Monday, January 10, 2011

Duke Energy to Merge With Progress Energy

large_duke-energy That’s the news. Here are some details:

Duke's offer was a 6.4 percent premium over the last 20 trading days, the company said, and the deal would be accretive to Duke's earnings in the first year.

The transaction would create an industry giant with approximately 7.1 million electricity customers in North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio, and 57,000 megawatts of generating capacity.

And here’s what the proposed merged company wants to do:

The two North Carolina companies will serve more than 7 million electricity customers, and will use the opportunity to eliminate redundancies in their service areas to focus on beefing up their nuclear power offerings. Duke and Progress have long been expanding their nuclear ambitions, and say the new combined company will have the largest regulated nuclear fleet in the U.S.

Here are comments from Duke Energy’s Jim Rogers (from Duke’s press release):

“Our industry is entering a building phase where we must invest in an array of new technologies to reduce our environmental footprints and become more efficient,” said Jim Rogers, chairman, president and chief executive officer of Duke Energy. “By merging our companies, we can do that more economically for our customers, improve shareholder value and continue to grow.

“Combining Duke Energy and Progress Energy creates a utility with greater financial strength and enhanced ability to meet our challenges head-on,” Rogers continued.

And Progress Energy’s Bill Johnson (same source):

“This combination of two outstanding companies is a natural fit,” said Bill Johnson, chairman, president and chief executive officer of Progress Energy. “It makes clear strategic sense and creates exceptional value for our shareholders. Together, we can leverage our best practices to achieve even higher levels of safety, operational excellence and customer satisfaction, and save money for customers by combining our fuel purchasing power and the dispatch of our generating plants.

“This merger also provides predictable earnings and cash flows to support our dividend payments to shareholders,” Johnson added. 

As noted above, both companies are headquartered in North Carolina and their nuclear plant holding reflect this. Duke Energy owns Catawba (S.C.), McGuire (N.C.) and Oconee (S.C.). Progress Energy owns Brunswick (N.C.), Crystal River (Fla.), Harris (N.C.) and Robinson (S.C.)

4 comments:

Jeff Schmidt said...

It's still very much on the drawing board, but there was talk of Duke Energy partnering with Areva to build a new nuclear plant in Southern Ohio, at the site of a former enrichment facility in Piketon, OH.

I hope any merger doesn't derail those plans. I think more nuclear generating capacity in Ohio will probably be a good thing for our state.

Anonymous said...

Thank goodness. Someone's got to knock that chip of Exelon's shoulder. And, being in the regulated south, this utility will have quite the advantage with respect to - among other things - a new-build program.

Chad said...

I fear this may not be good news for new nuclear. Duke already had plans with a SC AP1000 and the Areva plant in Ohio. Progress "has" an EPC for a FL AP1000 and another COLA for a NC AP1000. Both have shown interests in finding parterns for their new nuclear because of forcast changes in electrical demand. Thus, I think one of these Carolina plants will be on the chopping block.


Furthermore, Jim Rodgers is a big supporter of new nuclear. His new role seems like a transisition to retirement. Not to say Bill Johnson is not big on nuclear, he just has not been as vocal about it to the public.

Anonymous said...

Lots of Progress nuclear staff will be on the chopping block. Progress new plants will take a back seat to Duke new plants, if not scrapped. Customers will eventually see rates rise due to new market power dynamics. I am not optimistic about this merger. More power to the power company means less power to the employees, regulator, and rate payers. Possibly good for stock price, but not for others that are not shareholders.