RALEIGH, N.C. (AP) — Duke Energy and Progress Energy said Monday they’ll need only about two weeks to address concerns from federal regulators that their merger will too heavily concentrate the electric power market in the Carolinas.
The two North Carolina-based utilities said they won’t need the 60 days the Federal Energy Regulatory Commission gave the companies to come up with solutions to the threat of diminished competition in North Carolina and South Carolina. Federal regulators said remedies could include selling off power plants, building new transmission lines, or giving up control of their transmission system to a regional operator.
Opponents of the combination would have 30 days to respond to whatever Duke Energy and Progress Energy propose. Once interested parties had the opportunity for comments, regulators would decide whether the steps proposed by Charlotte-based Duke and Raleigh-based Progress were sufficient, the FERC order issued late Friday said.
The companies said Monday they were still working toward closing the merger by year’s end, a target that is less than three months away.
“I have to assume that in their heart of hearts they had to presume there were some things they would have to do” to satisfy regulators, said Phil Adams, a bond analyst at the corporate bond research firm Gimme Credit. “But it’s pretty late in the game.”
Federal regulators said they tentatively approved Duke Energy’s buyout of Progress Energy, but said changes were required under the threat that the combination “will increase already excessive levels of market concentration” in the Carolinas, the FERC order said.
A combined company would have 7.1 million power consumers in the Carolinas, Florida, Kentucky, Indiana and Ohio. It would become the country’s largest utility company by number of customers, retail revenue and generating capacity, according to Edison Electric Institute, the country’s main electric utility trade group.
FERC’s order is the first major hurdle to a deal that had appeared to be on track to close on the timetable the two utilities wanted.
Shareholders of both companies in August approved the buyout valued at $13.7 billion when it was announced in January.
The deal also requires approval from state regulators and other federal regulatory agencies. State regulators could impose conditions on the companies in exchange for approval, which could change the expected financial advantages and push the companies to reconsider the deal.
The North Carolina Utilities Commission held hearings on the buyout nearly two weeks ago, but the agency’s consumer advocate unit agreed to allow the merger as long as the companies passed on to customers $650 million of their projected savings. The commission could require other conditions before allowing the deal.
The state commission could hold new hearings, but its decision on the merger will wait until after the companies satisfy FERC to allow a look at the new details of the proposed deal, chairman Edward Finley Jr. said Monday.
“We’ll have to see what if anything the companies do in response to that, what efforts they make to comply with the requirements that FERC imposes,” Finley said. “There’s a different context.”
South Carolina’s Public Service Commission has scheduled hearings for Oct. 26. Kentucky regulators approved the deal with conditions, including that merger costs can’t be passed on to Kentucky customers. No merger-specific approvals are required by regulators in Indiana, Ohio or Florida, the companies said.
Emery Dalesio can be reached at http://twitter.com/emerydalesio
Copyright 2011 The Associated Press.