There'll be little drama when City Council meets later today to discuss what to do about an impending wholesale price increase in the city's electricity costs. City officials have been talking about the 14 percent rate hike for more than a month, and have already agreed that there isn't enough money in the city's electric coffers to cover any portion of it.

The only response is to raise customer rates by 14 percent, which council is expected to do following a public hearing. Customers will begin feeling the impact of the rate hike in September, when their annual power costs are expected to rise about $200 a year.

The causes for the increase have been well documented. Officials from ElectriCities, the administrative arm of the North Carolina Eastern Municipal Power Agency, have pointed out how explosive price increases for both coal and uranium, the raw materials that fuel their power plants, are driving up electricity production costs. Both materials have jumped in price by more than 100 percent since the beginning of the decade.

But at least 2 percent of the increase is attributable to a decision by NCEMPA's board of directors in 2004 to convert a portion of its debt from bonds with a fixed interest rate to bonds with a variable interest rate. The decision was projected to save NCEMPA and its 32 members, including Elizabeth City, about $10.5 million a year in interest costs. Instead, owing largely to the collapse of the subprime mortgage market, the decision is now costing NCEMPA $12 million a year — roughly equivalent to 2 percent of this year's proposed wholesale rate hike.

NCEMPA directors have defended the decision, noting that converting the bonds from fixed-rate to variable rate was the best call at the time, and that there was no way to know then that the subprime mortgage market would collapse. They also note that a number of other large public agencies — everything from hospitals to airport authorities — made the same decision.

NCEMPA directors have also defended the salary the agency pays its chief executive officer, Jessie Tilton. According to NCEMPA, Tilton earns an annual salary of $438,043, and his total compensation package for 2007, including an automobile allowance and annuity contract contribution, was $458,002.

Power agency officials say there's nothing unusual about Tilton's salary. In fact, they cite a study prepared by a consultant that concludes Tilton is underpaid compared to CEOs who oversee organizations of similar size. They also say Tilton's compensation is evaluated annually as part of a study of ElectriCities' employee salaries.

NCEMPA board members are probably right about how Tilton's salary compares to that of other CEOs'. The question they seem to be avoiding, however, is whether they, as trustees of an agency made up of municipal governments, should be paying an employee like he was working for a private-sector corporation. We question the size of Tilton's compensation, especially given the performance of NCEMPA on ratepayers' pocketbooks in recent years.

Customers of Elizabeth City's electric utility were hit with a 5 percent rate increase in 2005, a 4 percent rate hike in 2006 and a 14 percent rate hike this year. (The rate hike in 2006 actually would have been 10 percent if not for City Council's decision to have the city absorb 6 percent of it.) That's 23 percent more for electricity in three years. Not exactly a convincing argument for paying someone half-a-million dollars a year.

Maybe NCEMPA's board should restructure Tilton's salary so that it contains aggressive rewards for rate stability or actual decreases and significant punishments for increases. If that were to happen, decisions like the one City Council will make today might be a little easier to swallow.