Archive for December 13th, 2011

Environmental groups make deal in Duke Energy merger hearing

Posted on: December 13th, 2011 by shannon No Comments

A deal between environmental groups and Duke Energy    and Progress Energy    in South Carolina will require the companies to accelerate their energy-efficiency efforts, contribute $2 million to renewable-energy initiatives in the state and agree to an enforceable deadline for closing several coal plants.

The agreement was announced Monday as the S.C. Public Service Commission started hearings on part of Duke’s proposed $13.6 billion purchase of Progress. The agreement is likely to speed the hearing, which could be the final regulatory proceeding needed for the merger.

The commission must approve plans for Duke to dispatch power from the plants at the utility subsidiaries Duke Energy Carolinas and Progress Energy Carolinas as a single fleet after the merger. The post-merger Duke does not anticipate combining the two Carolinas utilities for several years. But operating the two fleets as one is key to at least $650 million in savings Duke has committed to sharing with Carolinas customers in the five years after the merger.

Efficiency deadlines

The Environmental Defense Fund, Southern Alliance for Clean Energy and the S.C. Coastal Conservation League have agreed to drop their opposition to the proposal for joint dispatch of the power from the two fleets.

In return, the combined company has agreed to speed up its energy-efficiency targets. By 2015, the company will save 1% of the energy sold in the previous year through efficiency. By 2018, the company will achieve 7% power savings over the 2014 total through efficiency. That is a year earlier than existing agreements with regulators for both targets.

The post-merger Duke also will contribute $1 million per year for two years to the nonprofit Palmetto Clean Energy Inc.

The two operating utilities also agreed to hard deadlines for closing a series of old coal plants that they have already agreed to close.

CEOs testify

Six groups have intervened in the S.C. proceedings for the joint-dispatch agreement. Most of them are satisfied with an agreement Duke and Progress made to have the power dispatched jointly on a one-year trial basis. The agreement will then be reviewed to make sure it is working as expected.

With the agreement announced Monday, only the city of Orangeburg remains unsatisfied with the proposal. It will be the only intervenor to cross-examine witnesses during the hearing. That should make the proceeding go faster, and it is now expected to be finished by Tuesday.

The seven commissioners are expected to have a number of questions — particularly for Duke CEO Jim Rogers and Progress CEO Bill Johnson, who will be on the first panel of witnesses today.

FERC questions

South Carolina has no jurisdiction over the merger of the two parent companies — Duke Energy    Corp. and Progress Energy    Inc. The only issue before the commission involves the joint dispatch. Kentucky has already already approved the corporate merger. North Carolina regulators have held a hearing on the corporate merger, but has not ruled yet.

North Carolina is waiting for the Federal Energy Regulatory Commission to complete its proceedings on the merger. The FERC has raised questions about the impact on wholesale power competition in the Carolinas. It is expected to rule Thursday on whether Duke and Progress have adequately answered those questions.

If FERC is satisfied, no more hearings need to be held in the merger after the South Carolina proceeding. If FERC puts additional conditions on the merger, it is possible that North and South Carolina will need additional hearings.

 

Republished from the Charlotte Business Journal; Author John Downey