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Duke-Progress merger critics call for broad conditions to any deal

Tuesday, September 20, 2011
(Updated 3:07 pm)

RALEIGH (AP) — Critics of a proposed Duke Energy-Progress Energy merger asked state regulators Tuesday to impose a broad list of conditions that if required would force revolutionary changes to the business of any merger of Duke Energy and Progress Energy into the country's largest electric utility.

The North Carolina Utilities Commission's hearings this week are examining a deal that would restructure the state's electricity market by allowing a single dominant utility. Charlotte-based Duke Energy and Raleigh-based Progress Energy want to combine into one company with more than 7 million customers in the Carolinas, Florida, Kentucky, Indiana and Ohio.

Merger critics told the commission the resulting giant corporation would wield so much political influence it would shape laws so that it could drag its feet in adopting wind and solar power generation in favor of its current portfolio of coal, natural gas and nuclear power plants.

"That overwhelming political power will almost certainly be used to ram down customers' throats a business plan that would make the most money for them but lead to massive rate increases for us," said Beth Henry of Charlotte, one of more than two dozen people speaking as the hearings opened. "Duke and Progress make the most money by building the most expensive power plants."

Duke Energy's financial backing was crucial in attracting next year's Democratic National Convention to its headquarters hometown of Charlotte.

The companies agree that higher electricity rates are ahead. The two companies said the merger was needed because the coming years will require such massive spending on power plants that it outstrips the companies' abilities to support on their own.

"The utility industry now faces an extended period of extremely large investments in infrastructure replacement, modernization and expansion. In order to meet future demand for electricity, both companies will have to invest in new generation that will be more costly than the companies' current embedded costs," Duke CEO Jim Rogers and Progress CEO Bill Johnson said in prepared testimony. "Much of this generation is simply replacing aging plants that are no longer cost effective to operate."

Allowing the merger will distribute the costs across a greater number of customers, the statement said. Progress is already investing nearly $2 billion in new natural-gas generating plants, while Duke is pumping $3 billion into coal and natural-gas generation, the companies said.

The companies announced the merger in January and shareholders approved it last month. The deal also needs to be approved by federal regulators.

North Carolina law requires the Utilities Commission to make sure the public's benefits outweigh the offsetting costs and risks before approving a merger. The commission can impose conditions, including limits on electricity rates, pollution cuts, and promises to contribute to social welfare programs.

Critics asked the commission to withhold approval of the merger except with a long list of conditions.

They include requiring the combined company to generate more energy from solar and wind power, more protection for the poor against future rate increases, major investment in energy conservation, faster installation of smart-grid technologies, allowing solar-panel owners to sell electricity directly to consumers rather than only to utilities, and unlinking electric company profits from the amount of power sold.

Accompanying Photos

File photo (Associated Press)

Photo Caption: Duke Energy corporate headquarters in a Charlotte.

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