NC regulators weigh power merger

State utility regulators heard hours of testimony today on the proposed merger between Progress Energy and Duke Energy - a merger that would create the country's largest regulated utility, with over 7 million customers in 6 states.

Today's hearing was the one opportunity citizens had to speak to the NC Utilities Commission about the deal, and most of the thirty who spoke today were against it. Many said that was insufficient input on a deal that would affect millions of ratepayers. 

"It is not in our best interest to bring these two companies together," said public commenter Robert Eidus. "If we're talking about jobs, this is a job killer."

The merger would lead to the cutting of 2,000 jobs in the state.  Progress Energy would cut up to 1,000 - half its workforce in downtown Raleigh - over the next three years.  The two companies together employ about 29,000 in North Carolina. 

Progress spokesman Mike Hughes said the cuts would be handled carefully, eliminating vacant positions first and offering generous buyout packages before letting people go. But he said the personnel cuts are part of the savings the merger will yield for consumers.

"We have provided a guaranteed savings over 5 years of $650 million," Hughes said. “And 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, being able to run our power plant fleet as a single fleet, thus more economically.” 

Other commenters said they feared the new monopoly would have too much power, politically and financially, for state regulators to stand up to it. They say ratepayers would be asked to foot the bill for new coal and nuclear plants, instead of investing in green resources like solar and wind. 

Yet others spoke about the merger's potential impact on the 1.6 million North Carolinians who live in poverty.  Al Ripley with the NC Justice Center said the poor pay a disproportionately higher share of their income for power than wealthier ratepayers, and poorly built and insulated housing only adds to the problem. He said any deal should require the new utility to provide a substantial weatherization fund, better conservation programs, limits and protections for power cutoffs, and a commitment to explore solar power for multi-family low-income housing.  

Attorneys for Duke and Progress urged the NC Utilities Commission to evaluate the merger along its usual narrow lines: whether the deal would have an adverse effect on rates or service, and whether the benefits would equal or outweigh the cost to consumers.

Commission Chairman Ed FInley said the issue, prescribed by statute, might be bigger than those two criteria. "Is this proposed merger consistent with the public convenience and necessity? That's a very broad standard," he said. "We'll listen to all of the evidence. It's a good question whether job loss is something that should be considered."

Also at issue is who should pay for the generous buyout packages the "new Duke" plans to offer to employees in the process of job cuts. The utilities want to add the cost of the buyouts to consumers' electric bills. But consumer advocates say corporate shareholders, not ratepayers, should have to underwrite that cost.

After the hearing, which is expected to last through at least Thursday, both sides have 30 days to file additional motions. Then the committee will weigh all the testimony before ruling. A decision is expected by December.