Duke, Progress complete energy merger
Forms the largest electric utility in the US.
mergers in the energy sector
RALEIGH, N.C.—Duke Energy Corp. and Progress Energy Inc. said Tuesday they had completed their merger now valued at about US$32 billion to form the largest electric company in the United States. But the normally routine event came with a twist.
Bill Johnson, who was tapped to lead the combined company as president and chief executive, has decided to leave by “mutual agreement,” the companies said.
Duke CEO Jim Rogers, who was expected to be executive chairman, has instead been named CEO of the new company.
“This is day one and we’re all one group of employees,” Rogers said in an interview.
“They see what I see which is a belief in the long-term proposition of this combination. We put together the largest utility in this country. We see tremendous opportunities. We have a deep bench of capable people that can deliver.”
Rogers has twice before been the CEO leading his company through a merger, first when PSI Energy became part of Ohio-based Cinergy in 1988 and again when Cinergy merged with Duke Energy in 2006.
Duke won federal approval for the merger announced in January 2011 on June 8. The North Carolina Utilities Commission voted in favour of the deal last week. South Carolina’s Public Service Commission approved an agreement Monday.
The combined company will serve about more than seve million customers in North Carolina, Kentucky, Ohio, Indiana, Florida and South Carolina. Duke Energy’s more than $100 billion in assets include power plants in Central America and South America and a growing portfolio of wind and solar renewable energy projects in the U.S.
Experts said the new company will be able to borrow money more cheaply, and it will use fewer coal-burning power plants in favour of ones that use natural gas. It’s also expected to keep power prices stable. Regulators saw the deal as the best possible in an environment of energy industry consolidation.
Rogers said on a conference call with analysts that his top focus would be realizing the promised savings from the merger, followed by coping with the costs of a shutdown at Progress Energy’s Crystal River nuclear plant in Florida. Crystal River has been down for repairs since 2009 and isn’t expected to operate again until 2014.
Among the benefits Rogers stressed was that adding Progress Energy’s regulated markets in the Carolinas and Florida increases the new company’s percentage of revenues from regulated electricity sales, a business in which profits are controlled by state regulators but largely assured. About 85 to 90 per cent of the combined company’s revenues will come from its regulated business, compared to about 75 per cent for Duke Energy before the merger, a spokesman said.