Apex official touts pulling plug on city electric utilities.

• Position: Apex, North Carolina

Bill Sutton doesn't like the odds. Come deregulation, there's no way North Carolina's 51 municipal electric utilities can compete against the big power companies' cheaper rates, the Apex town manager believes. Not with $6 billion in debt from the municipalities' bad bet on nuclear plants. So he says it's time to get out of the game.

Sutton, who sits on the board of Electricities of North Carolina Inc., contends that most members feel the same way. Selling Apex's customer list and assets such as its transmission lines won't offset its debt, but it's a start.

He faces fierce opposition from fellow board member Ed Wyatt, Wilson's city manager. "Let me say this to you very directly - I am not interested in getting out," Wyatt says. "I've called him and expressed to him very clearly my view about what he's proposing." One reason is that Wilson and other cities supplement their municipal budgets with electricity revenues. Wilson transfers around $3 million a year to its general fund out of revenues of around $90 million. To replace that, the city would have to raise property taxes 17 cents per $100 valuation.

When it became clear that such transfers would come under criticism in deregulation, most cities started reducing them. Gastonia City Manager Danny Crew brags that since 1995 he's brought them down from $9 million a year to $4 million. Other cities such as Monroe have eliminated them altogether, and some such as Apex never made them - "It's a philosophical thing," Sutton says. But other cities are keen on continuing, justifying them as a reasonable return. "Basically the transfers represent dividends that Duke and CP&L pay to their shareholders," Wyatt says.

Investor-owned utilities have used transfers against the cities, insisting they've run up the debt by using the revenue to keep property taxes low. Electricities says that's a canard. All the transfers combined total $500 million to $600 million over 20 years, a fraction of the debt.

The cities bought into nuclear plants in the mid-'70s, then saw the cost of building them skyrocket. Even so, in a regulated environment, the cities were guaranteed a return.

But in a free market, bad investments are, well, just bad investments. Apex has high rates, no transfers and struggles to fund transmission lines to keep pace with its population. "That's the worst of both worlds," Sutton says. "Why would we want to stay in the business?"

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