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NCEMPA reaches agreement with Duke Energy to sell generation assets
RALEIGH (July 28, 2014) –North Carolina Eastern Municipal Power Agency (NCEMPA) and Duke Energy Progress (DEP) announced today that both companies’ boards of directors have approved an agreement for DEP to purchase the Power Agency’s generating assets. The $1.2 billion transaction would lower wholesale electric rates for NCEMPA’s 32 member communities across eastern North Carolina if it is completed. The agreement is subject to the execution of an Asset Purchase Agreement and a Full Requirements Power Purchase Agreement between the parties.
“The ElectriCities Board of Directors is very pleased we were able to reach an agreement with Duke Energy Progress,” said Richard Hicks, ElectriCities Board Chairman. “The Board’s overarching goal is to strengthen public power’s future in North Carolina. Reducing NCEMPA’s debt and therefore reducing our overall costs will provide the opportunity for more competitive rates in the 32 member communities.
Although we have a long road ahead of us with regulatory approvals, today is a good day for NC Public Power and eastern North Carolina.”
Negotiations between the two parties have been underway for several months.
“This is a complicated transaction that would require federal and state approvals. It won’t happen overnight,” ElectriCities CEO Graham Edwards said. “Several agencies must agree to the purchase agreement before it becomes official. We remain optimistic that we can work through that process and finalize the agreement.”
“Our primary goal is to secure a long-term, reliable power supply for NCEMPA members at the lowest possible cost,” said John Craft, Chairman of the NCEMPA Board of Commissioners and La Grange Town Manager. “We are committed to work together toward that end. The announcement today is a positive step toward our goal.”
Sale Could Reduce NCEMPA Debt by More Than 70 Percent
The current debt owed by NCEMPA members is approximately $1.9 billion. After selling the assets for $1.2 billion and liquidating certain bond reserve funds, the Power Agency members would share responsibility for outstanding debt of approximately $480 million.
“When we entered these negotiations, we knew it wasn’t feasible to expect to completely eliminate the debt by selling our assets. But this agreement has the potential to reduce our current debt by more than 70 percent,” Edwards said. “That’s a significant decrease in our costs and the savings would be directly passed along to NCEMPA members.”
The exact impact on rates for each community will be different and will depend on a number of factors, such as each community’s share of the outstanding debt, the specific load characteristics and customer mix of the community.
As a part of the transaction, DEP and NCEMPA will enter into a wholesale power contract.
The sale of NCEMPA’s electric generation assets would not affect distribution assets. Public power communities would continue to own the power lines, substations and transformers that carry electricity directly to the consumers. In addition, they would continue to employ their own utility staff and be responsible for issues such as maintenance, customer service and billing.
DEP will notify the NC Utilities Commission that it intends to make a filing with the Federal Energy Regulatory Commission next month. NCEMPA and DEP entered into exclusive negotiations in January 2014 involving NCEMPA’s ownership in four power plants in North Carolina: Brunswick Nuclear Plant Units 1 and 2 (Brunswick County), Mayo Plant Unit 1 (Person County), Roxboro Plant Unit 4 (Person County) and the Harris Nuclear Plant (Wake County).
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