The Indiana Utility Regulatory Commission has approved an agreement resolving all issues related to the commission's review of Cinergy's planned merger with Duke Energy.
PSI Energy Inc., the Indiana utility subsidiary of Cinergy Corp., reached a settlement agreement last December with the staff of the Indiana Utility Regulatory Commission, the Indiana Office of Utility Consumer Counselor, and the PSI Industrial Group. Some of the key elements of the agreement include:
- US$40 million merger savings rate credit: PSI will credit to its Indiana electric customers $40 million over one year beginning 30 to 60 days following the close of the merger.
- $5 million for low-income energy assistance and clean coal technology: After the merger closes, PSI will make an annual contribution of $1 million for five years, starting in 2006 and ending in 2010. PSI will split the funds equally between the state Low Income Home Energy Assistance Program and the Indiana Center for Coal Technology Research based at Purdue University.
- Service quality and customer service standards: PSI agreed to file quarterly performance reports with state regulators on customer service standards, such as the number and length of power outages as well as average speed of answer in the company's customer Call Center. If benchmarks are not met, PSI will implement a service remediation plan as approved by state regulators.
"During a period of rising fuel and environmental costs, customers will benefit from the merger's efficiencies and cost savings," said PSI President Kay Pashos. "We've also committed to service quality benchmarks and are joining with a company that is ranked first in its region when it comes to customer service."
The merger, announced May 9, 2005, was approved by both companies' shareholders March 10 and has been approved by state regulators in Ohio, Kentucky and South Carolina as well as Indiana; by the Federal Energy Regulatory Commission and the Nuclear Regulatory Commission. The companies also have satisfied Federal Trade Commission and U.S. Department of Justice review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Regulators in North Carolina are currently considering a settlement agreement reached between the company and the North Carolina Utilities Commission Public Staff. The companies hope to receive an order from regulators in North Carolina later this month and expect to close the merger around the first of April.
The new company's Indiana operations, including ratemaking, will continue to be regulated by the Indiana Utility Regulatory Commission.
Upon closing, the existing electric and gas utilities - PSI Energy in Indiana; Cincinnati Gas & Electric in Ohio; Union Light, Heat and Power in Kentucky; and Duke Power in North Carolina and South Carolina - will all do business using the Duke Energy name. Paul M. Anderson, currently chairman and chief executive officer of Duke Energy, will become chairman of the board of the new Duke Energy. James E. Rogers, currently chairman and chief executive officer of Cinergy, will be president and CEO.