NO. COA13-566

NORTH CAROLINA COURT OF APPEALS

Filed: 4 March 2014

IN THE MATTER OF:

APPLICATION OF DUKE ENERGY 

CORPORATION AND PROGRESS ENERGY, 

INC., TO ENGAGE IN A BUSINESS 

COMBINATION TRANSACTION AND TO 

ADDRESS REGULATORY CONDITIONS AND 

CODES OF CONDUCT

N.C. Utilities Commission

Nos. E-2, Sub 998

 E-7, Sub 986

Appeal by City of Orangeburg, South Carolina and N.C. Waste 

Awareness and Reduction Network from order entered 29 June 2012

by the N.C. Utilities Commission. Heard in the Court of Appeals 

6 November 2013.

Allen Law Offices, PLLC, by Dwight W. Allen, Britton H. 

Allen, and Brady W. Allen; Duke Energy Corporation Deputy 

General Counsel Lawrence B. Somers; and Womble Carlyle 

Sandridge & Rice, LLP, by James P. Cooney, III, for 

Appellee Duke Energy Corporation.

Spiegel & McDiarmid, LLP, by James N. Horwood and Peter J. 

Hopkins, pro hac vice; and Schiller & Schiller, PLLC, by 

David G. Schiller, for Intervenor-Appellant City of 

Orangeburg, South Carolina.

The Law Offices of F. Bryan Brice, Jr., by Matthew D. 

Quinn; and John D. Runkle, for Intervenor-Appellant N.C. 

Waste Awareness Reduction Network.

Public Staff Chief Counsel Antoinette R. Wike and Staff 

Attorney Gisele L. Rankin, for Appellee Public Staff-North 

Carolina Utilities Commission.
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McCULLOUGH, Judge.

Intervenors City of Orangeburg, South Carolina

(“Orangeburg”) and N.C. Waste Awareness and Reduction Network 

(“NC WARN”) appeal from order of the N.C. Utilities Commission 

(the “Commission”) entered 29 June 2012. For the following 

reasons, we affirm the Commission’s order and dismiss 

Orangeburg’s appeal.

I. Background

In accordance with N.C. Gen. Stat. § 62-111(a), on 4 April 

2011, Duke Energy Corporation (“Duke”) and Progress Energy, Inc.

(“Progress”) (collectively the “applicants”) submitted an 

application to the Commission for authorization to: “engage in 

a business combination transaction; revise and apply Duke Energy 

Carolinas, LLC’s (“DEC”) Regulatory Conditions and Code of 

Conduct to Progress and Progress Energy Carolinas, Inc. (“PEC”); 

and nullify PEC’s Regulatory Conditions and Code of Conduct.” 

DEC and PEC, wholly-owned subsidiaries of Duke and Progress, 

respectively, are electric utilities organized, existing, and 

operating under the laws of the State of North Carolina. 

Pursuant to the terms of the Agreement and Plan of Merger (the 

“merger agreement”) entered into by the applicants and attached 
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to the application as Exhibit 1, the business combination

transaction (the “merger”) would occur at the holding company 

level with Diamond Acquisition Corporation, a wholly-owned 

subsidiary of Duke, merging with and into Progress with the 

result that Progress survives the merger as a wholly-owned 

subsidiary of Duke.1 Progress and PEC would remain separate 

legal entities following the merger, with the plan that PEC and 

DEC would merge into a single legal entity in the future.

On 27 April 2011, the Commission entered an Order 

Scheduling Hearing, Establishing Procedural Deadlines, and 

Requiring Public Notice. By the terms of the order, a 

Commission hearing on the application was scheduled to begin on 

20 September 2011.

In the interim, the Commission allowed the intervention of 

thirty-seven (37) different parties, including the Commission’s 

public staff and appellants NC WARN and Orangeburg. Regarding 

appellants, NC WARN filed a petition to intervene on 27 May 2011

that the Commission granted by order entered 7 June 2011;

Orangeburg filed a petition to intervene on 5 August 2011 that 

the Commission granted by order entered 12 August 2011. Also in 

the interim, on 2 September 2011, the applicants and the public 

 

1Duke would acquire all issued and outstanding common stock of 

Progress in exchange for Duke common stock.
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staff entered into an agreement and stipulation of settlement 

(the “Stipulation”) for consideration by the Commission pursuant 

to N.C. Gen. Stat. § 62-69.

By Commission order entered following a pre-hearing 

conference on 19 September 2011, the application, certain 

exhibits, the revised Joint Dispatch Agreement, the Stipulation, 

and the corrected Regulatory Conditions and Code of Conduct were 

admitted into evidence as if introduced at the hearing on the 

application set to begin the following day.

