Duke Energy Progress on Friday filed its formal application with federal regulators for approval to bail out 32 Eastern North Carolina towns that are saddled with high power bills.
The filing with the Federal Energy Regulatory Commission said the $1.2 billion deal would retire about 70 percent of the $2.1 billion debt the towns took on when they bought into five power plants, including the Shearon Harris nuclear plant in Wake County.
The towns include Apex, Clayton, Wake Forest, Wilson, Smithfield, Kinston and others dotting the eastern half of North Carolina. Their 270,000 customers pay, on average, $240 to $600 more a year for electricity than Progress customers.
Raleigh-based Progress, owned by Charlotte-based Duke Energy, is proposing to buy back the ownership share of the power plants, and then to sell the power back to the towns under a long-term wholesale power contract. The towns are represented by the N.C. Eastern Municipal Power Agency, or NCEMPA.
In the FERC application, Progress contends the acquisition will not give it unfair market power concentration because “it involves a change of ownership but not a change in control of the assets in question.”
The utility also said the $1.2 billion purchase price is above net book value, but the best deal it could negotiate with the municipal power agency.
“Power Agency would have preferred a price closer to its overall outstanding debt level of over $2 billion, but DEP could not be assured that it could obtain sufficient long-term energy savings at that price,” Progress wrote. “Conversely, DEP would have preferred a price closer to Power Agency’s net book value, but that would have left Power Agency with too much outstanding debt to make the Transaction beneficial to its Participants.”
The FERC has discretion over the proceedings, and it’s not clear when the agency might rule, said Duke spokesman Jeff Brooks.