NC Appeals Court to hear NC WARN's challenge to Duke-Progress merger

jmurawski@newsobserver.comNovember 5, 2013 

— Eleven months after state officials signed off on the utility merger between Duke Energy and Progress Energy, the merits of the $32 billion deal will be revisited Wednesday before the N.C. Court of Appeals.

NC WARN, a Durham advocacy organization, is continuing its opposition to the merger that turned Duke Energy into the nation’s largest electric utility company, even though at this point it’s inconceivable that the deal could be unwound.

Wednesday’s arguments in Raleigh, expected to take about an hour, will be the first of two merger challenges that NC WARN has taken to the appeals court. The other case, several months behind in the queue, has not been scheduled.

In both legal challenges, NC WARN alleges that the N.C. Utilities Commission, which approved the merger last year, ignored the potential harm the merger would do to local economies and to low-income people. NC WARN has a history of taking on the state’s giant utility companies over such issues as nuclear power and renewable energy.

NC WARN Director Jim Warren acknowledged the merger will not be reversed, but he still holds out hope that the court will direct the Utilities Commission to impose additional terms and conditions on Duke. One possibility NC WARN has advocated: forcing Duke to contribute $270 million, over a decade, to low-income home weatherization efforts.

“It’s certainly not likely that it is overturned but modified overall to where the customers are better off,” Warren said.

The merger between Charlotte’s Duke and Raleigh’s Progress attracted 37 intervenors – environmental groups, town governments, rural electric cooperatives and others. Most of these groups negotiated promises with Duke and Progress, agreeing not to fight the companies, but two did not yield: NC WARN and the South Carolina city of Orangeburg.

The two merger opponents will face off against lawyers from Duke as well as the Public Staff, the state’s consumer advocacy agency in utility proceedings. The Public Staff is defending the merger because the agency negotiated a number of concessions from Duke and Progress as part of a settlement.

Among the concessions, Duke agreed not to charge its customers the several hundred million dollars it would pay out in severance payments to the 1,860 employees that would leave the company through early retirements or layoffs.

Duke and the Public Staff dismiss NC WARN’s challenge as misguided.

“We’ve got a million pages of evidence, and NC WARN’s case is rather weak,” said Gisele Rankin, an attorney with the Public Staff.

Duke says the merger will deliver at least $650 million in fuel savings over 6.5 years for customers, plus additional savings from staff reductions and combined operations.

The company has promised $16.5 million in charitable and community support, $15 million for workforce development and low-income assistance, and $2 million to N.C. GreenPower, a Raleigh nonprofit that promotes renewable resources.

Duke also says the merger will result in a stronger balance sheet, better risk profile, greater diversification, stronger credit rating and lower borrowing costs.

The company says it’s all spelled out in the Utilities Commission’s order approving the merger.

“While NC WARN is free to disagree with the Commission’s unanimous decision, mere disagreement standing alone is an insufficient basis on which it may seek to overturn this merger,” Duke said it court papers. “NC WARN ignores the Order and instead submits a litany of complaints – a litany that, when set against the record, is simply not true.”

Murawski: 919-829-8932

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