The Commission hearings on the application then began as 

scheduled on 20 September 2011. The hearings lasted three days, 

concluding on 22 September 2011. A supplemental hearing was 

later held on 25 June 2012.

On 27 June 2012, NC WARN filed an offer of proof alleging 

that many facts relevant to the merger had changed significantly 

since the September 2011 hearings and, therefore, the Commission 

should reopen the hearing process. The Commission, however, 

determined the offer of proof was defective and on 29 June 2012

entered an Order Approving Merger Subject to Regulatory 

Conditions and Code of Conduct (the “merger order”). In the 

merger order, which includes 41 findings of fact and over 80

pages of analysis discussing the evidence and reasoning
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supporting the findings, the Commission stated its conclusions

as follows:

The Commission concludes that the 

Stipulation, Regulatory Conditions, Code of 

Conduct, Supplemental Stipulation, as 

amended, guaranteed fuel and fuel-related 

savings, Applicants’ contributions to 

various work force development, low-income 

assistance, environmental and charitable 

programs, and the potential for future 

merger cost savings for ratepayers are 

sufficient to ensure that: (1) the merger 

will have no adverse impact on the rates and 

service of DEC’s and PEC’s North Carolina 

retail ratepayers; (2) DEC’s and PEC’s North 

Carolina retail ratepayers are protected as 

much as reasonably possible from potential 

costs and risks resulting from the merger; 

and (3) there are sufficient benefits from 

the merger to offset the potential costs and 

risks. Therefore, the Commission further 

concludes that the proposed business 

combination between Duke and Progress is 

justified by the public convenience and 

necessity.

In accordance with the terms of the merger order, the 

applicants filed a statement notifying the Commission they 

accepted and agreed with all terms, conditions, and provisions 

of the merger order on 2 July 2010, the same day the merger was 

finalized.

On 26 July 2012, NC WARN filed a motion for reconsideration

of the merger order. The Commission denied NC WARN’s motion by 

order entered 10 December 2012.
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Orangeburg and NC WARN appealed from the merger order to 

this Court.

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II. Discussion

NC WARN and Orangeburg raise distinct issues on appeal. On 

the one hand, NC WARN challenges the merger as a whole, claiming 

there is not substantial evidence to support the Commission’s 

decision to approve the merger. On the other hand, Orangeburg 

challenges the constitutionality of certain regulatory 

conditions imposed in connection with the Commission’s approval

of the merger. We address these issues separately.

A. Standard of Review

The scope of this Court’s review of a Commission decision 

is governed by statute. As our Supreme Court has recognized, 

“‘[t]he decision of the Commission will be upheld on appeal 

unless it is assailable on one of the statutory grounds 

enumerated in [N.C. Gen. Stat. §] 62–94(b).’” State ex rel. 

Utilities Com'n v. Cooper, 366 N.C. 484, 490, 739 S.E.2d 541, 

545 (2013) (quoting State ex rel. Utilities Com'n v. Carolina 

 

2NC WARN also appealed from the Commission’s denial of its motion 

for reconsideration. The issues related to the denial of NC 

WARN’s motion for reconsideration, however, were dismissed by 

the Commission on 29 April 2013 following Duke’s 7 March 2013 

motion to dismiss.
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Utility Customers Ass'n (CUCA I), 348 N.C. 452, 459, 500 S.E.2d 

693, 699 (1998)). N.C. Gen. Stat. § 62-94(b) provides:

So far as necessary to the decision and 

where presented, the court shall decide all 

relevant questions of law, interpret 

constitutional and statutory provisions, and 

determine the meaning and applicability of 

the terms of any Commission action. The 

court may affirm or reverse the decision of 

the Commission, declare the same null and 

void, or remand the case for further 

proceedings; or it may reverse or modify the 

decision if the substantial rights of the 

appellants have been prejudiced because the 

Commission's findings, inferences, 

conclusions or decisions are:

(1) In violation of constitutional 

provisions, or

(2) In excess of statutory authority or 

jurisdiction of the Commission, or

(3) Made upon unlawful proceedings, or

(4) Affected by other errors of law, or

(5) Unsupported by competent, material and 

substantial evidence in view of the 

entire record as submitted, or

(6) Arbitrary or capricious.

N.C. Gen. Stat. § 62-94(b) (2013). As explained by our Supreme 

Court,

“[t]his Court's role under section 62–94(b) 

is not to determine whether there is 

evidence to support a position the 

Commission did not adopt. Instead, the test 

upon appeal is whether the Commission's 

findings of fact are supported by competent, 
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material and substantial evidence in view of 

the entire record. Substantial evidence [is] 

defined as more than a scintilla or a 

permissible inference. It means such 

relevant evidence as a reasonable mind might 

accept as adequate to support a conclusion. 

