NC Appeals Court hears arguments from critics of Duke-Progress merger

jmurawski@newsobserver.comNovember 6, 2013 

— When Duke Energy and Progress Energy proposed their merger in 2011, neighboring utilities had long been circling North Carolina, intent on cherry-picking one or both of the state’s power companies.

The Duke-Progress merger, finalized in December 2012, not only created the nation’s largest electric utility, but also saved two homegrown companies from an out-of-state takeover.

That’s the narrowly-averted scenario Duke lawyer Dwight Allen presented Wednesday to the N.C. Court of Appeals, which heard arguments in Raleigh on the merits of the $32 billion deal.

Allen said North Carolina residents are much better off with the power company remaining in-state and urged the appeals court not to second-guess the pros and cons of the merger 11 months after it was approved.

“This thing has been going on a long time,” Allen told the jurists. “Uncertainty is a terrible thing for employees, for shareholders and for ratepayers.”

Two opponents are challenging the validity of the merger in appellate court; both had opposed the utility deal before the N.C. Utilities Commission, which assented to Charlotte-based Duke buying Raleigh-based Progress.

One opponent, the City of Orangeburg, wants the merger to allow for more favorable terms on which the South Carolina municipality can buy wholesale power from Duke when its current contract expires.

NC WARN, a Durham advocacy group, alleges the merger short-shifted low-income residents. The group has suggested that, as a condition of the merger, Duke contribute $270 million over 10 years to low-income housing weatherization programs.

“You have to look at all the costs to the ratepayers and citizens of North Carolina,” NC WARN’s lawyer, John Runkle, told the judges. “You can’t just look at the benefits to the utilities and their shareholders.”

NC WARN has lodged a second merger challenge before the N.C. Appeals Court, but that case has not been scheduled for oral arguments.

The pair of challengers are the only two remaining holdouts of 37 organizations that got involved in the merger proceedings and negotiated promises from the companies in exchange for their support.

The appeals court is expected to rule in the coming months on the case argued Wednesday.

During the 90-minute proceeding, the trio of jurists expressed occasional – but muted – skepticism at NC WARN’s arguments.

“You’re asking us to reverse the commission and impose a $270 million remedy, but do we have that authority?” asked Judge J. Douglas McCullough. “What you’re arguing about is just over a number.”

Allen said the Utilities Commission approved the merger with a number of conditions to protect the public, including stipulations for Duke to make contributions to charities, workforce development and other programs.

Duke has touted a number of public benefits, including a guaranteed savings of $650 million on fuel costs over 6 1/2 years. Duke also agreed not to charge customers several hundred million dollars in severance payments to the 1,860 Progress and Duke employees who took buyouts or got laid off.

Murawski: 919-829-8932

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