Business

Duke, Progress promise savings, funding if merger approved

Posted September 2, 2011 3:12 p.m. EDT

— Duke Energy and Progress Energy agreed Friday to save customers $650 million over five years and continue pumping money into local communities if state regulators approve their proposed merger.

The promises were part of a proposed settlement between the two utilities and the North Carolina Public Staff, the state's chief consumer advocate on utility matters.

The state Utilities Commission is expected to consider the settlement at a Sept. 20 hearing. The commission is among several regulatory agencies that still must approve the $35 billion merger, which would create the largest utility in the U.S., with 7.1 million customers in six states.

The two utilities said they would pass along at least $650 million in savings to North and South Carolina customers from efficiencies in buying and using fuel and meeting area power demands through a combination of the companies' plants.

They also promised to maintain their community support at about $16.5 million a year for the next four years and provide $15 million for weatherizing low-income homes, funding community college programs for technical training and other initiatives.

"We are very pleased to have reached this proposed settlement agreement with the Public Staff," Progress Energy Chairman and Chief Executive Bill Johnson said in a statement. "The settlement will provide constructive and tangible benefits for our customers and communities."

Johnson will serve as CEO of the merged utility, which will be based in Charlotte.

Progress Energy announced Thursday that Raleigh would lose 700 to 1,000 jobs in the merger. Many positions will be shifted to Charlotte, and others will be eliminated through layoffs and buyouts.

About 2,000 people now work for Progress Energy in Raleigh.

"We have a century-long history in Raleigh," Johnson said. "We will continue to be a driving force in Raleigh and eastern North Carolina, and we will work to make the transition as smooth as possible for our employees, our customers and our communities."

The agreement with the Public Staff also stipulates that the utilities won't recoup the costs of completing the merger from their customers. Their recovery of employee severance costs will be addressed later, under the agreement.