KFP: Kinston officials seek more info on Duke-Progress merger

by David Anderson
Kinston Free Press

Although their counterparts in New Bern and Rocky Mount are steaming ahead with their opposition of the potential multi-billion dollar merger of Duke Energy and Progress Energy, officials with Kinston and the region’s other public power towns are reserving judgement until they can obtain more information about the merger’s positive or negative outcomes for the cities.

“The city of Kinston’s position as of right now is to try to gather as much information about the decision and about the fallout from the decision as we possibly can,” Mayor B.J. Murphy said last week.

The decision Murphy referred to was the recent conditional approval of the merger granted by federal energy regulators.

The conditional approval is not a green light, though.

“Applicants have not shown that the Proposed Transaction will not have an adverse effect on horizontal competition,” officials with the Federal Energy Regulatory Commission stated in their findings, released Sept. 30.

If approved by federal and state regulators, the purchase of Progress by Duke would create the largest utility in the United States, serving millions of customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky.

They currently serve a combined 3.9 million customers in North and South Carolina.

Officials with FERC want Duke and Progress to adjust their merger plans to where the merger does not create an anti-competitive environment in the Carolinas.

Such adjustments could include selling off assets or building more transmission capacity to increase the opportunity for competition.

“Accordingly, we conditionally authorize the Proposed Transaction and provide Applicants with 60 days to propose mitigation measures the address the anticompetitive effects of the Proposed Transaction and give intervenors 30 days to comment on Applicants’ proposals,” the FERC report stated.

Murphy and Councilman Will Barker, who also sits on the board of the N.C. Eastern Municipal Power Agency, said Kinston leaders still want more information about what sort of positive or negative impact the merger would have on public power communities, before expressing support or opposition.

“At this point, we haven’t received enough additional information to make any decision,” Barker said. “We’re in the process of getting that information.”

Murphy added: “Because of the FERC ruling, the question is — and the question that we need to try to answer for Kinston — does the FERC ruling change the game?”

Public power communities, which are organized under the NCEMPA and the Municipal Power Agency 1, which is over public power towns in Western North Carolina, are represented by the Raleigh-based nonprofit ElectriCities.

ElectriCities communities jointly own power plants with Progress and Duke, and purchase supplemental power produced by the utilities.

Officials such as New Bern Mayor Lee Bettis worried the merger could make it more difficult for cities to compete for customers — municipal electric customers’ bills are already typically more than 30 percent higher than a private utility’s customers because of the debt the cities took on to buy into the power plants 30 years ago.

“We’re not easily intimidated,” Bettis recently said about his city’s effort to hire an attorney and a consultant and file a motion with FERC against the merger, and how he and Rocky Mount officials plan to continue that opposition.

Kinston and other public power communities remain on the fence, though, and the NCEMPA board has discouraged its members from opposing the merger — New Bern and Rocky Mount are members.

Kinston’s decision did not sit well with one resident — Donald Pollock, who was working with his fellow residents to bring down electric bills and encourage the city to support New Bern, lashed out at City Council members recently.

“If you want to represent the city of Kinston and you know the plight of its people, get off your haunches and do something,” he told the council.

 

The Raleigh News & Observer contributed to this report.

 

David Anderson can be reached at 252-559-1077 or danderson@freedomenc.com.

 

BREAKOUT BOX:

To see the FERC ruling, visit http://www.ferc.gov/EventCalendar/Files/20110930200750-EC11-60-000.pdf