Progress Energy customers continue cutting back on electricity use in the aftermath of the recession as unemployment remains high and public confidence low.
With the recession officially over for more than a year, executives at the Raleigh-based electric utility had expected customers in Florida, North Carolina and South Carolina to start falling back into their old energy habits by now.
"There's no question residential and commercial (electricity sales) in particular are not where we had projected them to be," chief financial officer Mark Mulhern told analysts Thursday.
The company blames the ailing economy for sluggish electricity sales as customers dial back thermostats, buy energy-efficient appliances and budget conservatively. The unexpected duration of the trend suggests that many in the nation are shedding a freewheeling mindset that had been ingrained in the bygone era of cheap and abundant energy.
The customer data for the first quarter released by Progress on Thursday mirrors the behavior of Duke Energy's customer base in the first three months of the year. This week Charlotte-based Duke reported declining electricity use among households and businesses, but a surprising uptick in power use by larger industries.
Merger in the works
Progress, with 3.1 million customers in Florida and the Carolinas, is in the midst of a merger with Duke, its cross-state neighbor. The corporate union will form the nation's largest electric utility with 7.1 million customers in six states, to be based in Charlotte and headed by Progress CEO Bill Johnson.
Mulhern said shareholders of both companies would likely vote on the merger in June or July. A date has not been set, but officials expect the merger to be completed by the end of this year.
Progress' electricity sales took a major hit in the first quarter. But the dramatic decline was not alarming because it was mostly caused by a mild winter this year, after frigid weather last year that drove up heating demand.
Progress reported per share earnings of 69 cents, an 8 percent decline. Electricity sales fell by 14.5 percent, to less than $2.2 billion.
"We had a strong quarter this year when you consider the return of normal weather," Johnson told analysts.
But even when adjusted for weather, customer use continues declining. Retail sales were down 0.2 percent in North Carolina and South Carolina and 0.8 percent in Florida during the first quarter.
What's more, Florida has seen four consecutive quarters of customer growth. In the first quarter Progress added about 8,000 customers in the Sunshine State.
Meanwhile, customer gains in the Carolinas continue to slip.
During the same three-month period, Progress added 7,000 customers in the Carolinas, the first time since the recession that the company has gained fewer customers in those states than in Florida.
"Although Florida continues to show positive upward trends for the last four quarters, the Carolinas are still lagging historical trends in customers growth," Mulhern said.
The company employs about 10,700, including about 5,600 in North Carolina and 3,000 in Wake County.
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