COLUMBIA -- Duke Energy Corp. and Progress Energy Inc. said plans to merge by the end of the year and create the nation's largest utility company are on track after regulators in South Carolina and North Carolina approved agreements that can curb future rate increases.
However, a North Carolina consumer group said the deals worked out don't do enough to protect consumers or keep rates in check for a company that would have 7 million customers in six states.
On Tuesday, the S.C. Office of Regulatory Staff approved a settlement agreement that requires at least $650 million in retail electric customer savings during the first five years of the merger. That money would be used to offset fuel cost increases, a key component of electricity bills, said Dukes Scott, the agency's executive director.
"It may not be a rate reduction, but it will lessen fuel increases," Scott said.
The agreement also says South Carolina customers won't pick up any costs tied to a Florida nuclear power plant and an Indiana coal-fired plant the companies are building. Tom Williams, a spokesman for Charlotte-based Duke, said those costs haven't been a factor in South Carolina rates, but state regulators wanted assurances that they wouldn't be in the future.
The companies announced the merger in January and shareholders approved it last month.
The settlement agreement in South Carolina and one approved last week are part of regulatory approval that should be concluded by the end of the year. "It's an important step. A very positive one, but one step," Williams said.
Kentucky regulators are approving the merger with a single issue remaining involving a requirement that the merged companies' 18-member board include someone from the Midwest.
The North Carolina Justice Center said Tuesday the deals don't do enough. Al Ripley, the advocacy group's director for housing and consumer affairs, said the settlement agreements ignore or don't address key issues, including power conservation, weatherization, rate increases and how power shutoffs are handled.
For instance, the $650 million in fuel cost savings isn't much of a return to customers, Ripley said. "We're concerned that's too low an amount to be returning to consumers," he added.
Williams said it is a clear customer benefit. "It's not a hypothetical. It's a substantial amount of money," Williams said.
Nonetheless, rates will increase, said Mike Hughes, a spokesman for Raleigh-based Progress. "All roads, no matter what, lead to higher electricity process," he said. Duke and Progress both are seeking rate increases.
Ripley said the settlement falls short on reducing demand for power that would ease the need to build power plants and pay for them with rate increases in the future.