Electricity bills should remain virtually unchanged as energy companies unite
Talk of a merger between Duke Energy and Progress Energy may have generated a buzz in the public sphere, but company officials say customers will find they are virtually unaffected by this change.
The energy companies’ CEOs –Jim Rogers of Duke, a primary supplier of electricity for Union County, and Bill Johnson of Progress – began planning a possible merger in July 2010. In the past six months, the two companies have worked together to formulate strategies to join together, hopefully by the end of this year.
According to Duke Energy spokesman Dave Scanzoni, the electric industry across the nation is facing financial challenges as it looks to update power plants and energy utilities and reduce traces of energy use in the environment.
“Doing this will be very costly,” Scanzoni said. “We are hoping that the combined resources of the two companies can help reduce this cost.”
Both companies are developing strategies to replace older power plant with cleaner facilities.
Officials from both companies believe that by merging together and combining their buying power, they will be able to purchase fuel at a lower cost and secure better interest rates for loans to build onto plants and replace utilities, such as power lines and meters.
Utility commissions in both North and South Carolina must authorize this merger before it can be implemented. In addition to the state government commissions, the Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC) would have to give their stamp of approval as well.
Steps of integrating Progress into Duke will be carefully developed. The companies must also look at their human resources and decide where they are needed most.
Duke and Progress are working hard to ensure as few layoffs as possible, according to Scanzoni. “A lot of people will stay where they are,” he said. “It’s more of the central office overhead staff that would need to be examined.”
In addition to redistributing workers to avoid layoffs, the companies also are considering early retirement, or buyout, packages for some employees. “No decisions have been made at this point, nor have numbers been determined,” Scanzoni said.
The corporate headquarters after the merger will remain in Charlotte. Progress will ultimately become a part of Duke, although the companies will use Progress’ Raleigh headquarters.
Officials predict customers’ utility bills will remain, for the most part, unchanged by this merger. As the cost of energy goes up and the companies begin to revamp power plants and turn towards greener mechanisms of energy use, the joining of Duke and Progress would allow the larger corporation to accomplish this at a lower cost to customers.
“The merger will probably buffer and soften the impact of buying new things,” Scanzoni said. “Two companies together can buy these at a lower cost, so this would not affect the consumer as much.”
Some are concerned about the monopoly that this merger will create. “Many people don’t realize that energy is a regulated monopoly,” Scanzoni said. “The company cannot charge whatever they want for energy. That has to go through the government, and everything is highly regulated. Every piece of land is mapped out as to what type of energy is available, so most people can’t choose an electric company anyway.”
One advantage for customers is the combined workforce will be able to bring more resources to bear quickly in the event of power outages, especially those caused by weather.
“Both companies have a great record of restoring power,” Scanzoni said. “If an area needs additional resources because of an ice storm, for instance, we will be able to supply those.”