NC regulators mull Duke-Progress Energy merger
Posted September 20, 2011 8:08 a.m. EDT
Updated September 20, 2011 9:03 p.m. EDT
Raleigh, N.C. — 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.
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.