Duke Energy and Progress Energy customers would not shoulder charges for costs of about $450 million related to the utilities’ proposed $26 billion merger if the North Carolina Utilities Commission (NCUC) speedily approves the deal, according to an agreement between the companies and the state regulatory body that was disclosed Monday.
The agreement supplements a Sept. 2, 2011, settlement with the NCUC and follows two rejections of the deal by the Federal Energy Regulatory Commission (FERC) on concerns that the merger would create a monopoly that could manipulate regional wholesale power prices in North and South Carolina, where Duke Energy and Progress Energy are based. The filing with the NCUC disclosed on Monday addresses “state regulatory issues” raised by the market power mitigation proposal filed with FERC on March 26, the companies said.
In the filing, the companies agreed to continue guaranteeing $650 million in system savings for Carolinas retail customers, achieved through fuel blending and jointly operating Carolinas generation fleets. Also, Duke and Progress will not seek recovery from North Carolina customers for seven transmission projects described in the mitigation proposal—estimated to cost about $110 million—for five years following the merger. Customers would also not be charged for revenue shortfalls or fuel-related costs, estimated at about $40 million to $50 million, during the three-year interim mitigation power sales agreements, or for any merger severance costs, which could total $230 million.
The Duke-Progress merger has so far been approved by the Department of Justice, Nuclear Regulatory Commission, Kentucky Public Service Commission, and the shareholders of both companies. FERC is expected to rule on the mitigation plan by June 8. The firms said they hope to close the merger by July 1.
Sources: POWERnews, Duke Energy, Progress Energy