The Commission's knowledge, however expert, 

cannot be considered by this Court unless 

the facts and findings thereof embraced 

within that knowledge are in the record. 

Failure to include all necessary findings of 

fact is an error of law and a basis for 

remand under section 62–94(b)(4) because it 

frustrates appellate review.”

Cooper, 366 N.C. at 490-91, 739 S.E.2d at 545 (quoting CUCA I, 

348 N.C. at 460, 500 S.E.2d at 699–700 (alteration in original) 

(citations and internal quotation marks omitted)); see also 

State ex rel. Utilities Com’n v. Village of Pinehurst, 99 N.C. 

App. 224, 226, 393 S.E.2d 111, 113 (1990) (“[T]he essential test 

to be applied is whether the Commission’s order is affected by 

errors of law or is unsupported by competent, material, and 

substantial evidence in view of the entire record as 

submitted.”). Yet, “[u]pon any appeal, . . . any . . . finding, 

determination, or order made by the Commission . . . shall be

prima facie just and reasonable.” N.C. Gen. Stat. § 62-94(e).

B. NC WARN’s Appeal

NC WARN is a not-for-profit corporation with members across 

North Carolina that, according to its motion to intervene, seek

“to reduce hazards to public health and the environment from 
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nuclear power and other polluting electricity production through 

energy efficiency and renewable energy resources.” In this 

case, NC WARN was allowed to intervene to advocate that the 

Commission investigate the public convenience and necessity of 

the merger and to address its members’ concerns regarding the 

merger’s potential impacts on the cost of electricity, renewable 

energy projects, and energy efficiency programs.

Now on appeal, NC WARN contends the Commission erred in 

approving the merger because there was insufficient evidence to 

support approval. Specifically, NC WARN argues: (1) the 

applicants failed to submit evidence of the risks posed by the 

merger; (2) there is no evidence the merger will result in 

benefits to the public; and (3) the merger is not justified by 

the public convenience and necessity.

As provided in the Public Utilities Act, “[n]o . . . merger 

or combination affecting any public utility [shall] be made 

through acquisition or control by stock purchase or otherwise, 

except after application to and written approval by the 

Commission, which approval shall be given if justified by the 

public convenience and necessity.” N.C. Gen. Stat. § 62-111(a) 

(2013). Since 2000, the Commission has required that applicants 

submit market-power and cost-benefit analyses as part of an 
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application for an electric utility merger. See Order Requiring 

Filing of Analyses, Docket No. M-100, Sub 129, at 7 (2 November 

2000) (the “Sub 129 Order”).

1. Merger Risks

NC WARN first argues that neither the application nor 

applicants addressed the risks posed by the merger, as required 

by the Sub 129 Order. We disagree. Although there was no 

specific document titled cost-benefit analysis, we find there 

was sufficient consideration of the risks of the merger.

In approving the merger, the Commission explicitly found 

“[t]he Applicants . . . are in compliance with the filing 

requirements established in the Sub 129 Order with respect to 

the market power and cost-benefit analyses submitted with the 

application.” This finding reiterated a prior 27 April 2011 

Commission order concluding the application satisfied the filing 

requirements of the Sub 129 order.

Upon review of the record, we hold there was substantial

evidence to support the Commission’s approval where, in addition 

to the application, the applicants submitted investment analyses 

from three different financial institutions, an analysis of the 

economic efficiencies under joint dispatch, a fuel synergies 

review, and a market power study, among other exhibits.
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Despite recognition of the analyses submitted by the 

applicants, NC WARN argues the analyses only examined the 

potential benefits of the merger and did not constitute a 

comprehensive cost-benefit analysis. We hold that the 

Commission adequately addressed this argument in discussing its 

finding that the applicants met the filing requirements of the 

Sub 129 Order. In the merger order, the Commission noted, 

“[t]he purpose of such analyses is to assist the Commission in 

determining whether or not a merger meets the statutory standard 

for approval.” The Commission then explained,

[t]he Applicants stated in the application 

that the actual integration of Duke and 

Progress and their service companies is 

expected to produce cost savings in addition 

to those identified in the Compass Lexecon 

Study and the Fuel Synergies Review and that 

there will be upfront costs associated with 

achieving these savings. The fact that the 

application did not include a quantification 

of the costs and benefits associated with 

these non-fuel savings, along with the 

exhibits quantifying direct and immediate 

fuel savings, does not constitute a filing 

deficiency insofar as the Sub 129 Order is 

concerned. Moreover, as discussed . . . , 

the record contains ample evidence regarding 

the Applicants’ estimates of both fuel and 

non-fuel savings to support a decision as to 

whether the merger meets the statutory 

standard for approval.
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We find it evident from a review of the merger order that the 

Commission had sufficient evidence to determine whether the 

merger was justified by the public convenience and necessity.

