The proposed merger between Duke Energy and Progress Energy just got interesting.
State regulators who will begin public hearings on the merger tomorrow morning said today they will consider arguments about the broader economic impacts of the merger, including hundreds of job losses.
The state's two biggest electric companies had argued such issues were out of bounds in a merger proceeding and should not be allowed. The utilities are planning to combine into the nation's biggest electric utility, with 7.1 million customers in six states.
Critics said it's essential to consider the consequences of the 2,000 job cuts the companies plan as part of their consolidation. North Carolina's jobless rate is above the national average and the economy is still sputtering more than a year after the recession ended.
"The commission is taking a broad perspective in assessing the costs and benefits of the proposed merger," said Progress spokesman Mike Hughes. "That is certainly the commissions prerogative."
The merger hearings are set to get underway tomorrow morning in Raleigh. The proceeding will take place just days after the Employment Security Commission said last week the state's jobless rate in August was 10.4 percent. That's the fourth consecutive monthly increase in the state's jobless rate and the highest unemployment level in more than a year.
State law requires the N.C. Utilities Commission to review utility mergers by verifying that the public benefits outweigh the costs and risks.
Charlotte-based Duke and Raleigh-based Progress urged the commissioners to restrict the scope of the hearings to consider only the merger's impact on customer rates.
A number of nonprofit advocacy organizations contend the merger's sweeping job cuts will require substantial compensation to offset the damage to the state's depressed economy. The critics are suggesting an increase in green energy and conservation programs, and one organization wants the merged utility to contribute $270 million to low-income housing assistance programs for weatherization and other services.
The companies have said the merger will benefit customers to the effect of $650 million over five years, the net savings from combined fuel and related operations.
But the companies also plan to spend hundreds of millions of dollars on severance payments to employees who are laid off and those who take voluntary buyouts. Duke and Progress plan to ask the commission to make customers pay for those severance payments in their rates.