Combining Duke Energy Carolinas and Duke Energy Progress projected to save customers over $1B in future costs
Rhea-AI Summary
Duke Energy (NYSE:DUK) has filed for regulatory approval to combine its two electric utilities, Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP), into a single utility. The strategic reorganization, planned for a January 1, 2027 effective date, is projected to save customers over $1 billion through 2038.
The combination will create operational efficiencies across a 52,000-square-mile service area in the Carolinas, serving 4.7 million customers with a combined 34,600 megawatts of energy capacity. Key benefits include reduced infrastructure investments, improved grid reliability, and more efficient resource planning. No immediate changes to retail rates or services will occur before 2027.
Positive
- Projected customer savings of over $1 billion through 2038
- Streamlined operations across 52,000-square-mile service area
- Reduced infrastructure investment needs through combined resource planning
- More efficient generation operations with lower fuel and maintenance costs
- Previous joint operations have already saved over $1 billion since 2012
Negative
- No immediate cost savings for retail customers before 2027
- Requires multiple regulatory approvals from state and federal agencies
- Gradual rate integration process may create temporary rate disparities
News Market Reaction
On the day this news was published, DUK declined 1.46%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
- Filed today for approval with state and federal regulators, operating as one utility could save customers even more than the
$1 billion - If approved, no bill or service changes would occur to retail rates before 2027 due to the combination
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. This strategic reorganization will create a single utility, streamlining operations and significantly reducing costs for customers. Subject to approval, the targeted effective date of the combination is Jan. 1, 2027.
Our view:
"Combining our two utilities reduces customer costs, simplifies operations, supports economic growth and promotes regulatory efficiencies, all of which will create value for customers in both states," said Kodwo Ghartey-Tagoe, executive vice president and CEO of Duke Energy Carolinas. "There will be no immediate changes to retail customer rates or services. We look forward to sharing more details with our customers on how rates will evolve over time if the combination is approved by regulators."
The big picture:
Duke Energy is modernizing its infrastructure to meet the Carolinas' growing energy needs, while ensuring customers continue to have reliable service at the lowest reasonable cost.
- 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.
- 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.
- 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.
- 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.
By the numbers:
Duke Energy 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
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.
Yes but:
No retail rates will change immediately – DEC and DEP retail rates will start to blend gradually, over time, in future rate cases and future rider filings made after Jan. 1, 2027.
Flashback:
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.
- Joint dispatch, fuel savings and other efficiencies have already produced more than
$1 billion - Since the 2012 merger, Duke Energy has completed years of operational alignment and consolidation efforts, such as building out advanced metering infrastructure and industry-leading customer, energy and distribution management systems.
Benefits of operating as one utility:
- New generation and transmission: 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.
- Better generation reliability: A combination will 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.
- Less confusion: A combination will enable a more uniform approach in programs, services and rates. The company will implement changes – like simplifying rates and service offerings – over time with the goal of reducing customer confusion.
- More regulatory efficiencies: With two utilities each operating across two states, Duke Energy must maintain four retail rate structures, produce four separate annual filings – like those related to fuel costs – and more. A combination will reduce the time and expense of this regulatory compliance work by eliminating duplicative filings and proceedings.
The bottom line:
Over the past 13 years, most corporate functions were merged, but the planning and operation of the respective power grids and generation resources in the Carolinas remained separate. This combination of electric utilities will allow the company to operate more efficiently as a single provider in the Carolinas, benefiting customers and enabling energy modernization at a significantly lower cost than would otherwise occur.
Duke Energy Carolinas
Duke Energy Carolinas, a subsidiary of Duke Energy, owns 20,800 megawatts of energy capacity, supplying electricity to 2.9 million residential, commercial and industrial customers across a 24,000-square-mile service area in
Duke Energy Progress
Duke Energy Progress, a subsidiary of Duke Energy, owns 13,800 megawatts of energy capacity, supplying electricity to 1.8 million residential, commercial and industrial customers across a 28,000-square-mile service area in
Duke Energy
Duke Energy (NYSE: DUK), a Fortune 150 company headquartered in
Duke Energy is executing an ambitious energy transition, keeping customer reliability and value at the forefront as it builds a smarter energy future. The company is investing in major electric grid upgrades and cleaner generation, including natural gas, nuclear, renewables and energy storage.
More information is available at duke-energy.com and the Duke Energy News Center. Follow Duke Energy on X, LinkedIn, Instagram and Facebook, and visit illumination for stories about the people and innovations powering our energy transition.
24-hour media line: 800.559.3853
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SOURCE Duke Energy
FAQ
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