CEO: Duke/Progress close to settlement with North Carolina commission staff

Duke Energy (NYSE:DUK) and Progress Energy (NYSE:PGN) have had “constructive” discussions with the North Carolina Public Utilities Commission staff regarding their proposed merger, and are close to reaching a settlement with them, said Jim Rogers, Duke Energy’s chairman, president and CEO.

“These discussions have centered on how the costs for the proposed FERC mitigation plan will be handled for ratemaking purposes, as well as some clarifications, including timing on the $650m guarantee of fuel and joint dispatch savings,” Rogers said during the company’s 1Q12 earnings conference call on May 4.

Discussions with the staff also have focused on finding the appropriate treatment for the $110m investment in transmission and the sale of electricity.

Rogers reiterated that the companies’ recently revised merger mitigation plan, filed March 26, will address FERC’s market competition concerns. In the event that FERC requires modifications to the proposed mitigation plan, the companies are building into their settlement agreement with North Carolina staff a provision that will allow them to reopen the agreement and make any adjustments appropriate to address FERC’s actions, Rogers said.

Duke Energy and Progress Energy have requested that FERC issue orders approving the mitigation plan, joint dispatch agreement, and joint OATT no later than June 8, for a July 1 merger close. After satisfactory FERC approval, the companies will continue to seek final merger-related approvals from North Carolina and South Carolina state regulators, he said.

“We’re close to reaching agreement with the staff” in North Carolina, though the companies are not close to reaching agreement with other parties in North Carolina, Rogers said.

The plan filed March 26 proposes permanent mitigation with seven transmission projects, estimated to cost approximately $110m, as well as a two-to-three-year interim mitigation plan with must-deliver, must-take power purchase agreements that will be in place from the date the merger closes until the transmission projects are operational. The interim plan is expected to cost between $40m and $50m.

The Greenville-Kinston Dupont line would be the only newly constructed line in the companies’ proposed transmission package.

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.