Duke Energy

Duke, Progress Energy merger to save $700M

Those savings came out as Duke (NYSE: DUK) formally asked state regulators in Kentucky and North Carolina to approve the $13.8 billion deal.

The companies also filed a petition with federal regulators to approve their plans to operate the Duke and Progress (NYSE: PGN) power plants in the Carolinas as a single fleet even though the two Carolinas utilities will continue to operate as separate subsidiaries.

Duke intends to complete the purchase of Progress by the end of this year. The combined company will be called Duke Energy Corp. and remain based in Charlotte. It is expected to be the largest regulated power utility in the nation.

The proposed acquisition, was announced in January and is an all-stock transaction. The deal values Progress shares at $46.48 each, or $13.7 billion in total equity value. Duke also will assume $12.2 billion in debt.

Duke counts about 1.1 million customers in Ohio, 235,000 customers in Kentucky, and 790,000 customers in Indiana. Duke provides electricity to about 685,000 customers and natural gas service to 400,000 customers in Southwest Ohio, including parts of Butler and Warren counties.

Duke competes with American Electric Power Co. (NYSE AEP), Constellation Energy Group Inc. (NYSE: CEG), Vectren Corp. (NYSE: VVC) and DPL Inc. (NYSE: DPL), the parent of Dayton Power & Light Co., the largest provider of power to Dayton-area residents and businesses.
Detailed savings: $694.7M

The filings provide a little more detail on the savings the utility holding companies expect from operating the fleets jointly. But it gives no specific information on what will be saved beyond the reduced fuel and related costs in the Carolinas.

Duke and Progress tell N.C. regulators they expect to save $364 million in the five years following the merger directly from combining the fleets. That will come largely by making greater use of the most efficient plants in each fleet to cover the combined Carolinas demand.

The companies expect to save $330.7 million more in fuel-related costs. Leverage attributed to greater coal purchases can save $115 million in procurement and rail-transportation costs. Almost $184 million can be saved, they say, by applying Progress’ coal blending techniques to Duke’s plants. About $32 million can be saved on natural gas purchases.

That totals $694.7 million over five years — roughly in the middle of the $600 million to $800 million the companies touted when they announced the merger Jan. 10.
Employee cuts

The filing in Kentucky promises no specific savings. But like the North Carolina filing, it says there will be savings from combining and streamlining operations at the corporate level.

And the filings in both states acknowledge Duke will make cuts in its employee rolls. Duke employs about 3,100 in Greater Cincinnati.

“To the maximum extent possible, the companies will manage these reductions through normal retirements, employee attrition, possible voluntary retirement programs and similar measures, rather than through forced layoffs,” both state filings say.

The filing with the Federal Energy Regulatory Commission was made within hours of a ruling by the N.C. State Utilities Commission that cleared the way for the federal filing.

The utilities are also asking N.C. regulators for permission to combine the fleets. Next month they expect to file a similar request with S.C. regulators.

But Duke and Progress contend they do not need approval of the merger from South Carolina. They also say they do not need to make any formal filings in Florida, where Progress operates, or Ohio and Indiana, where Duke has state utilities. The companies say they will work to keep regulators in those states informed of merger developments.

http://www.bizjournals.com/dayton/news/2011/04/05/duke-progress-energy-merger-save-700m.html


Duke Energy working to restore power after storm

Duke Energy officials estimated there were more than 200,000 people without power at mid-morning Tuesday as the result of high winds and severe thunderstorms that crossed the region during the night.

Due to the high number of outages, the company was unable to determine the specific number of people affected in Rockingham County, according to a Duke spokesperson.

As of 10 a.m., the company was in the beginning stages of determining the areas most affected. Duke employees reported seeing trees down across power lines and entire poles which were toppled over. A media representative for the company said all hands were on deck assessing the damage. Though Duke officials could not give an idea of what time power would be restored for everybody, they said they wanted to assure their customers that they are working on the situation and will be able to give another update soon.

http://www2.godanriver.com/news/2011/apr/05/duke-energy-working-restore-power-after-storm-ar-952389/


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