Weak Conditions Offered on Duke-Progress Merger
The closed-door decision by the NC Utilities Commission (NCUC) and the Public Staff to end its investigation into the Duke-Progress merger in exchange for a handful of restrained conditions is another missed opportunity by state regulators to protect NC consumers.
The Commission must vote on the proposal on Monday which includes conditions such as shuffling of staff and board members, concretizing Jim Rogers’ already planned 2013 retirement and throwing a few bones to consumers and low-income customers. It’s mind-boggling to think how little has come from the merger investigation.
First and foremost – where are the results of the independent investigation? The public deserves to see what was uncovered.
Second, the Public Staff should have taken the opportunity to compel Duke to change its rate allocation method which is unfair to residential customers. In the past, the Public Staff has highlighted serious drawbacks with Duke’s method – so why squander the opportunity? Progress uses a different method to allocate rates (considered more fair) so why should the merged company not have to rectify the inconsistency?
Third, evidence has been building that the utilities may have hidden cost estimates related to the crippled Progress’ Crystal River nuclear plant in Florida. The plant has been shut down since 2009 due to cracks found in the containment walls. Earlier this week, NCWARN uncovered documents that raise questions about what was actually disclosed about this potentially huge liability during the merger proceedings. Where is the information to show that the Commission and the Public Staff were privy to cost estimates and if not, why would they settle without further investigation?
Finally, a real sanction for the botched merger would be to disallow the return on equity agreed in Duke’s last rate case. A 10.5% return was allowed, which is factored into electricity rates. A review of Duke’s return on equity since 2007 showed 7.9% as the high, so why be so generous at the expense of NC customers. Now we’ll have to wait and see if the Attorney General is successful in his case against Duke before the NC Supreme Court.
The NC Utilities Commission and the Public Staff’s merger conditions are weak and limited. If that is all these entities judged they could demand from the evidence, then let the public see the results of the external investigation – so we can judge their decision.