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NC regulators mull Duke-Progress Energy merger

Posted September 20, 2011

— North Carolina regulators opened a multi-day hearing Tuesday on whether Duke Energy and Progress Energy should be allowed to merge.

The North Carolina Utilities Commission must approve the merger, as well as South Carolina and federal regulators. The $35 billion deal would create the country's largest utility, with 7.1 million customers in six states.

Consumer advocates and environmentalists argued against the merger.

"This merger should only be approved if the newly formed utility demonstrates that it is committed to major new investments in clean renewable energy in North Carolina, such as solar and wind energy," said Dan Conrad, legislative counsel of the North Carolina Conservation Network.

Others said Duke and Progress need to focus more resources on energy conservation and provide more assistance for low-income households.

"When big companies merge, it's common knowledge that they do so to increase profits, regardless of how the merger affects everyday people," said Harry Phillips of Chapel Hill.

Progress Energy employs 2,000 people at its Raleigh headquarters, but officials said 700 to 1,000 of those positions would be eliminated when the merged utility moves its headquarters to Charlotte.

Many positions would be shifted to Charlotte, while others would be eliminated through layoffs and buyouts.

"It is not in our best interest to bring these two companies together," Robert Eidus said. "I believe, if we're talking about jobs, this is going to be a job-killer."

Some opponents have expressed concern that the companies want ratepayers, not shareholders, to pick up the cost of the severance packages offered to departing employees.

Opponents speak against utility merger Opponents speak against utility merger

Commission members said no decision has been made on whether job cuts would factor into their decision, which is expected by December.

"Is this proposed merger consistent with the public convenience and necessity? That's a very broad standard," Chairman Edward Finlay said. "We'll listen to all of the evidence. It's a good question whether job loss is something that should be considered."

Utility officials tried to focus the commission on positive aspects of the deal.

"We have provided a guaranteed savings over five years of $650 million," Progress Energy spokesman Mike Hughes said. “That comes mainly through the economies of scale that we achieve by being able to purchase larger portions of fuel that we use for our power plants (and) being able to run our power plant fleet as a single fleet, thus more economically."

The $650 million in savings is part of a settlement by the utilities to secure support for the merger from the North Carolina Public Staff, the state's chief consumer advocate on utility matters. They also have agreed to not recoup merger costs from customers, to maintain community support at about $16.5 million a year for the next four years and to provide $15 million for initiatives including weatherizing low-income homes and technical training programs at community colleges.

66 Comments

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  • rcarroll Sep 26, 3:39 p.m.

    Another example of the rich getting richer, and the poorer getting poorer. All of the executives who proposed this make more money in a week than most of the employees make in a year. The executives lives will not suffer one little bit. They can up and move and pay cash for a new home in Charlotte. Their spouses dont need to work either. The workers here in Raleigh have spouses who work and the ones who are offered a job in Charlotte will have spouses who will have to give up jobs to move. The workers who are the actual backbones of Progress Energy are the ones to suffer.

  • keapittman Sep 21, 3:08 p.m.

    This is ludicrous!!!!

  • computer trainer Sep 21, 2:02 p.m.

    You are so right-- Today they admit that the 700 layoffs could actually be 2,000 layoffs, and that customers of the merged company will pay for their severence and/or unemployment costs with rate increases.--- I guess that we should be thankful that they are being honest, BUT come on. Where is it right for them to pass those severances on to the consumer? And what kind of severances are we looking at? I doubt that the janitor is going to take those nice little packages.

  • gphotohound2 Sep 21, 1:11 p.m.

    I thought that when you take away competition , Duke and Progress energy , that is a monopoly which I believe is against trade laws

  • Capt Mercury Sep 21, 11:16 a.m.

    Electric power generation is pretty much a monopoly regardless of the size of the company you are dealing with. Those who put up the power lines are in charge. Passing these companies off as "public utilities" is a sham. Politicians know this and use their political power and influence to make more money for the already rich people who put them in office. Trust me, this merger will happen.

    The only benefit the public gets from this arrangement is access to electricity. But at what cost? If these operations were really public utilities they would operate for the benefit of all, but maybe not at maximum efficiency.

  • ILoveDowntownRaleigh Sep 21, 9:56 a.m.

    According to an article in the N and O earlier this week, it is AGAINST NORTH CAROLINA LAW for utilities to merge unless the NC public benefits.

    Today they admit that the 700 layoffs could actually be 2,000 layoffs, and that customers of the merged company will pay for their severence and/or unemployment costs with rate increases.

    As an NC citizen, how do rate increases benefit me? How do 2,000 layoffs and all of the lost salaries and that money spread into the local economy benefit NC citizens?

    This merger benefits a few already rich people, and stiffs the rest of us. Rate commission - do the right thing!

  • computer trainer Sep 21, 9:39 a.m.

    Right now, you can get rebates from PE for doing upgrades to your home, which in turn save on your electric bill. Does Duke do that? NO! I suspect the "new" power company will not either.

    CP&L use to be a FAMILY company. They took care of their people, the community, and cared. Then, they merged with FL Power. Not a good thing. LOTS of job losses, when they went to FL. CEO made great $$ though. Cavanaugh got $28 MILLION as a bonus the first year, while many of us were on unemployment. Now PE (formerly CP&L) will merge with Duke and what will happen? Mr Johnson will probably have those nice bonuses, too, while many more people will be added to the unemployment roles. Sorry, but this is BAD for Raleigh, and NC.

  • larieke Sep 21, 8:32 a.m.

    I'm sure the decision of the regulators will be on the up-and-up. If their decision goes against the masses of 7.1 million, I'm confident that the FBI will be closely scrutinizing their bank accounts.

  • james27613 Sep 20, 7:57 p.m.

    Green power generation is not always cost effective.

    New generation Thorium reactors are the future of energy.

    http://www.thorium.tv/en/thorium_reactor/thorium_reactor_1.php

    These reactors use Thorium that can not be made into fuel for weapons grade. The reactors can also use depleted Uranium and byproduct Plutonium.

  • james27613 Sep 20, 7:54 p.m.

    Do the merger.

    Why, if the merger fails, foreign companies will step up and try to buy either Duke and or Progress.

    Lots of international conglomerates like Macquarie Consortium
    snapping up US owned power companies.

    Same thing happening in UK and Europe.

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