Duke Energy and Progress Energy have cleared the biggest remaining hurdle to their merger but wont make it official Sunday as planned.
The N.C. Utilities Commission approved the $32 billion deal Friday, closely following terms the utilities and consumer advocates had negotiated.
But South Carolinas utility commission, which has a limited role, has scheduled a Monday meeting on the final approval Duke and Progress need.
The S.C. Public Service Commissions authority is over an agreement between Duke and Progress to jointly operate their fleets of power plants, not the merger itself. The commission has signaled no objections to the agreement, and its unclear why it has not acted.
We hope to close soon after we hear from South Carolina, possibly as soon as Monday afternoon, Duke spokesman Tom Williams said.
The joint operating agreement, which North Carolinas commission approved Friday, is expected to save the utilities nearly $700 million in fuel costs in the first five years after the merger.
Duke and Progress have agreed to pass at least $650 million of those savings to their Carolinas customers over five to six years. That will amount to a little more than $1 a month for most customers.
The North Carolina commissions approval order gives the utilities 30 days to file for a reduction in the fuel portion of customer bills, based on the first years projected fuel savings.
Those savings will partially offset the rate increases Duke is expected to seek this summer and Progress in the fall. Higher rates could be further reduced by nonfuel savings from the merger, which some analysts have estimated at $300 million to $400 million.
The utilities had hoped to officially begin the merger at the start of a new fiscal quarter, Sunday, but their merger agreement gives them until July 8 to close. After that, either could walk away without penalty or try to renegotiate its terms.
In its order unanimously approving the merger Friday, the North Carolina commission concluded that the merger itself wont increase state electric rates and wont make customers bear the mergers costs.
Duke lawyers were reviewing the 182-page order, but it looks like a positive order for the transaction, Williams said.
The union would create the nations largest utility by several measures. Duke and Progress will continue to operate separately in the Carolinas, under one corporate umbrella, for at least a few years.
The new Duke Energy will serve 7.1 million customers in the Carolinas, the Midwest and Florida. Its headquarters will remain in Charlotte but under the day-to-day command of former Progress CEO Bill Johnson.
The merger will also eliminate 1,860 jobs, mostly in the Carolinas, about 6 percent of the combined workforce. Company officials expect the number of Duke jobs in Mecklenburg County, now 5,681, to stay about the same as former Progress employees transfer to Charlotte.
Environmental and clean-energy groups decried the merger Friday, saying it failed to push Duke toward renewable energy. The commission did order Duke and Progress to donate a combined $2 million to renewable energy nonprofit NC GreenPower.
While were glad that the commission supported NC GreenPower, we think the new Duke could do more to spur innovation and create North Carolina jobs through smart, local investments in clean, renewable energy like solar and wind power to offset the job losses from this merger, said a statement from the Sierra Club, Environmental Defense Fund, the S.C. Coastal Conservation League and the Southern Alliance for Clean Energy.
With a few exceptions, the North Carolina approval parallels an earlier settlement agreement between the utilities and the commissions Public Staff, which advocates for consumers.
Under Fridays order, the utilities will donate $15 million toward North Carolina workforce development and low-income energy aid in the first year after the merger.
The order directs Progress, a part of Raleighs downtown for more than a century, to maintain a significant corporate and utility presence there after the merger.
Experts say its usually state utility commissions that make or break mergers. The Duke-Progress union got its stiffest test, instead, from the Federal Energy Regulatory Commission. After rejecting the merger twice, FERC approved the deal June 8.