Duke Merger With Progress Draws FERC Audit

The U.S. Federal Energy Regulatory Commission said it will audit Duke Energy Corp. (DUK)’s 2012 merger with Progress Energy Inc. to determine whether the company complied with conditions the agency imposed to approve the deal.

Norman Bay, director of the FERC’s Office of Enforcement, notified Charlotte, North Carolina-based Duke of the audit in a letter today that was posted on the agency’s website.

Duke’s $17.8 billion takeover of Raleigh, North Carolina-based Progress in July 2012 drew scrutiny before regulators approved creating the nation’s largest electric utility by market value. The FERC in December 2011 rejected the merger, setting conditions on the company’s ability to control the market for electricity prices in North and South Carolina.

Duke Energy spokesman Tom Williams said today by telephone that the audit wasn’t unexpected, because the FERC does similar reviews of major utility takeovers.

“We look forward to fully cooperating with the FERC,” he said in a statement.

The FERC said the audit will include company subsidiaries’ compliance with limits set by the regulator on prices. The audit will cover from Jan. 1, 2011, to the present.

Williams said the merger conditions are already under review by an independent monitor and that the company is ahead of schedule on upgraded required by the FERC for new power lines.

The agency also audited the 2012 merger of Exelon Corp. (EXC) and Constellation Energy Group Inc. and FirstEnergy Corp. (FE)’s 2011 takeover of Allegheny Energy Inc., FERC spokeswoman Mary O’Driscoll said in an e-mail.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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