Throughout the merger order, the Commission weighed and 

balanced the benefits of the merger with the known and potential 

costs and risks of the merger. Specifically, in Finding of Fact 

22, the Commission documented the potential costs and risks to 

retail ratepayers that it considered.

Known and potential costs and risks of the 

merger to North Carolina retail ratepayers 

include direct merger costs and other 

merger-related cost increases that could 

impact North Carolina retail rates; the 

potential for preemption of the Commission’s 

regulatory authority under the FPA, 

particularly as it relates to the JDA and 

the Joint OATT, and under the Public Utility 

Holding Company Act of 2005 (PUHCA 2005); 

potential adverse effects on DEC and PEC of 

transactions within the holding company 

family and the resulting need for increased 

regulatory oversight of such transactions, 

including the treatment of joint dispatch 

costs and savings; the potential for DEC and 

PEC to unreasonably favor their unregulated 

affiliates over nonaffiliated suppliers of 

goods and services; potential adverse 

impacts on DEC’s and PEC’s cost of capital; 

the exposure of DEC, PEC, and their 

respective retail ratepayers to costs and 

risks associated with Duke, Progress, and 

their subsidiaries; and the potential for 

DEC’s and PEC’s quality of service to 

deteriorate because of increased management 

focus on cost savings and earnings growth.
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In identifying these costs and risks, the Commission noted that 

“[t]he known and potential costs and risks to North Carolina 

retail ratepayers from a merger affecting one or more regulated 

electric utilities have been well documented in prior merger 

proceedings.” The Commission further found, however, that 

despite these costs and risks, the retail ratepayers were 

adequately protected by the Regulatory Conditions and 

Stipulation approved by the Commission with the merger.

Although no single document entitled cost-benefit analysis 

was presented by the applicants quantifying the known and 

potential costs and risks of the merger, we hold there was 

sufficient evidence of the costs, considering the benefits and 

protections afforded to retail ratepayers, to allow the

Commission to determine that the merger met the statutory 

standard for approval.

2. Public Benefit

NC WARN also argues that there is no evidence that the 

merger will result in benefits to the public. NC WARN instead 

maintains that the benefits resulting from the merger accrue 

solely to the benefit of the emerging entity. We disagree.
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Based on claims in the application and supporting evidence

in the analysis of economic efficiencies under joint dispatch 

and fuel synergies review, the Commission found,

[t]he primary quantifiable benefits of the 

merger to North Carolina retail ratepayers 

consist of an estimated $364.2 million in 

total system fuel and fuel-related cost 

savings over the five-year period 2012 

through 2016 through joint dispatch of DEC’s 

and PEC’s generation assets and an 

additional estimated $330.7 million in total 

system fuel and fuel-related system cost 

savings through sharing and implementing 

best practices for fuel procurement and use 

over the same five-year period.

These savings in turn benefit the ratepayers. As further found 

by the Commission,

[t]he Stipulation [agreed upon by the 

applicants and the public staff] guarantees 

that North Carolina retail ratepayers will 

receive their allocable share of $650 

million of these cost savings, as well as a 

small amount of non-fuel operations and 

maintenance (O&M) cost savings, over five 

years through DEC’s and PEC’s annual fuel 

clause proceedings. . . . Further, if the 

fuel and fuel-related savings achieved by 

DEC and PEC exceed the guaranteed $650 

million during the first five years after 

the merger, then North Carolina ratepayers 

will receive their allocable share of the 

additional savings.

NC WARN does not dispute the fuel cost savings on appeal, 

but contends the savings are temporary, are not a product of the 

merger, and are diminished by settlements to allocate fuel 
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savings to wholesale customers. We are unpersuaded by NC WARN’s 

contentions.

