Duke Energy on Aug. 14 asked state and federal regulators for permission to combine its two electric utilities in the Carolinas.
Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP) have operated as separate utilities since the 2012 merger of Duke Energy and Progress Energy.
Although legally considered a merger, the proposed combination is more in line with reorganizing two corporate divisions into one, the investor-owned utility said.
Subject to approval, the targeted effective date of the combination is Jan. 1, 2027.
Duke Energy said it is modernizing its infrastructure to meet the Carolinas’ growing energy needs, while ensuring customers continue to have reliable service at the lowest reasonable cost.
It said operating as a single utility would allow DEC and DEP to meet the growing needs of the Carolinas at a much lower cost. “Combining the two utilities would result in more efficient planning across the utilities’ combined 52,000-square-mile service area in the Carolinas, avoid redundant investments, improve grid reliability and more.”
Duke Energy also said a combination allows Duke Energy to build fewer resources to meet growth needs than would be required if DEC and DEP continued as separate utilities. And spreading infrastructure investments over a larger customer base helps moderate the impact on rates, it said.
“The combined companies will also be able to operate existing resources more cost-effectively by running fewer and less expensive units, using less fuel, and reducing unit cycling on and off, saving maintenance costs,” the company said.
Approvals are required from the North Carolina Utilities Commission, the Public Service Commission of South Carolina and the Federal Energy Regulatory Commission, which will continue to oversee and regulate the combined utility.
Duke Energy said it evaluated the customer benefits of operating as a single, combined utility versus continuing to operate as two separate utilities. Duke Energy projects retail customer savings of more than $1 billion through 2038, after any expenses. The savings are projected to occur between Jan. 1, 2027 – the proposed effective date of the combined utility – and 2038, the close of the planning horizon for the 2023 Carolinas Resource Plan. Additional customer savings would continue to be generated beyond 2038, it said.
As part of the 2012 merger of their holding companies, Duke Energy and Progress Energy received regulatory permission to jointly dispatch power generation resources in the Carolinas.
Duke said regulations limit further coordination between the two utilities and that only a full combination can unlock additional savings.
It also said that a combined utility can more effectively plan, execute and operate new generation and transmission in the Carolinas, locating new assets where they make the most sense across a broader geographic footprint.
A combination will also strengthen reliability by improving the balancing of distributed generation resources while reducing the need to restrict solar production due to oversupply, grid congestion or lack of demand, it said.
