The Duke Energy Progress unit of Duke Energy (NYSE: DUK) and the North Carolina Eastern Municipal Power Agency (NCEMPA) announced July 28 that both companies’ boards of directors have approved an agreement for Duke Energy Progress to purchase the agency’s ownership in certain generating assets.
Duke had revealed its interest in the NCEMPA assets in February, shortly after Duke dropped out of talks to buy a minority stake in a new nuclear plant in South Carolina.
NCEMPA has partial ownership interests in several Duke Energy Progress plants, including Brunswick Nuclear Plant Units 1 and 2 (in Brunswick County, N.C.), Mayo Plant (Person County, N.C.), Roxboro Plant Unit 4 (Person County) and the Harris Nuclear Plant (Wake County, N.C.). The agency’s shares are: 16.17% in Harris; 18.33% in Brunswick 1; 18.33% in Brunswick 2; 16.17% in the Mayo Plant; 12.94% in the Roxboro Plant; and 3.77% in the Roxboro Plant common facilities.
- The two-unit, 1,870-MW Brunswick Nuclear Plant is located approximately two miles north of Southport, N.C., and houses two boiling water nuclear reactors.
- The single-unit, 900-MW Harris Nuclear Plant is located near New Hill, N.C.
- The single-unit, 727-MW coal-fired Mayo Plant is located near Roxboro, N.C.
- The four-unit, 2,422-MW coal-fired Roxboro Steam Plant is located in Semora, N.C.
The agency’s ownership interest in these plants represents approximately 700 MW of generating capacity. The purchase price for NCEMPA’s ownership interest in the plants, fuel inventories, and spare parts inventory is $1.2bn, subject to certain adjustments outlined in the asset purchase agreement (APA).
NCEMPA members’ distribution assets are not part of the agreement, and will continue to be owned and maintained by those members.
Under the agreement, Duke Energy Progress and NCEMPA will enter into a 30-year wholesale power supply agreement to continue meeting the needs of NCEMPA customers currently served by the agency’s interests in the Duke Energy Progress plants.
Both parties see benefits from this deal
“This agreement provides positive benefits to Duke Energy Progress customers including long-term fuel savings that help keep rates affordable,” said Paul Newton, Duke Energy president–North Carolina. “We have been providing electric service to NCEMPA members for more than 100 years, and we look forward to beginning this new chapter in our ongoing commitment to the communities of eastern North Carolina.”
“We’ve been investigating options to lower our costs for several years while preserving the benefits of public power,” said Graham Edwards, ElectriCities chief executive officer. “Selling our generation assets is a significant way we can achieve that goal and strengthen NC Public Power’s future in eastern North Carolina.”
Completion of the transaction will be subject to several closing conditions, including approvals by various state and federal agencies. Duke Energy Progress is expected to file the APA for approval by early September with the Federal Energy Regulatory Commission (FERC). Duke Energy Progress is required to provide notice to the North Carolina Utilities Commission (NCUC) at least 30 days prior to the FERC filing.
Both parties said they will work diligently to close the transaction as quickly as possible. Under the terms of the agreement, approvals must be received and the transaction completed by the end of 2016.
NCEMPA consists of 32 cities and towns in eastern North Carolina, including some of the largest cities in the region. NCEMPA participants own and operate their electric systems and serve nearly 270,000 retail customers. NCEMPA was formed in 1978 and is managed by ElectriCities of North Carolina, headquartered in Raleigh.
Duke Energy Progress provides electricity and related services to nearly 1.5 million customers in North Carolina and South Carolina. The utility is headquartered in Raleigh, N.C.