First, the fact that the savings are only guaranteed over 

the first five years does not diminish the benefit of the 

guaranteed savings to retail ratepayers. Second, the fuel 

savings are a product of the merger. As the Commission 

explained, the fuel cost savings “are the result of using the

lower cost resources of each company to displace the higher cost 

resources of the other depending on the marginal cost of 

production of each utility’s available resources in a given 

hour.” Without the merger, these savings from joint dispatch 

would not be possible. Similarly, without the merger, it is 

unlikely the savings from the implementation of best practices 

for fuel procurement and use would be realized because companies 

do not usually share their proprietary skills and practices with 

unaffiliated entities. Third, we are unconvinced that the 

savings to retail ratepayers will be diminished by settlements 

with wholesale customers. As the Commission noted, there was 

testimony that “the settlement agreements between the Applicants 

and parties other than the Public Staff were considered by the

Public Staff in its negotiations of its settlement with the 

Applicants.” Furthermore, the Commission ultimately sets retail 
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rates and the Commission is not bound by the terms of those 

settlement agreements.

In addition to the quantifiable fuel cost savings, the 

Commission also found that “substantial non-fuel O&M cost 

savings are expected to result from the integration of Duke and 

Progress over the long term.” As explained by the Commission, 

this finding is supported by an internal study on merger 

integration savings and witness testimony that a major source of 

the O&M savings is lower payroll costs resulting from the 

elimination of duplicate positions.

Lastly, in addition to the fuel and non-fuel cost savings, 

the Stipulation provides that DEC and PEC will make annual 

community support and charitable contributions of at least $9.2 

million and $7.28 million, respectively, in their service areas 

over four years and contribute $15 million for workforce 

development and low income energy assistance during the first 

year following the merger. Additionally, the merger order 

requires DEC and PEC to contribute $2 million to NC GreenPower.

Considering the significant guaranteed fuel cost savings 

and potential non-fuel cost savings, as well as the commitments 

by DEC and PEC to contribute funds to support the community, 

workforce development, and low income energy assistance, we hold
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there was substantial evidence before the Commission that the 

merger will result in benefits to the public.

3. Public Convenience and Necessity

In NC WARN’s third argument, NC WARN contends the merger is 

not justified by public convenience and necessity for three 

reasons: (1) the merger allows the applicants to manipulate 

prices and harm local markets; (2) the merger will result in job 

losses; and (3) the merger harms low income families. It is

evident from the merger order that the Commission considered 

each of these concerns; nevertheless, the Commission found the 

merger justified by public convenience and necessity. Upon 

review, we affirm the Commission.

Monopsony

NC WARN first argues the merger contradicts the public 

convenience and necessity because it is likely to create a 

monopsony, “a market situation in which one buyer controls the 

market.” Black’s Law Dictionary 1023 (7th ed. 1999). NC WARN 

contends this control could allow the buyer to manipulate 

prices, harming local markets, such as the market for renewable 

energy. NC WARN further contends that based on uncontroverted 

witness testimony concerning the potential for a monopsony 

following the merger, the Commission should have concluded “the 
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merger will harm [local markets] within North Carolina – such as 

renewable energy markets – and therefore the merger cannot be in 

the public convenience and necessity.”

While we acknowledge the potential of a monopsony was 

raised in testimony provided during the Commission hearing, we 

find the Commission adequately addressed the issue in the merger 

order. In explaining the potential costs and risks of the 

merger enumerated in Finding of Fact 22, the Commission 

specifically addressed the testimony of Richard S. Hahn, noting 

“Hahn testified that a result of the merger would be market 

dominance by the merged entities with regard to the procurement 

of renewable energy, leading to unaffiliated renewable energy 

developers foregoing North Carolina development activities.” 

Yet, after considering the rebuttal testimony of B. Mitchell 

Williams, the Commission was not persuaded that the merger would 

negatively impact the market for renewable energy. The 

Commission reasoned,

PEC and DEC are required to meet their 

[Renewable Energy and Energy Efficiency 

Standards (“REPS”)] renewable energy 

obligations in the least cost manner. In 

doing so, they minimize the rate impact to 

their customers of complying with this 

statutory mandate. In addition, to the 

extent the merger allows PEC and DEC to 

lower their REPS compliance costs through 

more efficient resource procurement 
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procedures, this will be a direct benefit to 

their North Carolina customers.

The Commission further explained,

following the close of the merger DEC and 

PEC will each continue to have the same 

obligations they had before the merger to 

refrain from favoring or subsidizing their 

affiliates, to pursue the most reliable, 

prudent and cost-effective resources and 

projects, and to demonstrate that they have 

done so in appropriate proceedings before 

the Commission[.]

Upon review, we hold the Commission’s analysis is supported 

by Williams’ testimony and the governing statutes, N.C. Gen. 

Stat. §§ 62-133.8(b) and 62-133.9(b).

