Duke Energy and Progress Energy cleared another hurdle in their $26 billion corporate merger this morning with the announcement that the two companies reached a settlement with South Carolina's consumer advocate.
The agreement with the S.C. Office of Regulatory Staff, which is very similar to terms signed in North Carolina last week with the Office of the Public Staff, means that the consumer advocate agencies in both states will not oppose the merger when it comes up for review before the utilities commissions in each state.
The consumer advocates say the settlements will help keep down future rate increases, which are inevitable as both companies enter a phase of mutli-billion dollar power plant construction and transmission upgrades.
In both cases, Charlotte-based Duke and Raleigh-based Progress have promised to pass on to their customers $650 million in fuel and related savings over five years, whether they achieve those savings or not.
But the consumer advocates were unable to win a key concession: They were unable to persuade the power companies to agree to pay for the cost of the severance payments they will dole out to hundreds of employees who lose their jobs as a result of the merger and consolidation.
N.C. Public Staff director Robert Gruber said that his agency will fight any request to pass on severance costs to customers. Gruber believes the severance costs, which could total several hundred million dollars, be paid by the utilities' shareholders.
Duke and Progress said it January they planned to combine operations and create the nation's largest electric utility with 7.1 million customers in six states.
Duke has 600,000 electricity customers in South Carolina and 1.8 million in North Carolina. Progress has 175,000 customers in South Carolina and 1.4 million in North Carolina.
As part of their settlements, the electric utilities also agreed to maintain current levels of philanthropic giving for four years and contribute to public benefit funds low-income energy assistance and workforce development.