Duke Energy and Progress Energy said they have reached a settlement with the N.C. Public Staff regarding the companies' proposed merger. The N.C. Public Staff serves as the state's chief consumer advocate on utility matters.
The proposed settlement, if approved by the North Carolina Utilities Commission (NCUC), would provide for the following:
- The companies will guarantee North Carolina customers benefit from their allocable share of $650 million in savings over the first five years after the merger closes (2012-2016);
- The companies will continue their current level of community financial support of approximately $16.5 million annually for a minimum of four years after the merger closes (based on each company's average level of community support over the last 5 years – which is approximately $9.2 million for Duke Energy and approximately $7.28 million annually for Progress Energy);
- The companies will provide $15 million for low-income household weatherization, community college programs that target technical and vocational training, or similar organizations and initiatives; and
- Direct merger-related expenses will not be recovered from customers. Recovery of employee severance costs can be requested separately.
The settlement agreement was filed Sept. 2 by the N.C. Public Staff. Other parties will file testimony related to the merger application and the proposed settlement agreement by Sept. 7.
The NCUC has scheduled an evidentiary hearing on the proposed merger Sept. 20.
The companies said the $650 million in savings to their customers in North Carolina and South Carolina will come through efficiencies in fuel procurement, fuel usage, fuel transportation and jointly dispatching Duke Energy Carolinas and Progress Energy Carolinas power plants to serve Carolinas' customers.
To date, the companies have made the following filings, in addition to the North Carolina filing:
- Merger-related filings with the Public Service Commission of South Carolina, which has scheduled hearings for Oct. 26.
- An application to approve the merger with the Kentucky Public Service Commission, which has provided conditional approval.
- Joint filings with the Federal Energy Regulatory Commission and with the Nuclear Regulatory Commission (the latter related to nuclear plant license transfers).
- Hart-Scott-Rodino filing with the U.S. Department of Justice and Federal Trade Commission. The waiting period under the HSR Act expired April 27, 2011.
- Assignment of Authorization filings with the Federal Communications Commission which were approved July 27.
Although there are no merger-specific regulatory approvals required in Indiana, Ohio or Florida, the companies will continue to update the regulatory commissions in those states on the merger. The merger also requires modifications to several existing affiliate agreements; the companies will file those with various state commissions for approval, as applicable.
If completed, the merger will create the nation's largest electric utility, as measured by enterprise value, market capitalization, generation assets, customers and numerous other criteria. The combined company is expected to have more than 7.1 million electric customers in six states (North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky) and the largest regulated nuclear fleet in the country.
Both Progress Energy, Inc. (NYSE: PGN) and Duke Energy Corporation (NYSE: DUK) received respective shareholder approval at separate meetings Aug. 23. The companies are planning to complete the merger transaction by the end of the year.
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