Duke Energy Progress is one step closer to buying shares of power plants owned by Smithfield, Selma, Clayton and other public power towns in North Carolina.
Last month, the utility let the Federal Energy Regulatory Commission know of its intention to purchase shares of power plants owned by the N.C. Eastern Municipal Power Agency, whose 32 members include Benson, Clayton, Selma and Smithfield. The FERC will decide whether the terms of the purchase deal are fair to the towns.
Duke must also submit filings with the N.C. Utilities Commission, the Public Service Commission of South Carolina and the Nuclear Regulatory Commission.
The public power towns own shares in five power plants. They want to sell their stakes because the debt they took own to purchase their shares has led to electricity rates that are higher than those charged by Duke.
Smithfield residents, for example, pay 18 percent more for their power than Duke customers, according to a study by ElectriCities of North Carolina, which represents public power towns. Clayton residents pay 24 percent more, while Selma’s residential rate exceeds Duke’s by 21 percent. In Benson, residents pay 27 percent more than their Duke neighbors.
Businesses in public power towns generally pay more too, though how much more depends on the size of the business, how much power it uses and when it uses that power.
In the 1970s, the 32 towns agreed to buy into the plants to ensure a steady stream of power. But the cost to build and maintain power plants increased exponentially in the 1980s, especially after the Tree Mile Island nuclear accidents. Last year, the public power towns owed more than $2 billion to creditors, according to the proposed agreement with Duke.
If the $1.2 billion deal goes through, the 32 towns will join Duke’s existing 1.5 million customers in the Carolinas. Towns will be able to purchase power for less and pass those savings on to their customers. How much less will depend on each town’s debt and how much of the savings it chooses to pass along to customers.
In Smithfield, public utilities director Ken Griffin has proposed an extensive cost-of-service study that would look not only at the cost of power but also at operational costs to determine new rates. He originally wanted a private firm to conduct the study but is now looking into having ElectriCities do some of the work to reduce the cost.
At the Smithfield Town Council’s Oct. 7 meeting, Councilman Travis Scott said he wanted to make sure that selling the town’s shares in the power plants was the best deal for businesses and residents.
“I just want to be sure we’re making the right decision,” he said. “I just want to make sure we have a seat at the table.”
Griffin said he’s confident FERC will conduct its review in a timely manner.
“Senior staff at ElectriCites has good relationships over many years with the FERC commissioners,” he said. “They will certainly encourage them to work quickly and move it along, because this is one of a number of approvals that need to be obtained.”