RALEIGH, N.C. — The North Carolina Utilities Commission on Friday approved the merger of Raleigh-based Progress Energy Inc. and Charlotte-based Duke Energy Corp., moving the companies one step closer to becoming the nation's largest electric utility.
The $35 billion merger was first proposed in January 2011, but the companies had to repeatedly revise the proposal to calm the concerns of state and federal regulators that the combined utility would exert too much control over the market in the Carolinas.
South Carolina regulators still must approve the merger before it can be finalized.
North Carolina officials said their decision was based on more than a year of analysis, including testimony from 26 organizations at four public hearings, thousands of pages of evidence and legal arguments and extensive comments from utility customers.
“In light of consolidation now underway in the energy sector, we believe this merger will best serve the interests of the state, its taxpayers and energy consumers by keeping jobs here in North Carolina,” Edward Finley Jr., chairman of the Utilities Commission, said in a statement. “It seems far preferable for Progress Energy to merge with North Carolina-headquartered Duke Energy than with a company in another state.”
The commission agreed largely with the recommendations of the Public Staff, an independent state agency that represents consumers' interests, in finding that the projected benefits of the merger outweighed any anticipated costs and risks.
The merger guarantees at least $650 million in fuel and fuel-related savings for utility customers and is expected to produce operating efficiencies to be reflected in future rates. Also, the merged companies will commit almost $16.5 million annually in community and charitable support during the first four years following the merger, as well as $10 million in energy assistance for low-income customers, $5 million for workforce development and $2 million for NC Greenpower, a nonprofit promoting renewable energy.
The commission also required any costs associated with the merger to be paid by the companies and their shareholders and not by North Carolina utility customers.
Environmental groups that lobbied for more concessions from the utilities said Friday that they hope the merged company will work harder on renewable energy initiatives.
“With greater power comes greater responsibility,” Kelly Martin of the Sierra Club said in a statement. "We regret that in approving the merger, the commission missed the opportunity to ensure that the new utility will be cleaner, not just larger. We hope that this new company, which will now be the largest in the country, will be a national leader in clean energy investments that will grow the economy and protect public health.”
Progress Energy and Duke Energy will continue to serve their respective areas, and the merged company will serve as a parent to both utilities, commission officials said. The parent company will serve more than 7 million customers in six states.