Duke Energy 2011 Annual Report Download - page 56

PART II
the Joint Dispatch Agreement and the joint Open Access
Transmission Tariff (OATT). On September 30, 2011, the
FERC conditionally approved the merger, subject to approval
of mitigation measures to address its finding that the
combined company could have an adverse effect on
competition in wholesale power markets in the Duke Energy
Carolinas and Progress Energy Carolinas East balancing
authority areas. On October 17, 2011, Duke Energy and
Progress Energy filed their plan for mitigating the FERC’s
concerns by proposing to offer on a daily basis a certain
quantity of power during summer and winter periods to the
extent it is available after serving native load and existing firm
obligations. On December 14, 2011, the FERC issued an
order rejecting Duke Energy and Progress Energy’s proposed
mitigation plan, finding that the proposed mitigation plans
submitted by the companies did not adequately address the
market power issues. In a separate order issued
December 14, 2011, the FERC dismissed the applications for
approval of the Joint Dispatch Agreement and the joint OATT
without prejudice to the right to refile them if Duke Energy and
Progress Energy decide to file another mitigation plan to
address the FERC’s market power concerns stated in the
FERC’s September 30, 2011 order.
• On April 4, 2011, Duke Energy and Progress Energy filed a
merger application and joint dispatch agreement with the
NCUC. On September 2, 2011, Duke Energy, Progress
Energy and the NC Public Staff filed a settlement agreement
with the NCUC. Under the settlement agreement, the
companies will guarantee North Carolina customers their
allocable share of $650 million in savings related to fuel and
joint dispatch of generation assets over the first five years after
the merger closes, continue community financial support for a
minimum of four years, contribute to weatherization efforts of
low-income customers and workforce development during the
first year after the merger closes and agree not to recover direct
merger-related costs. A public hearing occurred
September 20-22, 2011 and proposed orders and briefs were
filed November 23, 2011. Duke Energy is required by
regulatory conditions imposed by the NCUC to file with the
NCUC a thirty-day advance notice of certain FERC filings prior
to filing with the FERC. Accordingly, Duke Energy filed
advance notice of the revised FERC mitigation plan on
February 22, 2012. Duke Energy and Progress Energy may
file the mitigation plan with the FERC after approval from the
NCUC.
• On April 25, 2011, Duke Energy and Progress Energy, on
behalf of their utility companies Duke Energy Carolinas and
Progress Energy Carolinas, filed an application requesting the
PSCSC to review the merger and approve the proposed Joint
Dispatch Agreement and the prospective future merger of
Duke Energy Carolinas and Progress Energy Carolinas. On
September 13, 2011, Duke Energy and Progress Energy
withdrew their application seeking approval for the future
merger of their Carolinas utility companies, Duke Energy
Carolinas and Progress Energy Carolinas, as the merger of
these entities is not likely to occur for several years after the
close of the merger. Hearings occurred the week of
December 12, 2011 and proposed orders and briefs were
filed on December 20, 2011. Duke Energy Carolinas and
Progress Energy Carolinas committed at the hearing that, as a
condition for the PSCSC approving the proposed Joint
Dispatch Agreement, Duke Energy Carolinas and Progress
Energy Carolinas will give their South Carolina customers
“most favored nations” treatment. Thus, Duke Energy
Carolinas’ and Progress Energy Carolinas’ South Carolina
customers will receive pro rata benefits equivalent to those
approved by the NCUC in connection with the NCUC’s review
of the merger application. Duke Energy Carolinas and Progress
Energy Carolinas are awaiting a PSCSC order in this case.
Duke Energy Carolinas and Progress Energy Carolinas intend
to describe and explain the mitigation plan to the PSCSC in an
authorized ex parte briefing in the first quarter of 2012.
• On March 17, 2011, Duke Energy filed an initial registration
statement on Form S-4 with the Securities and Exchange
Commission (SEC) for shares to be issued to consummate the
merger with Progress Energy. On July 7, 2011, the Form S-4
was declared effective by the SEC, and the joint proxy
statement/prospectus contained in the Form S-4 was mailed
to the shareholders of both companies thereafter. On
August 23, 2011, Duke Energy and Progress Energy
shareholders approved the proposed merger. In addition, Duke
Energy shareholders approved a 1-for-3 reverse stock split.
• On March 28, 2011, Duke Energy and Progress Energy
submitted Hart-Scott-Rodino antitrust filings to the U.S.
Department of Justice (DOJ) and the Federal Trade
Commission (FTC). The 30 day notice period expired without
further action by the DOJ; therefore, the companies had
clearance to close the merger on April 27, 2011. This
clearanceiseffectiveforoneyear.Becausethemergerisnot
expected to close by the end of April 2011, the parties will
resubmit antitrust filings prior to April 26, 2012 expiration so
as to ensure there is no gap in the clearance period under the
Hart-Scott-Rodino Act.
• On March 30, 2011, Progress Energy made filings with the
NRC for approval for indirect transfer of control of licenses for
Progress Energy’s nuclear facilities to include Duke Energy as
the ultimate parent corporation on these licenses. On
December 2, 2011, the NRC approved the indirect transfer of
control of Progress Energy’s nuclear stations to include Duke
Energy as the parent corporation of the licenses.
• On April 4, 2011, Duke Energy and Progress Energy filed a
merger application with the KPSC. On June 24, 2011, Duke
Energy and Progress Energy filed a settlement agreement with
the Attorney General. A public hearing occurred on July 8,
2011. An order conditionally approving the merger was issued
on August 2, 2011. On September 15, 2011, Duke Energy
and Progress Energy filed for approval of a stipulation revising
one of the merger conditions contained in the KPSC order. On
October 28, 2011, the KPSC issued an order approving the
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