Duke deal to buy Progress Energy may happen today, starting fresh round of brand turmoil
Wake up and good morning. A $13 billion deal by Duke Energy Corp. to buy Progress Energy Inc., parent of Progress Energy Florida in St. Petersburg, may be unveiled today that would put Progress CEO William Johnson -- the younger of the two CEOs -- in charge of what will be the largest U.S. utility and a powerhouse player in the nuclear power industry, say reports in the Wall Street Journal and Bloomberg News. See stories here and here.
Final details are being negotiated and a deal could still fall apart, the reports say, citing unnamed people familiar with the deal.
Both companies are based in North Carolina -- Progress Energy in Raleigh and Duke in Charlotte -- which means any merger would probably result in substantial job cuts to eliminate overlap and inefficiencies in the Carolinas. But Duke has no utility operations in Florida, which presumably means most jobs at Progress Energy Florida would be unaffected or at least in minimal danger of being trimmed.
A successful deal, however, will mean another introduction into Florida of a new corporate brand -- presumably Duke Energy -- replacing Progress Energy. Of course, Florida is used to such musical chairs of brands. Progress Energy was previously known as CP&L (Carolina Power & Light), changing its named about a decade ago after buying St. Petersburg's Florida Power Corp. It's not unlike North Carolina banking giant First Union, once prominent in Florida, then changing its name to Wachovia only to be be gobbled up by Wells Fargo, whose name on Florida bank signs will start appearing later this year.
Duke and Progress have talked about the advantages of a merger, the Bloomberg report says, namely swinging massive investments in nuclear-development projects. Joining forces also would allow them to trim utility duplicative functions at a time when growth in electricity sales is tepid. Acquisitions in the U.S. power industry have picked up as companies seek to add customers to counter falling prices. Utilities expanding through mergers can also spread the cost of complying with environmental regulations or building new power plants across more customers. Regulators generally allow utilities to bill consumers for reimbursement of those costs.
Duke supplies energy to about 4 million utility customers in North Carolina, South Carolina, Indiana, Ohio and Kentucky, according to its website. It has about 35,000 megawatts of electric generation capacity. Progress owns more than 22,000 megawatts of power generation capacity, including its sole nuclear power plant in Florida in Crystal River, and has long delayed plans to build a new nuclear plant in Levy County just north of the existing one.
Is there any hurdle to this deal happening? Here's one cited: The combination could make Duke more dominant in the Carolinas than perhaps any utility in another state. That might create market-power worries among state-utility regulators.
We'll be following this merger dance with great interest.
-- Robert Trigaux, Times Business Columnist