Duke Energy and Progress Energy File Market Power Mitigation Plan with the Federal Energy Regulatory Commission March 26, 2011
CHARLOTTE AND RALEIGH, NC -
Duke Energy and Progress Energy today filed a revised wholesale market power mitigation plan with the Federal Energy Regulatory Commission (FERC) as part of their proposed merger.
The plan provides more details on the notice of intent to file a mitigation plan submitted to the North Carolina Utilities Commission (NCUC) on Feb. 22.
It requests that the FERC issue orders approving the mitigation plan, the Joint Dispatch Agreement and the Joint Open Access Transmission Tariff within 60 days of the filing, and no later than June 8, 2012. The companies intend to seek final merger-related approvals from the NCUC and the Public Service Commission of South Carolina (PSCSC) prior to the July 8, 2012, merger agreement termination date.
“We believe this plan addresses the FERC’s concerns about market power in the Carolinas,” said Jim Rogers, chairman, president and CEO of Duke Energy. “We have also had constructive discussions about the mitigation plan and other merger-related issues with the North Carolina and South Carolina consumer advocates over the past several weeks, and those discussions will continue while the FERC considers this plan. We continue working to move this process forward, gain the necessary regulatory approvals and complete the transaction.”
“We believe the planned merger continues to offer substantial benefits for our customers, shareholders and communities,” said Bill Johnson, chairman, president and CEO of Progress Energy. "We are focused on securing the remaining approvals necessary to begin to deliver on the promises of this combination."
The NCUC must also approve the merger and the Joint Dispatch Agreement in the Carolinas. The PSCSC must approve the Joint Dispatch Agreement.
The following are key elements of the mitigation plan:
- The FERC filing features a permanent mitigation plan with seven transmission projects, estimated to cost approximately $110 million. The transmission projects significantly increase the power import capabilities into the Progress Energy Carolinas and Duke Energy Carolinas service areas and enhance competitive power supply options in the region.
- The proposal also features a two-to-three-year interim mitigation plan with must-deliver, must-take power purchase agreements signed with Cargill Power Markets, LLC; EDF Trading North America, LLC; and Morgan Stanley Capital Group, Inc. The companies will sell 800 megawatts during summer off-peak hours, 475 megawatts during summer peak hours, 225 megawatts during winter off-peak hours, and 25 megawatts during winter peak hours. The agreements, or similar power purchase agreements, will be in place from the date the merger closes until the transmission projects are operational.
- Potomac Economics will serve as Independent Monitor of the interim power purchase agreements and a component of the permanent mitigation plan.
For planning purposes, the companies are targeting closing the merger on July 1.
To date, the companies have received merger-related approvals from, or met the requirements of the U.S. Nuclear Regulatory Commission, Kentucky Public Service Commission, and the shareholders of both companies.
Additionally, the companies have met their obligations with the U.S. Department of Justice under the Hart-Scott-Rodino Act (HSR). However, because the merger will not close by April 26, 2012 – 12 months from the expiration of the waiting period of the initial HSR filing – new HSR filings are required. The companies made new HSR filings on March 22, 2012.
Consummation of the merger is contingent upon receipt of all regulatory approvals, agreement on state regulatory issues related to the merger, and satisfaction of all of the conditions to the merger in accordance with the terms of the merger agreement.
About Duke Energy
Duke Energy is one of the largest electric power holding companies in the United States. Its regulated utility operations serve approximately 4 million customers located in five states in the Southeast and Midwest, representing a population of approximately 12 million people. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.
About Progress Energy
Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 500 energy company with more than 22,000 megawatts of generation capacity and approximately $10 billion in annual revenues. Progress Energy includes two major electric utilities that serve about 3.1 million customers in the Carolinas and Florida. The company has earned the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence, and was the first utility to receive the prestigious J.D. Power and Associates Founder's Award for customer service. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. Progress Energy celebrated a century of service in 2008. Visit the company’s website at www.progress-energy.com.
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This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as "may," "will," "should," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast," and other words and terms of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Progress Energy and Duke Energy caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed merger involving Duke Energy and Progress Energy, including future financial and operating results, Progress Energy's or Duke Energy's plans, objectives, expectations and intentions, the expected timing of completion of the transaction, and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties relating to: the risk that Progress Energy or Duke Energy may be unable to obtain governmental and regulatory approvals required for the merger, or required governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to abandon the merger; the risk that a condition to closing of the merger may not be satisfied; the timing to consummate the proposed merger; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on merger-related issues; general worldwide economic conditions and related uncertainties; the effect of changes in governmental regulations; and other factors discussed or referred to in the "Risk Factors" section of each of Progress Energy's and Duke Energy's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC). These risks, as well as other risks associated with the merger, are more fully discussed in the joint proxy statement/prospectus that is included in the Registration Statement on Form S-4 that was filed by Duke Energy with the SEC in connection with the merger. Additional risks and uncertainties are identified and discussed in Progress Energy's and Duke Energy's reports filed with the SEC and available at the SEC's website at http://www.sec.gov/. Each forward-looking statement speaks only as of the date of the particular statement and neither Progress Energy nor Duke Energy undertakes any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
Additional Information and Where to Find It
In connection with the proposed merger between Duke Energy and Progress Energy, Duke Energy filed with the SEC a Registration Statement on Form S-4 that includes a joint proxy statement of Duke Energy and Progress Energy and that also constitutes a prospectus of Duke Energy. The Registration Statement was declared effective by the SEC on July 7, 2011. Duke Energy and Progress Energy mailed the definitive joint proxy statement/prospectus to their respective shareholders on or about July 11, 2011. Duke Energy and Progress Energy urge investors and shareholders to read the Registration Statement, including the joint proxy statement/prospectus that is a part of the Registration Statement, as well as other relevant documents filed with the SEC, because they contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC's website (http://www.sec.gov/). You may also obtain these documents, free of charge, from Duke Energy's website (http://www.duke-energy.com/) under the heading "Investors" and then under the heading "Financials/SEC Filings." You may also obtain these documents, free of charge, from Progress Energy's website (http://www.progress-energy.com/) under the tab "Our Company" by clicking on "Investor Relations," then by clicking on "Corporate Profile" and then by clicking on "SEC Filings.”