone number.
Email comments to pwcboard@faypwc.com, or send them via U.S. mail to them to PWC, Attention: PWC Clerk to the Board, PO Box 1089, Fayetteville, N.C. 28302.
Senior reporter Paul Woolverton can be reached at 910-261-4710 and pwoolverton@cityviewnc.com.
This story was made possible by contributions to CityView News Fund, a 501c3 charitable organization committed to an informed democracy.
