Duke Updates: Progress Deal on Track, Subsidiaries Join Regional Transmission Group

Duke Energy’s (NYSE:DUK) local subsidiaries Duke Energy Ohio Inc. and Duke Energy Kentucky Inc. joined PJM Interconnection LLC, a regional transmission organization, starting midnight of January 1, 2012. The transmission lines owned by the subsidiaries will be directly controlled by PJM. The recent development is a result of the Federal Energy Regulatory Commission’s (FERC) push for sustaining competition post the Duke-Progress merger. ^[1]

Duke Energy is one of the largest electric utilities in the U.S. with approximately 35,000 megawatts of electric generating capacity in the Carolinas and the Midwest, as well as natural gas distribution services in Ohio and Kentucky.

Our price estimate for Duke is about $21, which is roughly in line with the current market price.

See our complete analysis for Duke Energy here

The PJM Interconnection ^[1]

PJM Interconnection is officially authorized by the federal government to manage the electric transmission system by regulating the distribution and transmission of wholesale electricity in the area under its consideration. It serves a 211,000 square mile area spanning 13 states and District of Columbia. Dayton Power and Light Co. is one of the other utility company under the PJM.

Duke and Progress Energy are moving ahead with a proposed $26 billion merger, which will create country’s largest utility company and potentially save millions of dollars in operational costs. FERC has had objections for the merger because of fears that the merged entity will be too big for any kind of competition to prevail. Therefore Duke and Progress Energy are taking steps to give the regulatory control over some of their subsidiaries such as the current inclusion of Duke Energy Ohio and Duke Energy Kentucky in PJM.

Duke Energy plans power lines upgrades near Cherokee site ^[2]

Duke Energy’s 161-kilovolt transmission line up-gradation project near the Eastern Band of Cherokee’s reservation in the North Carolina mountains was opposed by the tribal community and other residents in Kituwah Valley.

They complained to the North Carolina Utilities Commission with an argument that the construction will hamper the scenic beauty of the site sacred to the Cherokee. The Commission ruled the dispute in favor of Duke Energy on the pretext that there was not enough proof to consider a damage to the natural beauty and it is not under the commission’s authority to order a compensation for loss of property in the region.

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1. Duke Energy subsidiaries set to join PJM, Bizjournals [↩] [↩]
2. Duke Energy cleared to build high voltage line near reservation, Bizjournals [↩]