The negotiations underway between Duke Energy Progress and the power agency representing Wake Forest and other municipalities will not wipe out all the debt the towns and cities owe for purchasing shares in Duke’s power plants in 1986.
That is the message from the resolution approved by the Wake Forest Town Board Tuesday night. There is no indication how much debt Wake Forest will still have if the negotiations are successful.
Answering questions posed before the meeting, Town Manager Mark Williams replied, “A portion of the debt will not be paid off and new defeasance bonds will be sold to pay off the remainder. That’s about all I can tell you.”
A defeasance bond is one in which the borrower sets aside enough cash or bonds sufficient to pay off the debt. In other words, the town will borrow money to pay off whatever debt is left.
The town board approved the resolution after a 30-minute closed session with attorney Eric Vernon. Afterward, Mayor Vivian Jones said the closed meeting was to inform the commissioners about new information she and Williams had learned and that the power agency, the North Carolina Eastern Municipal Power Agency (NCEMPA), had asked all of its member municipalities to pass the resolution.
That new information could be part or all of the “confidential results of the preliminary financial analyses of the Proposed Transaction” NCEMPA had performed.
Williams did also say the negotiators are hoping to close the financial arrangements by July of next year.
The agency has been negotiating with Duke Energy Progress since early this year about the potential sale of NCEMPA’s ownership in five Duke Energy Progress plants: Brunswick Nuclear Plant Units 1 and 2, Mayor Plant Unit 1, Roxboro Plant Unit 4, and Shearon Harris Nuclear Plant.
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.
(See more about town board actions Tuesday night in a related article below.)
