Critics: Did Duke-Progress merger save consumers money? - WNCT

Critics question whether Duke-Progress merger really saved consumers money

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RALEIGH, N.C. -

Every time you turn on a light, odds are you have Duke Energy to thank. The Charlotte-based company provides nearly 95 percent of North Carolinians with their electricity

It has close to 8 million total customers spread across more than 100,000 square miles.

These numbers are thanks in part to Duke's $32-billion merger with the Raleigh-based Progress Energy in 2012. Industry experts say one reason we're seeing these mergers is because of how expensive it is to update aging power plants. With costs in the billions, they say one company just won't cut it anymore.

Duke Energy points out the merger aims to save customers hundreds of millions of dollars.

"We guaranteed $687 million through the first five to six years post-merger," said Mike Hughes, Duke Energy's vice president for community relations in North Carolina. "We've already achieved $185 million through the first 18 months."

Hughes added they now think they'll save customers more than $1 billion by 2017.

But critics, such as attorney John Runkle, ask, "Where are the savings for consumers? The merger was billed as a better deal for North Carolina consumers."

"Duke has gone up in rates increases in 2009, 2011 and then last year," Runkle said.  "Progress had their first rate case they had in over 20 years, so the rates are going up."

Runkle represents the energy watchdog group NC WARN, which is still in the process of appealing against the merger.

"A lot of low-income people are hurting now just because of the rate increases," he said.

For instance, last year's rate increase means that after September 2015, your average monthly bill will go up about $7.50.

In the end, NC WARN estimates the merger will cost consumers billions because of repairs to damaged plants in other states. These are costs the group says Duke Energy didn't fully disclose in merger hearings.

"There were hidden costs that were part of the process that never came to light," Runkle said.

"By state law, we have the opportunity to recoup those costs," said Hughes, the Duke Energy spokesman. "So I don't buy into the argument that the merger is creating any additional costs."

Asked about Duke Energy's transparency surrounding the merger, Hughes said, "There was certainly a heightened sensitivity to how the merger, the days after the merger, and some of the boardroom intrigue, how that played out. I think the company recognizes there are things that could have gone much more smoothly."

That "boardroom intrigue" was the abrupt resignation of the new company's CEO Bill Johnson immediately after the merger. That took people outside of Duke Energy -- including the North Carolina Utilities Commission -- by surprise.

The Commission investigated the resignation. Shortly after its settlement with Duke Energy

Duke Energy chief executive Jim Rogers told The Charlotte Observer he"personally negotiated the settlement terms with [utilities] commission chairman Edward Finley."

Critics, such as NC WARN, maintain that that type of negotiation between those two was inappropriate.

The North Carolina attorney general's office investigated the merger and was in agreement with its settlement. However, the attorney general is contesting three separate rate hikes by the combined Duke-Progress right now.

Despite all this, Hughes said Duke Energy is working to improve its public image.

"I think we have worked very hard over the last 18 months to rebuild trust where we had created some trust issues," Hughes said.

That includes their investing about $16 million statewide. Three million of those dollars alone are in Raleigh. It's an increase the Greater Raleigh Chamber of Commerce estimates to be 50 percent more than what Progress had invested before the merger.

Runkle said bigger isn't necessarily better for customers.

"It's 95 percent of the people of North Carolina, which is kind of incredible," Runkle said about Duke Energy's share of the market.  "[It's] the only game in town for most about everybody."

"We know being large in and of itself is not always necessarily a good thing," Hughes said.  "But we're leveraging that size in becoming the best."

Merger's impact on Raleigh

The merger of the two utilities had an impact on Raleigh. Duke Energy has about 2,000 employees in Wake County with half of those in downtown Raleigh. Overall, that's down from a high of approximately 3,000 workers in the year before the merger.

Most of the positions transferred to Charlotte are in the legal department, human resources and accounting.  However, storm response and distribution still are headquartered in Raleigh.

RELATED ARTICLES

* July 7, 2013: Duke Energy faces charges of overcharging customers

* May 31, 2013: AG Cooper will appeal recent Duke Energy Progress rate hike

* June 12, 2013: Deal lets Duke Energy raise rates $200 million a year

* Customers don't expect Duke-Progress merger to save them money

* Feb. 26, 2013: Progress Energy reaches compromise on rate hikes

Sean Maroney

Sean returns home to North Carolina after spending seven years reporting around the world and across the United States. More>>

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