Merger Update: FERC Says No to Duke Energy/Progress Energy While the New York PSC Says Yes to Constellation/Exelon

It has been a big week for the two major utility mergers proposed in the United States.

On Thursday just over a week after Exelon Corporation and Constellation Energy Group filed a new round of paper work with the Maryland Public Service Commission detailing an "enhanced package" which now totals  $1 billion and includes 285-300 MW of new generation in Maryland more than half of which will be sourced from renewables, the companies say that th State of Maryland, the Maryland Energy Administration (MEA), the City of Baltimore and the Baltimore Building and Construction Trades Council have agreed to the new package.

The companies announced that New York State Public Service Commission (PSC) has approved their merger. The PSC declared "that it does not need to review further the merger". Exelon and Constellation are still waiting for regulatory approvals by the Federal Energy Regulatory Commission (FERC), Nuclear Regulatory Commission (NRC) and Department of Justice but these announcements signal forward movement and keep the targeted close for the merger on schedule.

“This is another milestone toward completing our merger, and we continue to be on track to close the transaction in the first quarter of 2012,” said Exelon President and COO Christopher M. Crane.

The news wasn't so good for Duke Energy Corp. and Progress Energy Inc.'s proposed merger.

Last week the companies took a big step towards satisfying regulators when they received approval from the NRC for the transfer of indirect control of Progress Energy's nuclear plants to Duke Energy.

However, on Wednesday the FERC said No to a proposed mitigation plan the companies submitted in response to a previous FERC ruling. In September FERC conditionally approved the merger on the condition that Duke and Progress propose mitigation to fix what the Commission called "harmful effects on competition" in the Carolinas.

After reviewing the plan the companies submitted in October the FERC found the plan to be insufficient and listed three reasons why:

• The supporting analysis for the mitigation proposal is flawed and does not demonstrate that the mitigation proposal would remedy the market power screen failures identified in the September order.
• The mitigation proposal does not eliminate the opportunity for the merged company to act anti-competitively. Although Duke and Progress describe the proposal as a virtual divestiture, it would not transfer control of the energy the applicants propose to sell from the merged company.

• The independent monitor proposal would not provide sufficient oversight of the applicants’ compliance with the mitigation proposal.

In a brief joint statement released on Thursday Duke and Progress assert that they are "moving forward with the planned merger." The companies plan to submit a revised mitigation proposal but the FERC ruling will set back the targeted date for the merger to close. In the statement the companies were unable to set a new closing date saying, “the earliest close date would be in March, but will ultimately depend upon the regulatory approval process."

Image Credit: Jeff McNeill via Flickr.