Ratepayers Slow to See Duke-Progress Merger Benefits - WSJ.com

By REBECCA SMITH And NAUREEN S. MALIK

"In North Carolina, mergers can be approved so long as they do no net harm to ratepayers. In South Carolina, regulators are expected to do what's good for customers, leaving a lot of discretion. Consumer advocates usually seek a share of merger benefits. Deals have failed when utilities were asked to give more to ratepayers than they were willing to offer. That helped doom Exelon Corp.'s intended purchase of Public Service Enterprise Group of New Jersey.

After its 2006 merger with Cinergy Corp., Duke was required to return 42% of estimated five-year merger savings in North Carolina to customers there, some $117 million. Robert Gruber, the utility commission's consumer advocate, said he was 'struck' by how little Duke is now offering and said he plans to 'see if additional savings should be flowed back to ratepayers.'

One reason for the minimal shared savings is that Duke is not now earning its authorized rate of return in any of the five states in which it operates: North Carolina, South Carolina, Ohio, Indiana and Kentucky. Thus, it would like to retain as much of the savings as possible to boost earnings. Progress is faring better, earning its return in the Carolinas and Florida, where it operates utilities. Progress hasn't sought a rate hike in the Carolinas since 1988, an unusually long time to go without a rate adjustment."