Progress Energy and Duke Energy this afternoon vowed to press ahead with their corporate merger, despite two previous rejections from federal regulators.
The two North Carolina electric utilities plan to file a revised proposal to address federal monopoly concerns, adding that the earliest possible date the $26 billion deal could be completed would be in March. Some Wall Street analysts are projecting the merger will take six more months to complete.
Charlotte-based Duke and Raleigh-based Progress announced 11 months ago they plan to form the nation's largest electric utility, with 7.1 million customers in six states. The Federal Energy Regulatory Commission said twice, most recently yesterday, that the merger would allow the two companies to manipulate market prices of electricity in North Carolina.
The federal commission wants the companies to give up control of power plants or transmission lines, either by selling or leasing those assets.
In a joint statement issued this afternoon, the companies said they will file a revised merger plan as soon as they review the federal commission's most recent order.
"The FERC ruling does not call into question the benefits of the merger," the joint statement said. "The combination of Duke Energy and Progress Energy will provide clear benefits for our customers, including overall lower corporate costs and $650 million in guaranteed benefits to customers in the Carolinas from the joint dispatch of the utilities' generation fleets and from power plant fuel savings."
The FERC issued its latest rejection of merger revisions last night after close of market trading so as not to to trigger economic disruptions.
As a result of the delays, employees at both companies are in career limbo. Duke and Progress plan to eliminate 1,860 positions, and several hundred employees have left the companies already this year rather than to face uncertainty or layoffs. More than 1,000 have opted for voluntary buyouts, but they will not start leaving until the merger is completed.
The merger also awaits approval from regulators in North Carolina and South Carolina. But they won't rule until the FERC issues a final approval and sets the terms of the merger. Substantial revisions to the merger could trigger new rounds of public hearings before the respective state utilities commissions, adding months to the merger timeline.
Executives at both companies, who had hoped to have the merger completed by now, were stunned by the FERC's rejection of their most recent merger plan. A merger revision is technically called a "mitigation."
Their shock was acknowledged by at least one FERC commissioner, who issued her own statement today to comment on the FERC's order. The tone of the commissioner's personal statement suggests that the federal regulators are not hostile to the merger in principle.
"The decision to reject the proposed mitigation plan was not taken lightly," wrote Commissioner Cheryl LaFleur. "I recognize that our December 14th orders, like the merger proposal itself, are important to the companies, their customers, other electric customers in the region, and state regulators and officials."