Court upholds Duke-Progress merger approval

03/04/2014 12:49 PM

03/04/2014 4:44 PM

The N.C. Court of Appeals has upheld state approval of Duke Energy’s 2012 merger with Progress Energy, which created the nation’s largest utility.

The court ruled Tuesday on challenges to the $32 billion deal that were filed by the city of Orangeburg, S.C., and the Durham advocacy group NC WARN. The groups appealed approval of the merger by the N.C. Utilities Commission.

NC WARN argued in its appeal that the commission was not justified in approving the merger. The group said Duke and Progress didn’t set out the risks of the merger, such as the costs of upgrading Progress’ nuclear fleet, and said customers would never see promised savings from it.

The court ruled against those arguments.

“Throughout the merger order, the commission weighed and balanced the benefits of the merger with the known and potential costs and risks of the merger,” it said in a unanimous opinion.

Duke said it was pleased with the ruling. “The merger has yielded significant savings to customers since it closed in July 2012,” it said in a statement.

CEO Lynn Good told financial analysts in February that Duke has saved $190 million, above previous estimates, since the merger in fuel and in joint operation of the companies’ power plant fleet. She said Duke is on pace to save about 9 percent in nonfuel operating savings, compared with the original target of 5 percent to 7 percent.

NC WARN said it would probably challenge the ruling before the N.C. Supreme Court.

“NC WARN believes the courts should force the Commission to reopen hearings and require analysis of the actual impacts the merger has on customers – not just Duke’s purported but unsupported claims that the merger would benefit customers,” Executive Director Jim Warren said, in a statement.

Orangeburg is a wholesale buyer of electricity and a potential customer of Duke. It challenged commission rulings that the city said discriminate against buyers that are not historic customers of Duke, claiming the rulings hurt its ability to compete for low-cost power.

The appeals court dismissed Orangeburg’s appeal, noting that the city signed a 10-year power purchase agreement with S.C. Electric & Gas in 2011 and so isn’t affected by those rulings.

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