Feds: competition concerns in Duke-Progress merger
Monday, October 3, 2011
RALEIGH, N.C. (AP) — Federal energy regulators are giving Duke Energy and Progress Energy 60 days to describe how they would remedy anticompetitive effects of their merger in their North Carolina and South Carolina home markets if they’re allowed to form the country’s largest electric company.
The Federal Energy Regulatory Commission issued an order late Friday that conditionally approved Charlotte-based Duke Energy’s purchase of Raleigh-based Progress Energy, but it told the companies to propose solutions to protect competition in the Carolinas. The agency said remedies could include selling off power plants, building new transmission lines, or joining a regional transmission authority.
Duke Energy spokesman Tom Williams said Sunday that the company was evaluating the order and expected to have more information next week.
The FERC order was first reported Sunday by the News and Observer of Raleigh (http://bit.ly/oewmo9).
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.
The deal will cost about 2,000 workers their jobs, the companies said last month.
Shareholders of both companies in August approved the buyout valued at $13.7 billion when it was announced in January.
Regulators also said critics of the deal would get 30 days to comment on the utilities’ proposals — a timeline that could delay completion of the buyout beyond the end-of-the-year target the companies sought.
Once interested parties had the opportunity for comments, regulators would decide whether the steps proposed by Duke and Progress were sufficient, the FERC order said.
“We are still working toward closing the merger by year’s end,” Williams said in an email. “We are looking at an array of options to address the FERC’s concerns, and will file detailed mitigation measures in the coming weeks to satisfy the FERC’s concerns about market power in the Carolinas.”
The FERC considered protests against the merger by city officials in New Bern, N.C.; Orangeburg, S.C.; and Tallahassee, Fla., but decided not to add conditions related to Progress Energy’s Florida service area.
“We agree with City of New Bern that the proposed transaction will increase already excessive levels of market concentration” in the Carolinas, the FERC order said.
In addition to FERC, the deal requires approval from North Carolina regulators, which held hearings nearly two weeks ago. The North Carolina Utilities Commission is required by state law to make sure the public’s benefits from a merger outweigh the offsetting costs and risks. The commission can impose conditions, including limits on electricity rates, pollution cuts, and promises to contribute to social welfare programs.
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