In a move that will make it the largest utility in the U.S., Duke Energy Corp. will pay more than $13 billion to pick up Progress Energy Inc.
One of the reasons behind the move is with the company’s size, it will better afford replacing aging transmission infrastructure and old power plants that are struggling to keep up with tightening environmental regulations.
Today’s transaction will create a business with about 7.1 million electric customers in North Carolina, South Carolina, Florida, Indiana, Kentucky and Ohio.
The combined company will be able to run power plants more efficiently. This will save $600 to $800 million in fuel costs over the five years after the combination is completed, said Duke Chief Executive Jim Rogers.
While much of those savings will pass along to customers, electric bills will not fall. The cost of building new plants, erecting new wires, and upgrading existing plants to meet clean air and clean water regulations are going to increase the cost of power.
The companies would not provide details about job cuts, but said they plan to rely heavily on attrition and retirements to reduce the workforce. Both said they have a large number of workers eligible for retirement.
After approval, the combined company would have the third largest fleet of nuclear power plants in the country. They have applications with the Nuclear Regulatory Commission to build three new power plants, though the companies have no plans to begin construction.
Charlotte, NC-based Duke Energy will also assume approximately $12.2 billion in Progress net debt.
When the deal closes, Rogers will become an executive chairman of the new company and advise it on strategic matters while serving as lead spokesperson on energy policy. Progress’ Chief Executive, Bill Johnson, will become president and chief executive of the new company.
The companies aim to close the deal by the end of the year. Progress Energy has its headquarters in Raleigh, N.C. Headquarters for the combined company will be in Charlotte.