Federal regulators on Tuesday approved a $1.2 billion deal to allow Duke Energy Progress to buy back power plant ownership from 32 debt-saddled Eastern North Carolina towns that bought costly shares in the power plants more than three decades ago.
The Federal Energy Regulatory Commission said Duke’s buyback does not raise any monopoly-related concerns, in part because Duke Progress will continue selling electricity to the 32 towns, which include Apex, Clayton, Wake Forest, Wilson, Smithfield, Kinston and others dotting the Eastern half of North Carolina.
Their 270,000 customers have paid, on average, $240 to $600 more a year for electricity than Duke Progress customers pay for the same amount of power.
The deal is expected to deliver significant savings on power bills in the affected towns. But residents may not see the financial benefits for months, until their town councils vote on new electricity rates.
The federal approval caps years of failed efforts by town authorities to offload the power plants and the financial burden they carried for town residents. But it was only recently that the crushing debt had come down sufficiently to justify a sell-off.
Town officials have long said that their inflated electricity bills made it difficult to recruit potential industries and businesses that could save hundreds of thousands of dollars a year on energy costs by setting up shop in the nearby Duke Progress service territory.
Raleigh-based Duke Progress, owned by Charlotte-based Duke Energy, will now own 100 percent of the Harris nuclear plant in Wake County, the Brunswick nuclear plant near Wilmington and two coal-burning power plants.
The deal, which still requires approval from the N.C. Utilities Commission, will retire about 70 percent of the $2 billion debt the towns had on the books after sinking $3.6 billion into the power plant venture in 1982.
Their 2013 debt service exceeded $260 million.
The towns had invested in power plants as a hedge against unpredictable energy costs, but their economic bet backfired when nuclear costs skyrocketed in the wake of the 1979 nuclear accident at the Three Mile Island plant in Pennsylvania.
The debt has hampered the towns in different degrees. Towns with fast-growing populations, such as Apex and Wake Forest, spread out the costs over a larger population base and charged their customers less than the others.