State regulators expect to rule on Progress-Duke deal quickly

State says decision on Progress-Duke near

jmurawski@newsobserver.com June 25, 2012 

The state’s lead utility regulator suggested Monday that a much-anticipated N.C. Utilities Commission ruling on the proposed merger between Progress Energy and Duke Energy could come any day.

At the conclusion of a brief public hearing in Raleigh, Commission Chairman Edward Finley Jr. said participants in the merger proceedings are welcome to make more filings for the commissioners to consider. But Finley warned that the commission could issue its merger decision so fast that there won’t be time to make more filings.

“There’s no guarantee the order will wait until the filings are received,” Finley said.

Finley’s comments capped a 56-minute hearing held to allow N.C. Waste Awareness and Reduction Network to raise questions about the $26 billion utility deal that would form the nation’s largest electric utility. Finley noted that the Durham group was the only one out of 26 organizations participating in the merger that is still challenging it.

“We hope to rule as expeditiously as we can,” Finley explained after the hearing ended. “We’ve got to vote and we’ve got to look at all the words in the order, and we haven’t gotten there yet.”

Sounding impatient at times, Finley said that N.C. WARN failed to make a case that comprehensive merger hearings should be held. The hearing Monday allowed N.C. WARN to ask limited questions about three filings made since May in a merger that has produced a voluminous paper trail.

The commission hearing room was filled to capacity Monday. N.C. WARN attorney John Runkle cross-examined Progress executive Sasha Weintraub and posed questions to James Hoard, an accounting division head at the Public Staff, the state’s consumer protection agency in utility matters.

The questions were largely technical, going over the content of the filings, and took all of a half hour. The other commissioners didn’t ask any questions. The rest of the hearing was spent going over procedure.

“We were so restricted as to what we could put on,” Runkle said afterward.

Scope of hearing narrow

The Progress-Duke merger was approved earlier this month by the Federal Energy Regulatory Commission, which imposed more than a dozen conditions.

Those new conditions – and their potential effect on electricity customers – were the subject of Monday’s hearing. The N.C. Utilities Commission also permitted questions about recent modifications to the utilities’ settlement with the Public Staff, in which the companies agreed to absorb about $450 million in merger-related costs instead of passing those costs on to customers.

This agreement is not binding on the N.C. commission, but generally Public Staff decisions carry great weight with the commissioners.

N.C. WARN last year asked the N.C. commission to require the merging power companies to contribute $270 million over 10 years to low-income energy conservation programs as a condition of the merger. That request is still pending, as are conditions requested by other parties.

The bulk of the merger-related issues had been previously explored by the N.C. Utilities Commission in three days of hearings held in Raleigh last fall. In denying requests to expand the scope of the hearing, the N.C. Commission said it did not want to waste time rehashing old issues.

N.C. WARN also hoped to make an issue of confidential agreements in which the two power companies have promised numerous organizations that the merger would not harm them financially. The organizations are industrial power users, rural electric cooperatives and municipal power agencies.

Those private agreements can be reviewed by lawyers who sign non-disclosure agreements. N.C. WARN, which hasn’t signed non-disclosure agreements, said the confidential side deals could be at the expense of the poor and the elderly.

Duke spokesman Tom Williams said the private agreements contain sensitive information about power contracts and other business practices.

N.C. WARN has tried to argue that these private agreements should be made public, and has filed a freedom of information request to pry loose the documents. The N.C. Utilities Commission will eventually rule on this matter, Finley said, but not until after it decides on the merger.

“The Commission has carefully reviewed them,” Finley said in reference to the confidential agreements. “As they do not request action on the Commission’s part, nothing in them is binding on the Commission.”

The utilities have disparaged N.C. WARN’s efforts as a fishing expedition and delay tactic, and Finley’s comments suggested he did not disagree.

N.C. Warn: Savings an illusion

The Public Staff reviewed the private agreements last year and used them to structure its own deal with the utilities, Hoard told the Commission. The Public Staff’s deal, saving more than $1 billion for consumers, is publicly filed with the commission.

N.C. WARN’s lawyer contended that those savings are an illusion, because they largely would have been delivered anyway, even if the utilities had not promised them in writing. Those savings include $650 million in power plant efficiencies and fuel savings, and $226 million in severance payments to be made to employees who leave the company through early buyouts or layoffs.

Raleigh-based Progress and Charlotte-based Duke said they need to complete their $26 billion deal by July 8, the date their termination agreement expires and each could walk away without paying hundreds of millions of dollars in penalties.

But the companies had requested a ruling one week before their self-imposed deadline. They would optimally like to get their deal done by July 1, which would require a ruling from the N.C. commission this week.

The merger would create the nation’s largest electric utility by virtually every measure, including total customers, total value and power plant generating capacity.

Murawski: 919-829-8932

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