Duke Energy and Progress Energy File Market Power Mitigation Plan with the North Carolina Utilities Commission February 22, 2012
CHARLOTTE AND RALEIGH, N.C. -
Duke Energy and Progress Energy today filed a second wholesale market power mitigation plan with the North Carolina Utilities Commission (NCUC) as part of their proposed merger.
“The intent of this merger is to strike the right balance between the customer and shareholder benefits, and that continues to be our goal,” said Jim Rogers, chairman, president and CEO of Duke Energy. “We must also balance the expectations of our state commissions to keep electricity costs low, and the Federal Energy Regulatory Commission’s (FERC) concerns about market power in the Carolinas. We believe we have done that with this plan.”
“We believe that this is a solid plan that addresses the FERC’s concerns about market power while preserving benefits to our customers and shareholders,” said Bill Johnson, chairman, president and CEO of Progress Energy.
The NCUC has up to 30 days to review the mitigation plan before it is filed with the FERC, which required mitigation measures to offset market power concerns in the Carolinas resulting from the proposed merger.
The revised mitigation plan provides for permanent transmission upgrades and interim power sales:
• The permanent solution consists of constructing up to eight transmission projects in the Duke Energy and Progress Energy service territories.
These projects will expand the capability to import wholesale power into the Carolinas. The construction would begin after the merger closes and take approximately three years to complete. The preliminary cost estimate range of these projects is approximately $75 million to $150 million.
• While these projects are being built, the companies propose a three-year plan to sell capacity and firm energy during the summer (June – August) and winter (December – February) to new market participants.
Together, the companies would 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 companies expect to secure contracts with potential buyers prior to filing the mitigation plan with FERC.
The companies will be working closely with the North Carolina Public Staff and Office of Regulatory Staff in South Carolina over the next few months on appropriate state ratemaking treatment associated with measures in the revised mitigation plan and other merger-related issues.
Final agreement to the proposed mitigation efforts will be subject to resolution of the state ratemaking issues.
Later this quarter, the companies expect to file the mitigation plan with the FERC.
In addition to the market power mitigation plan, the FERC must also approve the merger’s Open Access Transmission Tariff and Joint Dispatch Agreement in the Carolinas. The NCUC must also approve the merger and the Joint Dispatch Agreement. The Public Service Commission of South Carolina must approve the Joint Dispatch Agreement in the Carolinas.
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.
The companies have also met their obligations with the U.S. Department of Justice under the Hart-Scott-Rodino Act (HSR), but will need to make a new HSR filing prior to the April 26, 2012, expiration date of the initial HSR filing.
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: http://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 http://www.progress-energy.com.
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.”
|Duke Energy||Duke Energy|
|Tom Williams||800-559-3853||Mike Callahan||704-382-0459|
|Progress Energy||Progress Energy|
|Mike Hughes||919-546-6189||Bob Drennan||919-546-7474|