Added by David Sandercock on January 12, 2011
Plans to create the largest power company in America are afoot as Duke Energy is purchasing Progress Energy Inc for $13.7 billion. However, the important question is whether regulators will permit the two utilities to merge to enjoy better financial strength.
The deal was announced on Monday and is pending approval from regulators. Overall, the combined entity will have more than 7 million customers and will generate 57000 MW of electricity every year.
The Chief Executive and Chairman of Duke Energy spoke in favor of the deal as he listed out the advantages of the merger. Better financial strength, the ability to tackle costs, the ability to upgrade power grids and improve environmental controls were some advantages that, he said, would ensue from the merger.
Regulatory approval is pending in North and South Carolina. The company promises to pass on savings of close to $800 million over the next five years as it enjoys cost reduction after the merger.
The resulting company will have a very strong presence in both states but analysts are of the opinion that regulator will sanction the deal. Analysts emphasize that the regulator will balance the strength of the undertaking with the potential savings that the average customer will enjoy.