A surprising but not shocking marriage was announced in North Carolina today. Two – well branded utility companies – decided to get hitched. And if regulators approve the merger of Duke Energy and Progress Energy – the union will form the largest utility company in America.
Duke Energy and Progress Energy – separately – are at the top of their games in the U-S. And they’re not shy when it comes to finding new mates.
Both companies have always had wandering eyes – expanding over the years – taking over regional utilities in Florida and elsewhere.
Whispers of a marriage leaked out last week.
Inge: Were you surprised about this?
" Yes I was, this was a complete surprise to me," says Meeker, " I hadn’t heard anything about it until I saw a story in the paper Saturday morning and here we are 48 hours later with an announcement already done."
Charles Meeker is the mayor of Raleigh. Despite the surprise – he’s hopeful there won’t be many changes to Progress Energy’s footprint in the capital city.
"Progress has been a big community supporter all the way from the performing arts center to all kinds of community activities. I am hopeful that Duke Energy will see that that is really good customer relations and they’ll remain, not only active for the first few years but active for all the time they’re in this area."
But with mergers of this magnitude and the thousands of people both utilities employ there is bound to be a shake-up. It’s not surprising since the newly formed company will use the Duke Energy name – its headquarters will be in Charlotte.
Progress Energy CEO William Johnson and Duke Energy CEO James Rogers addressed the media on a conference call this morning. Johnson will be the head of the newly formed Duke Energy. He says the companies have been devising a plan since July.
Johnson says the merger is good for North Carolina. And he says customers will be able to see the good news in their wallets. Over the next five years – the merger is expected to save energy customers 600 to 800-million dollars.
But Johnson skirted around the topic of lay-offs on the conference call.
"We’re going to rely on attrition, on managing vacancies and on retirements to help with most of this. You know, these are two companies and two CEOs that have a high regard for the employees who work in those companies. We know where the work gets done and how it gets done. We’re going to do the right thing here to get through this."
The Duke Energy – Progress Energy merger is valued at 26-billion dollars. Its customer base will reach from the Carolinas – down to Florida and also includes Kentucky, Ohio and Indiana.
William Mitchell is a professor of International Management at Duke’s Fuqua School of Business.
"I wasn’t expecting it, but it’s not a shock – if that makes any sense."
Several reports show there’s a lot of movement in the power industry as companies are looking to add customers to counter falling prices.
Mitchell says the Duke Progress merger is a good one but the company can’t expect to continue growing, counting on domestic customers alone. He says he can see the bigger company moving to emerging markets in Asia and Africa to grow.
"And they get more scale that they can use to invest in larger scale renewable projects – and probably in new experiments with nuclear."
Johnson and Rogers say they will spend the next year getting organized and determining what’s best for employees, customers and share holders. Rogers – a leading voice in the U-S climate legislation debate – will become the executive chairman of Duke.