Duke Energy-Progress Energy merger filings concede additional costs

photo JEN WILSON

Additional federal conditions will mean more compliance costs in the Duke-Progress merger.

North Carolina?s utility-customer advocate says conditions federal regulators have placed on Duke Energy?s planned $26 billion purchase of Progress Energy will increase monitoring costs to the merged company and could lead to additional losses on power sales to wholesale power marketers.

In a filing Wednesday with state regulators, the Public Staff of the N.C. Utilities Commission recommends that commission add new safeguards into a proposed order approving the merger to protect N.C. customers from having to pay any of those costs.

?The expansion of the independent monitor?s duties ... are sufficient to cause its fees to be a significant expense,? attorney Gisele Rankin writes for the public staff. ?It is appropriate, therefore, for an additional condition to be imposed to provide explicitly that those costs cannot be recovered from (Duke?s) and (Progress?) retail ratepayers.?

Rankin also proposes that state regulators make specific provisions to protect N.C. customers from paying other expenses that may be increased by the federal conditions.

Companies agree

The power companies also made a filing with the commission Wednesday. They acknowledged that new conditions imposed by the Federal Energy Regulatory Commission will increase their costs. Sasha Weintraub, vice president of fuels and power optimization at Progress, testifies that the two companies accept the additional safeguards proposed by the public staff.

FERC would not agree to approve the merger until Duke and Progress proposed specific measures to protect competition in wholesale power markets in the Carolinas. After months of filings and rulings back and forth, FERC accepted a plan for construction of new transmission lines and equipment and dedicated sales to wholesale power marketers to ensure the merged company would not dominate those markets.

John Downey covers the energy industry and public companies for the Charlotte Business Journal.

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