The North Carolina Eastern Municipal Power Agency is selling its stake in four Duke Energy Progress power plants to Duke in a deal valued at $1.2 billion, the organizations announced last week.
The agreement involves about 700 MW at two coal-fired plants and three nuclear units. When the deal closes, Duke will be the sole owners of the Roxboro Unit 4 and Mayo Unit 1 coal plants, and the Brunswick Units 1 and 2 and Harris Unit 1 nuclear stations. All of the plants are in North Carolina.
Duke also entered into a 30-year power-purchase agreement to supply wholesale power to the 32 municipalities represented by NCEMPA. The terms of that agreement were not released.
The deal will allow the agency to unburden itself of a large chunk of the approximately $1.9 billion in debt under which it has been struggling.
“NCEMPA’s decision to sell its power generating assets was driven by a desire to lower its power costs and reduce its risk of generation ownership,” said NCEMPA spokesperson Rebecca Agner on Friday. “This agreement will reduce NCEMPA’s outstanding debt by more than 70% and make our costs more competitive. After the sale, NCEMPA will not own any generation assets.”
The agreement needs approval from the Federal Energy Regulatory Commission and several state agencies.
Duke spokesman Jeff Brooks said the agreement was attractive for the company for a number of reasons. He acknowledged that the $1.2 billion sales price was somewhat higher than “book value” of the plants, but he said having sole ownership “will provide long-term fuel savings,” benefiting both Duke and its customers.
“These units were among the least costly [in the Duke fleet] to operate from a fuel standpoint,” he said. In buying back the 700 MW of capacity, Duke will be able to increase wholesale energy revenue while lowering its average fuel costs.
Municipalities will benefit from lower debt service costs.
Although Duke has retired a number of coal units in the region in recent years, the Roxboro and Mayo plants are among its youngest and have already seen substantial emissions control retrofits.
“We have made substantial investments in emissions control and dry ash” collection, Brooks said. “The coal units are among the cleanest in the nation.”
The two nuclear stations could run for at least two decades. The licenses for Brunswick Units 1 and 2 are good until 2034 and 2036, respectively. The Harris license expires in 2046.