Duke Energy and Progress Energy said Monday they expect to meet the conditions set by federal regulators in approving their merger, keeping the $26 billion deal on track to close by July 1.
The Federal Energy Regulatory Commission approved the merger late Friday, but with 15 modifications to the utilities plan. The changes are related to company commitments, prompted earlier by FERC, to boost competition for wholesale power in the Carolinas.
After a weekend of reviewing the order, Duke and Progress said they have accelerated their action to integrate the two companies. They expect to make a filing saying they will agree to the FERC terms within 15 days.
Its certainly our intent to meet the conditions, said Duke spokesman Tom Williams. We think theyre all doable.
Consumer-advocacy agencies in both Carolinas think so, too. The utilities have already reached merger agreements with the advocates, whose support will be key in winning state approval.
We think some tweaking will be needed, but nothing major, said Gisele Rankin, an attorney with North Carolinas Public Staff, which represents utility customers. I think (the state utilities commission) will do everything they can to get an (approval) order by July 1.
Rankin has some concern about wording removed by FERC from an agreement that allows Duke and Progress to jointly operate their power plants. Without the wording, she said, FERC could be interpreted to control how the costs of power plants are allocated. That could affect retail rates that are set at the state level.
That issue should be resolved in negotiations with Duke and Progress, by asserting state control over retail rates, within a couple of days, Rankin said.
The N.C. Utilities Commission is expected to soon schedule deadlines for responses, comments and requests for hearings before the merger vote. The commission may ask formal parties to the merger whether the FERC conditions represent material changes that should prompt a hearing.
South Carolinas Office of Regulatory Staff hasnt seen anything that jumps out at us as adverse, said executive director Dukes Scott.
The S.C. Public Service Commission, as its utilities commission is known, has the merger on its Wednesday meeting agenda. The commission has authority only to approve the utilities joint-operating agreement, but is poised to move quickly.
Duke identified a number of issues in the FERC order that need to be resolved.
Among them are rate-making jurisdiction issues with state and federal authorities, especially regarding the $110 million cost of transmission upgrades Duke and Progress have agreed to make.
The utilities have agreed not to recover the money from North Carolina retail customers for at least five years, and FERC wants to extend that commitment to transmission and wholesale customers.
They also have to reach binding agreements within 15 days with two other utilities, American Electric Power and Dominion Virginia Power, to build the transmission projects.
Utility analysts at Bernstein Research said the FERC conditions do not, in our view, impose an unreasonable burden on Progress or Duke. Bernstein noted that draft agreements with AEP and Dominion are already in place.
We think we can close the deal by July 1, said Williams, the Duke spokesman.
The companies have set a July 8 deadline by which to close the merger, creating the nations largest utility. Either side can walk away after that.
Duke and Progress expect the merger to cut 1,860 jobs; 1,153 have applied for buyouts. Duke employs 5,681 in Charlotte, a workforce thats expected to change little as the city becomes headquarters for the combined companies.