CHARLOTTE, N.C. and RALEIGH, N.C., Feb. 22, 2012 /PRNewswire/ — Duke Energy and Progress Energy today filed a second wholesale market power mitigation plan with the North Carolina Utilities Commission (NCUC) as part of their proposed merger.
“The intent of this merger is to strike the right balance between the customer and shareholder benefits, and that continues to be our goal,” said Jim Rogers, chairman, president and CEO of Duke Energy. “We must also balance the expectations of our state commissions to keep electricity costs low, and the Federal Energy Regulatory Commission’s (FERC) concerns about market power in the Carolinas. We believe we have done that with this plan.”
“We believe that this is a solid plan that addresses the FERC’s concerns about market power while preserving benefits to our customers and shareholders,” said Bill Johnson, chairman, president and CEO of Progress Energy.
The NCUC has up to 30 days to review the mitigation plan before it is filed with the FERC, which required mitigation measures to offset market power concerns in the Carolinas resulting from the proposed merger.
The revised mitigation plan provides for permanent transmission upgrades and interim power sales:
- The permanent solution consists of constructing up to eight transmission projects in the Duke Energy and Progress Energy service territories.
These projects will expand the capability to import wholesale power into the Carolinas. The construction would begin after the merger closes and take approximately three years to complete. The preliminary cost estimate range of these projects is approximately $75 million to $150 million.
- While these projects are being built, the companies propose a three-year plan to sell capacity and firm energy during the summer (June – August) and winter (December – February) to new market participants.
Together, the companies would sell 800 megawatts during summer off-peak hours, 475 megawatts during summer peak hours, 225 megawatts during winter off-peak hours, and 25 megawatts during winter peak hours. The companies expect to secure contracts with potential buyers prior to filing the mitigation plan with FERC.
The companies will be working closely with the North Carolina Public Staff and Office of Regulatory Staff in South Carolina over the next few months on appropriate state ratemaking treatment associated with measures in the revised mitigation plan and other merger-related issues.
Final agreement to the proposed mitigation efforts will be subject to resolution of the state ratemaking issues.
Later this quarter, the companies expect to file the mitigation plan with the FERC.
In addition to the market power mitigation plan, the FERC must also approve the merger’s Open Access Transmission Tariff and Joint Dispatch Agreement in the Carolinas. The NCUC must also approve the merger and the Joint Dispatch Agreement. The Public Service Commission of South Carolina must approve the Joint Dispatch Agreement in the Carolinas.
To date, the companies have received merger-related approvals from, or met the requirements of: the U.S. Nuclear Regulatory Commission; Kentucky Public Service Commission; and the shareholders of both companies.
The companies have also met their obligations with the U.S. Department of Justice under the Hart-Scott-Rodino Act (HSR), but will need to make a new HSR filing prior to the April 26, 2012, expiration date of the initial HSR filing.