Job Losses

NC WARN also argues the merger contradicts the public 

convenience and necessity because it results in job losses. NC 

WARN specifically points to the testimony of James Rogers, 

William D. Johnson, and Paula Sims to emphasize the applicants’

plan to terminate 2,000 or more jobs (approximately 6.7% of the 

applicants’ workforce) as a consequence of the merger. NC WARN

argues that “[t]hese job losses, in a time of economic crisis, 

weigh strongly against the merger of Duke and Progress.”

We agree the job losses weigh against the public 

convenience and necessity; yet, the number of jobs lost must not 

be considered in isolation.
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Although 2,000 or more jobs were expected to be lost as a 

result of the merger, the evidence before the Commission tended 

to show that a majority of these job reductions would occur 

through retirement, normal attrition, and voluntary severance. 

Furthermore, witness testimony reassured the Commission that 

these reductions would not affect the quality, safety, and 

reliability of DEC and PEC service because the majority of the 

reductions would occur in corporate functions, rather than 

operational functions. Testimony also provided that retained 

employees would benefit from the merger as a result of a larger, 

more diverse company with better career opportunities, 

compensation, and benefits.

It is evident from the merger order that the Commission 

considered the number of jobs lost, the manner in which the 

workforce was reduced, the benefits to the retained employees, 

and the potential benefits to retail ratepayers as a result of 

savings expected to be realized from lower payroll costs in its 

determination that the merger was justified by the public 

convenience and necessity. It is not this Court’s role to 

second guess the determination of the Commission where its 

findings and conclusions are supported by the evidence.

Low-Income Families
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In NC WARN’s final argument, NC WARN argues the merger 

contradicts the public convenience and necessity because it 

harms low-income families. Specifically, NC WARN relies on the 

testimony of Roger D. Colton and contends the merger will 

eliminate the individualized customer service on which lowincome families rely to manage the costs of electricity.

It is evident from the merger order that the Commission 

considered Colton’s testimony but was unpersuaded. The 

Commission explained,

[t]he Commission determines that the needs 

of low-income customers to manage their 

energy usage and be financially able to pay 

their bills are undeniably real and 

substantial, and the agencies and 

individuals who are committed to addressing 

those needs, particularly in times of 

economic hardship and high unemployment, 

have a considerable undertaking to manage. 

However, the Commission does not agree with 

witness Colton that the merger will 

adversely affect those customers or that 

conditions of the merger approval should be 

a major vehicle for addressing their energy

needs.

The Commission was persuaded, however, “that the Applicants’ 

commitments in the proposed Regulatory Conditions, along with 

the Commission’s Rules and Regulations and monitoring by the 

Commission and the Public Staff, are sufficient to ensure that 

there is no diminution of resources to assist low-income 

customers and other customers of DEC and PEC.”
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Upon review of Williams’ rebuttal testimony, we hold the 

Commission’s analysis is supported by the evidence. In 

rebuttal, Williams testified that Colton’s concerns were 

speculative and “that this merger will do absolutely nothing to 

impair or modify [the] Commission’s jurisdiction, consumer

protection authority or regulatory control over the combined 

company.” Specifically, Williams identified numerous Commission 

Rules and Regulatory Conditions that ensure quality customer 

service. Williams further testified the merger would not affect 

the discretion of customer service representatives and would not 

constrain the range of options available to customer service 

representatives assisting low income families manage payments.

NC WARN further contends that the payment of $15 million 

dollars by DEC and PEC within the first year following the 

merger is inadequate to remedy the harm to low income families 

resulting from the merger. NC WARN instead asserts that the 

Commission should have required the applicants to pay $270 

million, $27 million per year for 10 years, as recommended by 

Colton. We disagree.

As stated above, the Commission was clear that it did not 

agree with Colton’s analysis. Although there is no direct 

evidence to link the $15 million payment to the harm to low-
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income families, we hold the Commission did not err in approving 

the payment. As the Commission noted, the merger approval 

should not be the vehicle to address the energy needs of low 

income families. The statutory requirement for merger approval 

is that the merger is justified by the public convenience and 

necessity. Here, the $15 million dollar payment agreed to in 

the Stipulation is just a portion of the economic benefits to 

low income families, who also benefit from the $650 million in 

guaranteed savings to retail ratepayers.

Where it is evident that the Commission considered the 

potential costs and risks of the merger and weighed them against 

the anticipated benefits, and where there is substantial 

evidence supporting the Commission’s findings and conclusions, 

we will not second guess the Commission’s determination that the 

merger is justified by the public convenience and necessity. 

Thus, we affirm the Commission’s approval of the merger in the 

merger order.

