Statesville's electric utility customers, who have absorbed rate increases totaling 23.2 percent since 2000, may face another rate hike later this year.

Officials from ElectriCities, which provides wholesale power to Statesville and 18 other municipalities in the state via the N.C. Municipal Power Agency No. 1, have put the city on notice that a wholesale rate hike of 5 percent is planned for the fiscal year that will begin July 1.

The increase, however, could have been a lot worse.

"We were originally considering an increase of up to 9 percent," said Steve Shelton, the agency's senior vice president. "However, by employing some creative financing and reducing our debt service, we were able to shave the projected rate hike down to 5 percent."

The agency's board formally approved the 5 percent proposal March 26 in Raleigh. Now it's up to each municipality to determine how much to pass along to residents. Statesville city officials say they will probably have little choice but to pass along the rate increase.

"The electric fund is an enterprise fund that is not supported by tax dollars or other revenue sources," said Finance Director Lisa Salmon. "Rather, it is completely supported by fees from the users of the system."

A final decision will not be made until June, when the City Council adopts its the city's 2010-11 budget. Last year the council froze property taxes but imposed an 8 percent electric rate increase. Five percent of that increase was a pass-along of a wholesale rate hike by ElectriCities.

For city electric customers, a 5 percent increase would add about $50 annually to the average residential electric bill, and about $138 per year for business customers.

ElectriCities provides resources and services to local utilities such as Statesville. The city is one of 19 cities which comprise North Carolina Municipal Power Agency No. 1. Besides buying wholesale power from ElectriCities, the agency has a 75 percent ownership interest in the Catawba Nuclear Station Unit 2.

Shelton said the agency has been hit hard by the recession. "We've seen about a four percent drop in sales revenue, while our costs to produce power remain about the same. It's not that we're losing customers, but they are using less power due to reduced shifts and operations."

ElectriCities was formed in 1965 to protect the interest of N.C. public power communities and to provide a unified voice on both state and federal issues.

The prospect of a wholesale electric rate increase had been first discussed at the city's annual retreat Feb. 25-26 in Winston-Salem.