In a historic move aimed at lowering utility rates across eastern North Carolina — including in Elizabeth City, Edenton and Hertford — Electricities is entering exclusive talks with Duke Energy Progress to sell the N.C. Eastern Municipal Power Agency’s shares in four power plants.
If a deal can be reached, and federal and state agencies approve it, electricity customers across eastern North Carolina who have been saddled with high electric rates for three decades could finally see some relief.
Electricities, which provides management services for NCEMPA, has been in “low-level” talks on selling the four facilities since 2010, according to Elizabeth City City Manager Rich Olson, who represents the city on the NCEMPA Board of Commissioners.
On Monday, Olson said those talks advanced and Electricities called together the board for a meeting in Wilson.
Following that meeting, Olson said the NCEMPA board approved entering into exclusive negotiations with Duke Energy Progress over selling NCEMPA’s share in plants jointly owned with the Charlotte-based firm. Duke Energy acquired majority ownership in those plants in 2012 when it completed its merger with Progress Energy, creating Duke Energy Progress.
Duke Energy Progress has made an opening offer on NCEMPA’s shares, Olson said, but added a non-disclosure agreement prohibited him from discussing it. He added that, if the deal is approved, it would not affect the city’s electricity distribution system or electric department personnel.
What would be affected are the city’s utility rates, he said.
“We would not even entertain this if we didn’t think it would lower rates,” Olson said.
It’s far from certain if and when the deal will work out, Olson said. The sale would have to go through numerous state and federal agencies’ approval and receive the approval of every municipality in NCEMPA. That includes the city council in Elizabeth City, the town councils in Edenton and Hertford, and the governing bodies of 29 other cities and towns.
Officials in NCEMPA member cities and towns have long pointed out to frustrated customers for three decades that the agency’s long-term debt on the four power plants — currently about $2 billion — effectively locks in high electric rates.
Electricities spokeswoman Rebecca Agner said Monday that NCEMPA’s debt service represents 35 percent of its wholesale electric rates. If that debt burden were eased, NCEMPA could obviously look at lowering its rates significantly, she said.
However, she said it was too early to say if, or how much, debt Duke Energy was prepared to resolve to acquire NCEMPA’s shares in the power plants. Because negotiations are just beginning, Electricities still must assess what NCEMPA’s ownership stakes in the plants are worth.
Apart from the debt issue, Agner said NCEMPA would aim to negotiate lower rates through a new wholesale rate contract with Duke Energy Progress. Because NCEMPA receives part of its power needs as compensation for its ownership, it would need to negotiate different purchasing arrangements if and when it sells off all its shares.
Duke Energy Progress spokesman Jeff Brooks said Monday it was too early in the talks to specify how the deal could lower rates. But he said Duke Energy and Electricities had spent years researching the deal, and believed it could benefit both parties.
“NCEMPA and Duke Energy Progress will continue to negotiate all aspects of this agreement with the best interests of customers, communities and shareholders in mind,” Brooks said.
Agner said the deal could take 12-24 months to work out, and Electricities would regularly update the NCEMPA Board of Commissioners on its discussions with Duke Energy Progress.
U.S. Rep. G.K. Butterfield, D-N.C., represents many of the cities and towns that are NCEMPA members. In a press release Monday, he said he was hopeful a deal, if approved, would “significantly” lower utility bills for customers across eastern North Carolina.
“Six years ago, I suggested that both entities find a resolution to increasing energy production costs, which left residents and municipalities saddled with high utility bills,” Butterfield said. “I’m happy to see these companies work toward a solution that would be beneficial to them and to the dozens of cities they serve.”