Critics of a proposed merger between Duke Energy and Progress Energy asked state regulators Tuesday to impose a broad list of business conditions to be applied if the proposed deal to create the nation's largest electric company succeeds.
If mandated, the conditions are being sought would force revolutionary changes in the way the two utilities conduct business should they combine for a total customer base of 7 million power consumers in the Carolinas, Florida, Kentucky, Indiana and Ohio.
The North Carolina Utilities Commission's opened hearings this week to scrutinize the proposal to restructure the state's electricity market by allowing one single dominant utility. Charlotte-based Duke Energy and Raleigh-based Progress Energy want to combine into one company despite criticism that a giant corporation would result that would yield too much influence.
Critics of any merger told the commission that such a powerful corporation would wield so much political clout that 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 at the hearings.
Critics asked the commission to withhold approval of any merger that doesn't include the 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.
Increasing use of renewable energy would raise costs and conflict with another goal of merger critics to protect the poor from higher rates, Progress Energy CEO Bill Johnson said
"Those things go in opposite directions," Johnson said.
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," the companies 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.
Johnson and Duke Energy CEO Jim Rogers told commissioners the deal also would result in fuel and labor savings that would keep rates lower than they would be otherwise.
The merger was valued at $13.7 billion when it was announced in January. Shareholders of both companies 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.
Hearing testimony later this week is expected to focus on the merger's impact on industrial customers, the environment, and layoffs and other economic impacts. The companies said Friday the merger will cost about 2,000 workers their jobs.
___
Please enable JavaScript to view this content.