Duke Energy and Progress Energy File Updated Settlement Agreement in N.C. May 8, 2012
CHARLOTTE AND RALEIGH, N.C. -
Duke Energy (NYSE: DUK) and Progress Energy (NYSE: PGN) have entered into a supplemental merger settlement agreement with the North Carolina Utilities Commission (NCUC) Public Staff.
The agreement was filed with the NCUC today. It is subject to approval by the NCUC after action by the Federal Energy Regulatory Commission (FERC) on various merger-related filings.
The filing is a supplement to a previous settlement agreement filed Sept. 2, 2011. It addresses state regulatory issues raised by the market power mitigation proposal filed with the FERC on March 26, as well as clarifying provisions included in the previous settlement agreement.
“This agreement is an important milestone to move the merger process forward,” said Jim Rogers, chairman, president and CEO of Duke Energy. “We look forward to hearing from the FERC on our mitigation plan so we can have this proposal and related issues considered by the NCUC as soon as possible.”
“The supplemental agreement was the result of extensive negotiations between the companies and the Public Staff,” said Bill Johnson, chairman, president and CEO of Progress Energy. “One thing has been clear in this process – we all look forward to getting the benefits of this merger started.”
Specifically, the companies agreed to the following in the settlement agreement with the N.C. Public Staff:
- The companies will continue to guarantee $650 million in system savings for Carolinas retail customers. The savings will be achieved through fuel blending and purchases and jointly operating the Carolinas generation fleets. The settlement clarifies a number of issues related to the $650 million guarantee and provides up to 18 months beyond the original five-year timeframe in which the savings can be achieved if coal consumption at certain plants is less than originally forecast due to declines in natural gas prices.
- The companies will not seek recovery from North Carolina retail customers for the seven transmission projects in the mitigation proposal (estimated to cost approximately $110 million) for five years following merger close. After five years, the companies may seek to recover the costs of the transmission projects but must show that the projects are needed to provide adequate and reliable retail service regardless of the merger.
- To reflect the power plant capacity no longer available to retail customers during the interim mitigation period while the transmission projects are being built, the companies will reduce retail rates by approximately $70 million total over that two- to three-year period. The rate reduction will be achieved through a rider and will be apportioned between Duke Energy Carolinas and Progress Energy Carolinas retail customers.
- Duke Energy Carolinas and Progress Energy Carolinas will not seek recovery from North Carolina retail customers for any revenue shortfalls or fuel-related costs associated with the three-year interim mitigation power sales agreements (estimated at approximately $40-50 million over three years).
- The companies will not seek recovery from N.C. retail customers for any of their allocable shares of the merger severance costs (estimated to be approximately $220-230 million total).
Remaining schedule to approve the merger
To date, the companies have received merger-related approvals from, or met the requirements of, the U.S. Department of Justice under the Hart-Scott-Rodino Act, U.S. Nuclear Regulatory Commission, Kentucky Public Service Commission, and the shareholders of both companies.
The companies have requested that the FERC issue its orders on the mitigation plan, Joint Dispatch Agreement and joint Open Access Transmission Tariff by June 8.
The NCUC, which held hearings on the merger in September, is expected to wait until the FERC issues orders before determining whether additional state hearings are required. The Public Service Commission of South Carolina, which held a hearing in December, must also issue an order approving the Joint Dispatch Agreement.
The companies continue to target July 1 to close the merger.
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 23,000 megawatts of generation capacity and approximately $9 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 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.
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.”
|Contact:||MEDIA: Tom Shiel|