Duke Energy presented to state and federal regulators on Thursday a proposal to merge its two electric utilities in the Carolinas.
The Charlotte-based energy company said the proposed combination of Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP) would save customers more than $1 billion through 2038.
Duke Energy Carolinas and Duke Energy Progress (DEP) have operated as separate utilities since the 2012 merger of Duke Energy and Progress Energy. Immediately after that merger was approved, Duke Energy received scrutiny from shareholders for ousting a newly minted chief executive hours after the deal was done.
In 2015, Duke Energy agreed to settle a $146 million lawsuit that alleged executives and board members misled shareholders about who would be chief executive of the utility after the merger.
Duke Energy Carolinas supplies energy to the western half of North Carolina, including the Charlotte region. Duke Energy Progress covers the eastern half of North Carolina, including the Triangle.
Both subsidiaries also serve parts of the southeastern United States in South Carolina, Florida, Indiana, Ohio and Kentucky.
Duke Energy Carolinas currently owns 20,800 megawatts of energy capacity, supplying electricity to 2.9 million customers across a 24,000-square-mile service area in N.C. and S.C.
Duke Energy Progress owns 13,800 megawatts of energy capacity, supplying electricity to 1.8 million customers across a 28,000-square-mile service area.
Combined, the company said it serves 8.6 million customers and collectively owns over 55,000 megawatts of energy capacity.
A merger would play into Duke Energy’s next move to modernize its infrastructure to meet the Carolinas’ growing energy needs, the company says.
If the proposal is approved, the targeted date of the merger would be January 1, 2027.
“Combining our two utilities reduces customer costs, simplifies operations, supports economic growth and promotes regulatory efficiencies, all of which will create value for customers in both states,” said executive vice president and CEO of Duke Energy Carolinas, Kodwo Ghartey-Tagoe, in the press release.
“There will be no immediate changes to retail customer rates or services. We look forward to sharing more details with our customers on how rates will evolve over time if the combination is approved by regulators.”
WRAL reached out to Duke Energy officials for comment on how exactly a merger could save customers the promised $1 billion.
In its proposal, the company listed four benefits they say the merger would deliver:
- New generation and transmission: A combined utility could more effectively plan, execute and operate new generation and transmission across a broader geographic footprint.
- Better generation reliability: A combination would improve distribution of resources while reducing the need to restrict solar production due to oversupply, grid congestion or lack of demand.
- Less confusion: A combined entity would project a more uniform approach in programs, services and rates.
- More regulatory efficiencies: With two utilities each operating across two states, Duke Energy said it maintains four retail rate structures, produces four separate annual filings and more. A combination would reduce the time and expense by eliminating duplicative filings and proceedings.
Bill Norton, a Duke Energy spokesperson, said the company would have more to say about these changes after 2027 if and when the proposed merger can provide actual, substantial rate changes for customers.
Nonprofit leader Duke Energy’s proposed merger won’t save customers money
On Friday, WRAL News spoke with NC WARN executive director Jim Warren to hear his perspective on the proposed merger.
NC WARN describes itself as a 37-year-old nonprofit organization tackling the accelerating crisis posed by climate change by building people power for a swift North Carolina transition to clean power, and by promoting energy and climate justice.
“Saving customers money is not consistent with Duke
Energy’s business model,” Waren said. “In fact, Duke’s business model is to put
as many customer dollars into the rate system because that’s how they make
their money.”
The announcement comes weeks after the state legislature
overturned Gov. Josh Stein’s veto of a bill repealing Duke Energy’s carbon
reduction deadlines.
In a statement to WRAL News about the announcement, Stein’s
office says, “Gov. Stein remains focused on working to ensure the
lowest-cost, cleanest energy possible for North Carolina’s ratepayers.”
Warren said he is not convinced of Duke Energy’s claim that the proposed merger could open a path to more efficient and cleaner forms of electricity production.
“They want people to think they are green,” Warren said.