Duke, Progress merger put on hold by feds' ruling

Posted December 15, 2011

— Federal regulators delayed the proposed merger of Duke Energy and Progress Energy late Wednesday, setting back plans to merge the two North Carolina-based utilities by the end of the year.

The Federal Energy Regulatory Commission ruled that the $35 billion deal, which would create the nation's largest electric utility, would have "harmful effects on competition."

Despite the ruling, company officials said they remain committed to the merger and will adjust their proposal to meet regulators' concerns. The earliest a merger could be completed is now March, they said.

"The FERC ruling does not call into question the benefits of the merger," the companies said in a joint statement. "The combination of Duke Energy and Progress Energy will provide clear benefits for our customers, including overall lower corporate costs and $650 million in guaranteed benefits to customers in the Carolinas from the joint dispatch of the utilities' generation fleets and from power plant fuel savings.”

Any deal must also be approved by the North Carolina Utilities Commission, which had been awaiting a federal ruling.

Mike Hughes, a spokesman for Progress Energy, called the ruling a "bitter pill" for employees who have been working in limbo while plans for the merger moved forward.

The federal agency said in September the companies should change merger details and suggested steps such as selling power plants. The companies responded last month with a plan to sell excess electricity at a fixed price to wholesale buyers in their Carolinas territories.

Regulators now say the proposal by Charlotte-based Duke and Raleigh-based Progress doesn't go far enough.

The "mitigation proposal does not remedy the proposed transaction's adverse effects on competition," the FERC said.

The FERC cited three points in its decision:

  • "The supporting analysis for the mitigation proposal is flawed and does not demonstrate that the mitigation proposal would remedy the market power screen failures identified in the September order.
  • "The mitigation proposal does not eliminate the opportunity for the merged company to act anti-competitively. Although Duke and Progress describe the proposal as a virtual divestiture, it would not transfer control of the energy the applicants propose to sell from the merged company.
  • "The independent monitor proposal would not provide sufficient oversight of the applicants’ compliance with the mitigation proposal."

The merger would have eliminated 700 to 1,000 positions in Raleigh as Progress Energy shifted its headquarters to Charlotte. Software developer Red Hat had announced plans to move into the downtown Raleigh buildings vacated by Progress Energy.

It's unclear what Red Hat would do if Progress Energy has to keep its Raleigh offices.

The combined company would have had 7.1 million power consumers in the Carolinas, Florida, Kentucky, Indiana and Ohio. It would have become the country's largest utility company by number of customers, retail revenue and generating capacity, according to Edison Electric Institute, the country's main electric utility trade group.

The U.S. Department of Justice, the U.S. Nuclear Regulatory Commission, the Federal Communications Commission, the Kentucky Public Service Commission and shareholders of both companies have already approved the merger.


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  • pam17 Dec 19, 2011

    I have re-read the article...where is Obama blamed for this? (And I am not a fan of the President's politics....)

  • NC Taxpayer Dec 15, 2011

    Thank goodness! I like Progress Energy just the way it is. They have been quick to respond in power outages. Wonderful to work with concerning lines and repair. With a merger comes a company that loses its personal touch--too big!

  • judyfaybarbour Dec 15, 2011

    I am very thankful the postponement and pray the merger will not happen. We work for PE, buy electricity from PE, and have PE stock but the merger would be bad for everyone except the overpayed executives. Thank you feds for doing your job, this time.

  • PanthersFan45 Dec 15, 2011

    Not a great situation for the workers. Seems like many times the mergers eventually happen. Too bad the overall economy weren't better or many workers would have already jumped ship by now.

  • mikeyj Dec 15, 2011

    And why the heck do some people have to make a reference to Obama in EVERY SINGLE STORY? President Harry S Truman had a sign on his desk in the Oval Office reading, "The buck stops here". With wonderfull it "O" it seems the buck that stopped there got spent; How many times over now? hmmmmmmmm

  • Rebelyell55 Dec 15, 2011

    No matter how they spin it, or what political group gets invovled, if it stands this is good for NC. I really hope they stop it next year and the year after, because they'll keep trying.

  • davidgnews Dec 15, 2011

    '..employees who have been working in limbo...'

    Yes, waiting for the other shoe to drop while the execs get the golden parachutes ready.

    Please, bring on the next Enron.

  • SARCASTICLES Dec 15, 2011

    Ye nutty inhabitants of Berzerkistan are really slayin' now OBAMA is to blame for the merger being put on hold TOO? ;)

  • bgcoving Dec 15, 2011

    Who says the next president has to come from the GOP? -- artist

    Given the bunch of *candidates* they are fielding, odds are he won't.

  • bigal02282 Dec 15, 2011

    I made it through 8 years of Bush, you can make it through 8 years of President Obama..