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FERC clears Duke-Progress $17B union with conditions

by William McConnell in Washington | Published June 11, 2012 at 12:22 PM

The $16.5 billion merger of Duke Energy Corp. and Progress Energy Inc. gained Federal Energy Regulatory Commission approval late Friday, June 8, ending a yearlong review by the federal government.

FERC approved, subject to a few additional conditions, a revised mitigation agreement the companies submitted in March.

The companies have 15 days to accept the additional terms. If they accept the terms, attention turns to North and South Carolina regulators, who still must approve the merger.

FERC's additional demands include requiring regular status updates on transmission upgrades the companies have promised to carry out. FERC also said the upgrades must be completed by June 2015 and the costs may not be passed to wholesale customers.

The companies said over the weekend they are still reviewing FERC's order. "We are pleased that FERC has issued all merger-related orders within the time frame requested by the companies," Duke and Progress said in a statement issued to the Associated Press Saturday.

The companies have said they expect to close the deal by July 1 and asked FERC to rule on the deal by June 8. The merger has a termination date of July 8.

FERC conditionally approved the merger last fall, contingent upon approving a plan for mitigating increases in market power that the merger would create in the Carolinas.

The original mitigation plan was rejected Dec. 14 when FERC noted that the plan failed to transfer control over divested generation from the merged company, restricted the pool of eligible buyers and created a product that potential buyers would be unlikely to purchase.

The revised wholesale market power mitigation plan provides for construction of up to eight transmission projects in the companies' service territories and interim power sales while those upgrades are in the works.

Duke of Charlotte, N.C., and Progress of Raleigh, N.C., said the projects will expand their capability to import wholesale power into the Carolinas.

The construction would cost an estimated $75 million to $150 million. While the construction is under way, the companies would sell capacity and energy during the key summer and winter months to new market participants.

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Tags: Duke Energy Corp. | Federal Energy Regulatory Commission | FERC | Progress Energy Inc.

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FERC clears Duke-Progress $17B union with conditions

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