Earlier this month the Federal Energy Regulatory Commission approved the sale of shares in Duke Energy Progress plants, saying 32 North Carolina towns and cities, including Wake Forest, can sell their shares of the plants back to the energy company.
This is an important step in ridding the town of a heavy debt burden, or at least most of it, and becoming able to offer competitive electric rates.
Duke has been negotiating with the power agency that represents Wake Forest and the other municipalities (the North Carolina Eastern Municipal Power Agency or NCEMPA) for several months. The next steps, according to Mayor Vivian Jones and Town Manager Mark Williams, involve the General Assembly because several laws have to be rewritten.
“It’s a win-win for everybody,” Williams said. “It shouldn’t hit any snags.” But it will take some time.
Also, the town will have to refinance some of the debt that the towns took on in 1986. In April the Wake Forest Commissioners approved a resolution that apparently means they agree to borrow money to pay off whatever debt is left, which is still unknown or not public.
Williams did say in April that the negotiators hope to close the financial arrangements by July of 2015.
NCEMPA owns part of five Duke plants: Brunswick Nuclear Plant Units 1 and 2, Mayor Plant Unit 1, Roxboro Plant Unit 4, and Shearon Harris Nuclear Plant. The settlement is expected to reduce NCEMPA’s debt by about 70 percent. The debt reduction amount for each of the member municipalities depends on its ownership share, load characteristics, consumer mix and other factors.
Wake Forest owns a 0.7262 share in each of those five plants and owes about $1.5 million of the total NCEMPA debt of $2 billion. The contract calls for the last payment to be made Jan. 1. 2026.
Wiping out all or part of the town’s debt would reduce the cost of electricity to the 6,057 Wake Forest Power customers because the town-owned electric system is operated as a separate enterprise fund which has to pay all its costs, including the debt repayment, from its revenues.
In the mid-1980s energy experts predicted a sharp rise in electric consumption and demand that could or would leave towns like Wake Forest unable to purchase enough energy for its customers. The solution was for companies like Duke and Progress Energy (CP&L at the time) to build more plants to meet that demand. The consultants also recommended that towns which own their electric systems would be assured of a steady supply if they owned part of the plants.
For more about the sale, you can also find the lead article in the July 30 issue. Search for “Duke Energy Progress.”
