Duke Energy, Progress Energy file for merger approval
An application to the N.C. Utilities Commission filed outlines customer benefits that will occur as a result of the merger
Charlotte, N.C., and Raleigh, N.C., April 4, 2011 — Duke Energy Corp. and Progress Energy, Inc. filed applications seeking regulatory approval of the merger the companies announced Jan. 10.
An application to the N.C. Utilities Commission filed outlines customer benefits that will occur as a result of the merger. They include:
* Estimated savings of about $700 million in the Carolinas over the first five years after the merger closes through reduced fuel costs and efficiencies gained by jointly operating and managing the Progress Energy Carolinas and Duke Energy Carolinas utility power plant systems. Those savings flow directly to customers through the annual adjustment in the fuel component of retail rates.
* Efficiencies in siting and building power plants. By combining the generating fleets, planning for future capital expenditures and operating the fleets as a single system, the companies expect to realize efficiencies in location, timing and other factors associated with making large capital investments in new resources.
* Additional savings will occur over time as a result of the combination and integration of the companies' information technology systems, supply-chain functions, generation operations, corporate and administrative programs and inventories.
The savings from operating as a combined utility will help offset the impact of expected rate increases in the next few years. The entire U.S. electric system faces rising costs as aging infrastructure is replaced and as new federal and state regulations become applicable. The merger will enable the Duke and Progress utilities in the Carolinas to make these significant investments with lower overall impact to customers.
As previously announced, the companies are targeting to close the merger by late this year.
The filing with the NCUC seeks approval of the proposed holding-company combination. If approved, Progress Energy Inc. will become a unit of Duke Energy Corp.
The utilities — including Progress Energy Carolinas and Duke Energy Carolinas — will continue to operate as separate entities. It is anticipated that Duke Energy Carolinas and Progress Energy Carolinas will be combined into a single legal entity at some point in the future.
Before any combination of the utilities would occur, software, computer systems, business practices, procedures and equipment must be standardized and other issues resolved. Each company will continue to have separate rate schedules for the foreseeable future.
* Duke filed a preliminary joint proxy statement/prospectus with the Securities and Exchange Commission March 17. After the SEC reviews the joint proxy statement/prospectus, Duke Energy and Progress Energy will mail it to their respective shareholders before special shareholder meetings to approve the merger.
* The companies also filed an application to approve the merger with the Kentucky Public Service Commission today.
* The companies made joint filings today with the Federal Energy Regulatory Commission (which assesses market power-related issues).
* The companies have also submitted their Hart-Scott Rodino filing with the U.S. Department of Justice and Federal Trade Commission (for review under U.S. antitrust laws).
* This month, both companies will make merger-related filings with the S.C. Public Service Commission.
* In the coming months, the companies also will file an application to the Federal Communications Commission for certain license transfers.
* Although there are no merger-specific regulatory approvals required in Indiana, Ohio or Florida, the companies will continue to update the public service commissions in those states on the merger, as requested. The merger requires modifications to several existing affiliate agreements; we will file those with our various state commissions for approval, as applicable.
Upon closing, the merger will create the nation's largest electric utility, as measured by enterprise value, market capitalization, generation assets, customers and numerous other criteria. The combined company will have more than 7.1 million electric customers in six states (North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky) and the largest regulated nuclear fleet in the country.
Duke Energy is one of the largest electric power holding companies in the United States. Its regulated utility operations serve about 4 million customers located in five states in the Southeast and Midwest, representing a population of about 12 million people. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.
Progress Energy, headquartered in Raleigh, N.C., is an energy company with more than 22,000 MW of generation capacity and about $10 billion in annual revenues. Progress Energy includes two major electric utilities that serve about 3.1 million customers in the Carolinas and Florida. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system.