RALEIGH — North Carolina Eastern Municipal Power Agency and Duke Energy Progress announced this morning that they have approved an agreement for Duke to purchase the power agency’s generating assets.
The $1.2 billion transaction is expected to lower wholesale electric rates for customers in Red Springs, Lumberton and 30 other municipalities in eastern North Carolina.
“The first stage of the asset sale has been accomplished,” Red Springs Mayor John McNeill said. “I want to thank our entire delegation for their assistance in this process to this point and their continued help as we work to lower our rates for our citizens.”
Lumberton City Manager Wayne Horne called the announcement “great news” but added that the deal will still need regulatory approval, which could take nine to 12 months.
“We feel that once all this is consummated, it will certainly mean lower rates for our consumers and we are excited about that,” Horne said. “But I also don’t want to give people a sense that it will happen automatically. It may not happen until next July.”
Negotiations between the Duke Energy and the power 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.”
The agreement is also subject to the execution of an asset purchase agreement and a full requirements power purchase agreement between Duke Energy and the North Carolina Eastern Municipal Power Agency.
“The ElectriCities board of directors is very pleased we were able to reach an agreement with Duke Energy Progress,” Richard Hicks, ElectriCities board chairman said in a statement. “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.”
The current debt owed by North Carolina Eastern Municipal Power Agency members is approximately $1.9 billion. After selling the assets for $1.2 billion and liquidating certain bond reserve funds, the 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.”