The application filed by the utilities to the North Carolina Utilities Commission (NCUC) outlined how consumer will benefit from the merger. First, it is estimated that reduced fuel costs and efficiencies gained by jointly operating and managing the Progress Energy Carolinas and Duke Energy Carolinas utility power plant systems will save approximately $700 million in the Carolinas over the first five years after the merger closes. Duke notes: “Those savings flow directly to customers through the annual adjustment in the fuel component of retail rates.”
The merger also increases efficiencies in siting and building power plants. “By combining the generating fleets, planning for future capital expenditures and operating the fleets as a single system, the companies expect to realize efficiencies in location, timing and other factors associated with making large capital investments in new resources…Additional savings will occur over time as a result of the combination and integration of the companies’ information technology systems, supply-chain functions, generation operations, corporate and administrative programs and inventories.”
Duke Energy told the Commission that the money saved by the merger will help offset the impact of expected rate increases in the next few years. “The entire U.S. electric system faces rising costs as aging infrastructure is replaced and as new federal and state regulations become applicable. The merger will enable the Duke and Progress utilities in the Carolinas to make these significant investments with lower overall impact to customers.”
The companies are hoping to have the merger completed by the end of 2011. If approved, Progress Energy will become a wholly owned subsidiary of Duke Energy. Although the companies will continue to operate as separate entities for the time being, it’s expected that they will combine into a single entity at some point in the future.