C. Orangeburg’s Appeal

Orangeburg, through its Department of Public Utilities,

provides electric services to approximately 25,000 residential, 

industrial, and commercial customers in the City of Orangeburg 

and Orangeburg County. With a generation capacity of only 23.5 
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megawatts and a growing total peak load of over 180 megawatts, 

Orangeburg is reliant on wholesale purchases of power to meet 

the needs of its customers.

When the Commission entered the merger order, the 

Commission approved the application “subject to the provisions 

of [the merger order] and the Regulatory Conditions and Code of 

Conduct[.]” Just as Orangeburg argued before the Commission, 

Orangeburg, as “a potential wholesale power customer of Duke or

Progress and a competitor for industrial load with utilities in 

the Southeastern United States[,]” challenges Regulatory 

Conditions 3.6, 3.7, and 3.9 on appeal.

In short, these Regulatory Conditions provide the 

following: (1) DEC and PEC “shall continue to serve [their] 

Retail Native Load Customers with the lowest-cost power it can 

reasonably generate or obtain . . . before making power 

available for sales to customers that are not entitled to the 

same level of priority[;]” (2) DEC and PEC shall give written

notice to the Commission prior to “execut[ing] any contract that 

grants Native Load Priority to a wholesale customer” other than 

the historically served wholesale customers recognized by the 

Commission; and (3) “[t]he Commission retains the right to 

assign, allocate, impute, and make pro-forma adjustments with 
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respect to the revenues and costs associated with both DEC’s or 

PEC’s wholesale contracts for retail ratemaking and regulatory 

accounting and reporting purposes.”

Orangeburg argues these Regulatory Conditions effectively 

restrict the sale of low cost wholesale power to certain 

Commission-favored wholesale customers in violation of the 

Commerce Clause and Supremacy Clause of the U.S. Constitution. 

As a result, Orangeburg, which is not one of the Commissionfavored wholesale customers, contends it is competitively 

disadvantaged and will not receive competitive offers to 

purchase wholesale power in the future.

Below, the Commission considered these same arguments; 

nevertheless, the Commission approved the merger subject to the 

Regulatory Conditions finding,

[t]he Commission-approved Regulatory 

Conditions effectively protect as much as 

reasonably possible the Commission’s 

jurisdiction as a result of the merger, 

including risks related to agreements and 

transactions between and among DEC, PEC, and 

their affiliates, including the JDA;

financing transactions involving Duke, DEC, 

or PEC, and any other affiliate; the 

ownership, use and disposition of assets by 

DEC or PEC; participation in the wholesale 

market by DEC or PEC; and filings with 

federal regulatory agencies. In addition 

they insulate DEC’s and PEC’s retail 

ratepayers as much as reasonably possible 

from any adverse consequences potentially 
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resulting from the merger.

In fact, in discussing the evidence and conclusions supporting 

the above finding, the Commission specifically addressed

Orangeburg’s challenges to Regulatory Conditions 3.6, 3.7, and 

3.9, noting that “[t]he Commission, the North Carolina appellate 

courts[,] and FERC have been confronted by Orangeburg’s 

arguments or by similar arguments by others on previous 

occasions.” Following a discussion of these prior occasions, 

the Commission then explicitly rejected Orangeburg’s challenges. 

“The Commission [further] determine[d] that Orangeburg lacks 

standing at this time and in these dockets to raise these issues 

and alternatively that Orangeburg’s arguments as they

contemplate potential future harm are not ripe for 

consideration.”

Upon review, we agree with the Commission’s analysis; yet, 

we do not reach the merits of Orangeburg’s challenges to the 

Regulatory Conditions on appeal because we hold Orangeburg lacks 

standing to appeal the merger order. Therefore, we dismiss 

Orangeburg’s appeal.

N.C. Gen. Stat. § 62-90 provides that a “party aggrieved” 

by a final Commission order or decision has standing to appeal. 

N.C. Gen. Stat. § 62-90(a) (2013). “Generally, ‘a “party 

aggrieved” is one whose rights have been directly and 
-27-

injuriously affected by the judgment entered[.]’” State ex rel. 

Utilities Com'n v. Carolina Utility Customers Ass'n, Inc. (CUCA

II), 163 N.C. App. 1, 10, 592 S.E.2d 277, 282 (2004) (quoting 

Hoisington v. ZT-Winston-Salem Assocs., 133 N.C. App. 485, 496, 

516 S.E.2d 176, 184 (1999) (citations omitted)). In this case, 

we hold Orangeburg is not a party aggrieved at this time.

