Thursday, December 15, 2011

FERC Denies, Delays Duke Energy - Progress Energy Merger

The Federal Energy Regulatory Commission (FERC) again rejected the proposed merger between Duke Energy and Progress Energy, assuring the $26 billion deal will not get done this year, and raising questions whether it can get done at all.  FERC said the merger raises serious concerns about giving the companies too much monopoly power in North Carolina. Announced in January, the merger would create the nation's largest electric utility to be based in Charlotte. It would also result in the elimination of 1,860 positions, mostly in North Carolina.

Charlotte-based Duke and Raleigh-based Progress had argued the merger would result in hundreds of millions of dollars in savings for customers, and would hold down rising electricity costs. The deal had won support from the state's consumer advocate, known as the Public Staff, as well as from environmental advocacy groups.

Today's ruling was the second time the FERC said the merger was unacceptable. After the first such ruling in September, Duke and Progress said they'd cap their profit at 10 percent of some wholesale power sales, but the FERC said that wasn't good enough.

The agency said the companies' proposals to address monopoly concerns are vague, lack support, are riddled with flaws, and would not work. The feds said Duke and Progress still have the option of coming up with more alternatives to fix the problem.

The merger also requires approval by the N.C. Utilities Commission, but the commission had been waiting for the federal ruling before signing off on the deal. (News Observer, 12/14/2011)

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