Duke Energy Progress (NYSE: DUK) has received approval from the Federal Energy Regulatory Commission (FERC) to proceed with plans to purchase the North Carolina Eastern Municipal Power Agency’s (NCEMPA) ownership in certain nuclear and coal-fired generating assets.
The FERC ruling was based on a filing made by Duke Energy Progress on Oct. 10, 2014.
The ruling is an important milestone of the approximately $1.2-billion transaction with NCEMPA, announced July 28, 2014.
NCEMPA currently maintains partial ownership interest in several Duke Energy Progress plants, including Brunswick Nuclear Plant Units 1 and 2 (Brunswick County), the Harris Nuclear Plant (Wake County), and the coal-fueled Mayo Plant (Person County) and Roxboro Unit 4 (Person County).
The Power Agency’s ownership interest in these plants represents approximately 700 megawatts of generating capacity. NCEMPA members’ distribution assets are not part of the agreement, and will continue to be owned and maintained by those members.
“We are pleased to receive these approvals toward our goal of completing this purchase and providing positive benefits for both Duke Energy Progress customers and NCEMPA members,” said Paul Newton, Duke Energy president – North Carolina. “We will now turn our attention to securing the state approvals necessary to close the transaction.”
"This is a positive development for NCEMPA and is good news for eastern North Carolina," ElectriCities CEO Graham Edwards said. "We still face additional regulatory approvals before the transaction can be closed. We continue to be optimistic that we will finalize the agreement and secure a long-term, reliable and competitively priced power supply for NCEMPA members."
FERC approval of the asset purchase agreement (APA) was necessary for Duke Energy Progress to acquire the Power Agency’s ownership interest in the utility’s plants, as well as associated fuel inventories and spare parts. In addition, FERC approval was required for Duke Energy Progress to enter into a 30-year wholesale power supply agreement with NCEMPA to continue meeting the needs of NCEMPA customers currently served by the Power Agency’s interest in Duke Energy Progress’ plants. FERC also approved inclusion of the transaction in power supply contracts for certain other wholesale customers.
Now that the FERC review is complete, Duke Energy Progress and NCEMPA will pursue required state approvals, as well as the approval of the Nuclear Regulatory Commission.
Duke Energy Progress and NCEMPA will work diligently to close the transaction as quickly as possible, with a target to close by the end of 2015.
Under the terms of the agreement, approvals must be received and the transaction completed by the end of 2016. Ultimately, the timing of the transaction will be determined by the remaining approval process.