Watchdog asks NC to reconsider Duke-Progress merger approval
Posted July 26, 2012 12:16 p.m. EDT
Updated July 26, 2012 12:52 p.m. EDT
RALEIGH, N.C. — A group that monitors area utilities filed a request with the North Carolina Utilities Commission on Thursday to reconsider its recent approval of the merger between Duke Energy Corp. and Progress Energy Inc.
The North Carolina Waste Awareness & Reduction Network alleges that Duke failed to disclose plans to spend $2.5 billion on upgrades to Progress nuclear plants over the next two years, which the group says dwarfs the $650 million in customer savings the two companies promised in order to win regulatory approval.
“Billions in undisclosed rate hikes turns the merger into a net public soaking instead of the net public savings legally required of such a corporate merger,” NC WARN executive director Jim Warren said in a statement.
The watchdog group also contends that Duke and Progress failed to update the commission on the prospects for costly and complicated repairs to Progress' Crystal River nuclear plant in Florida, which has been offline since 2009. The repairs could impact North Carolina customers by raising Duke’s borrowing costs and by forcing more of the parent company’s dividends to be borne by North Carolinians, the group says.
Duke spokesman Tom Williams has said the nuclear plant upgrades are part of normal business operations.
Warren predicted that the nuclear expenses would lead to a 12 to 15 percent rate increase for Duke and Progress customers.
"We urge the commission to help restore public confidence by ensuring that all cost and rate information finally be placed on the table for a rigorous and transparent review by all intervening parties,” he said.
The commission has been examining whether to amend of rescind its June 29 approval of the merger following the sudden ouster of Progress Chief Executive Bill Johnson as the president and CEO of the combined company.
Duke board members told the panel last week that they had doubts about Johnson's ability for months before the merger closed and he was asked to resign. Jim Rogers, who had been Duke's president and CEO and was expected to become chairman after the merger, was named to replace Johnson.
Commissioners have said they feel Duke executives misled them, noting they were repeatedly told Johnson would be in charge as they considered whether to approve the deal.