BRADENTON, Fla. — Federal regulators approved Duke Energy Progress's request to purchase the generating assets of the North Carolina Eastern Municipal Power Agency.
The Federal Energy Regulatory Commission authorized the investor-owned Duke's $1.2-billion transaction with NCEMPA, according to a bondholder's notice posted on the Municipal Securities Rulemaking Board's EMMA filing system Dec. 10.
"This is a positive development for NCEMPA and is good news for eastern North Carolina," said Graham Edwards, chief executive officer of ElectriCities, the nonprofit company that manages the North Carolina Eastern Municipal Power Agency.
"We still face additional regulatory approvals before the transaction can be closed," Edwards said. "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."
The transaction was publicly announced July 28. If ultimately consummated, it will allow the Eastern Municipal Power Agency to retire about 70% of its more than $2 billion in outstanding bonds.
Debt service costs have resulted in high power rates for NCEMPA's 32 member communities and retail customers, according to FERC's approval of the deal.
The proposed sale still requires authorization from the Nuclear Regulatory Commission, the North Carolina Utilities Commission, and the General Assembly.
NCEMPA has ownership interests in several Duke Energy Progress plants, including several nuclear units, representing about 700 megawatts of generating capacity. The distribution assets owned by the power agency's members are not part of the agreement.
In addition to approving the sale, FERC also authorized Duke Energy to enter into a 30-year wholesale power supply agreement with NCEMPA to meet the agency's needs. Duke and the power agency expect the deal to close by the end of 2015.
North Carolina Eastern Municipal Power Agency's bonds are rated A-minus by Fitch Ratings and Standard & Poor's, and Baa1 by Moody's Investors Service. All have stable outlooks.
Moody's said the asset sale is credit positive because the related bond refunding will reduce outstanding debt and lower the wholesale power rates charged to municipal customers.
