Progress Energy and Duke Energy this afternoon made their third -- and most expensive -- merger proposal in a bid to win approval from regulators in Raleigh and in Washington.
The two power companies proposed building up to $150 million in transmission lines, including upgrades in the Triangle, in order to expand competition in the Carolinas between wholesale electricity producers. The proposal is intended to address concerns at the Federal Energy Regulatory Commission in Washington that the merged power company would manipulate market prices of wholesale electricity in the region.
The cost and extent of the concessions will almost certainly require North Carolina regulators to reopen merger proceedings in this state and potentially hold another round of hearings. The extra proceedings will prolong regulatory merger reviews into the summer as regulators and company executives negotiate who will pay for the transmission upgrades.
Duke CEO Jim Rogers said in a statement that the transmission line proposal strikes a balance at preserving the merger's financial benefits for customers and shareholders.
N.C. regulators will insist that the cost of the transmission lines and related expenses be fully borne by shareholders.
Raleigh-based Progress and Charlotte-based Duke had hoped to have their $26 billion merger approved by last December and are well along in their strategy to eliminate 1,860 jobs as they move to consolidate their corporate headquarters in Charlotte. The companies are proposing to form into the nation's largest electric utility, with 7.1 million customers in six states.
Duke and Progress plan to put in 84 miles of new transmission line -- either additional cables or replacement cables. During the three years it takes to build the upgrade transmission lines, the companies would sell up to 800 megawatts of electricity to wholesale customers, such as other electric utilities, rural electric cooperatives or municipal power agencies.