In January 2011, Orangeburg entered into a wholesale power 

supply agreement with S.C. Electric & Gas Co. (“SCE&G”) to 

purchase its power requirements from SCE&G from 1 January 2012 

through at least 31 December 2022.3 As a result of this 

agreement, Orangeburg is not currently in the market to purchase

wholesale power from DEC or PEC and will not be until it 

reenters the market in search of a new agreement several years 

before the current agreement expires. Thus, Orangeburg is not 

aggrieved by the Regulatory Conditions it challenges. 

Furthermore, we find our holding is bolstered by Orangeburg’s 

own declaration that it is merely “a potential wholesale power 

customer of Duke and Progress.” As the Commission recognized, 

there are many variables subject to change prior to the time 

Orangeburg is back in the wholesale market.

 

3The wholesale power supply agreement between Orangeburg and 

SCE&G provided SCE&G an option to extend the agreement through 

31 December 2023.
-28-

Despite its contract to purchase wholesale power from SCE&G 

through at least 31 December 2022, Orangeburg argues it has 

standing to challenge the regulatory conditions because the 

Commission, by allowing it to intervene, necessarily determined 

that it had an interest in the merger and a right to be heard. 

We are unpersuaded by Orangeburg’s argument.

The standards for intervention and standing are discrete 

and distinguishable. Intervention in a Commission proceeding is 

governed by Commission Rule 1-19, which provides that “[a]ny 

person having an interest in the subject matter of any hearing . 

. . before the Commission may become a party thereto . . . by 

filing a verified petition with the Commission” that includes, 

among other requirements, “[a] clear, concise statement of the 

nature of the petitioner’s interest in the subject matter of the 

proceeding, and the way and manner in which such interest is 

affected by the issues involved in the proceeding.” N.C. Admin. 

Code. tit. 4, c. 11, r. 1-19(a) (June 2012). Rule 1-19 further 

provides: 

[L]eave to intervene filed within the time 

herein provided, in compliance with this 

rule and showing a real interest in the 

subject matter of the proceeding, will be 

granted as a matter of course, but granting 

such leave does not constitute a finding by 

the Commission that such party will or may 

be affected by any order or rule made in the 
-29-

proceeding.

N.C. Admin. Code. tit. 4, c. 11, r. 1-19(d) (emphasis added). 

On the other hand, and as discussed above, standing is statutory 

and requires the party to be aggrieved. See N.C. Gen. Stat. §

62-90(a). As this Court has recognized, “[t]his Court's 

interpretation of ‘party aggrieved’ as it relates to an appeal 

of an order by the Commission . . . suggests that more than a 

generalized interest in the subject matter is required.” CUCA 

II, 163 N.C. App. at 10, 592 S.E.2d at 282-83 (citing State ex 

rel. Utilities Com’n v. Carolina Utility Customers Ass’n, 104 

N.C. App. 216, 408 S.E.2d 876 (1991) (holding CUCA was not an 

aggrieved party and dismissing its appeal of an order by the 

Commission for lack of standing because CUCA had failed to show 

that its interest in person, property, or employment has been 

substantially adversely affected, directly or indirectly); State 

ex rel. Utilities Com'n v. Carolina Utility Customers Ass'n, 142 

N.C. App. 127, 136, 542 S.E.2d 247, 253 (2001) (holding that 

CUCA was not a “party aggrieved” and thus, lacked standing to 

appeal “because the Commission's order did not impact rates and 

because any rate increases [would] be effectuated at subsequent 

rates cases”)).

Although Orangeburg may have had an interest in the 

proceedings before the Commission, Orangeburg is not currently 
-30-

in the market to purchase wholesale power and, therefore, not 

directly and injuriously affected by the Regulatory Conditions 

approved by the Commission at this time. Thus, we hold 

Orangeburg is not an aggrieved party and dismiss its appeal for 

lack of standing. Additionally, although we dismiss

Orangeburg’s appeal for lack of standing, we take this 

opportunity to note, as did the Commission, that regulatory 

conditions similar to those challenged by Orangeburg have been 

upheld by the Commission, this Court, and FERC in prior cases. 

See State ex. re. Utilities Com’n v. Carolina Power & Light Co., 

359 N.C. 516, 614 S.E.2d 281 (2005).

III. Conclusion

For the reasons discussed above, we hold the Commission did 

not err in determining the merger was justified by the public 

convenience and necessity and, therefore, affirm the 

Commission’s approval of the merger. Furthermore, having 

determined Orangeburg lacks standing to raise a challenge to the 

regulatory conditions on appeal, we dismiss Orangeburg’s appeal.

Affirmed in part and appeal dismissed in part.

Judges ELMORE and STEPHENS concur.