Federal regulators approved the deal; regulators in North Carolina and South Carolina are still reviewing it; Google and Walmart back it with conditions; an industrial group urges rejection; and three recent settlements address expected benefits.
Key Points
- FERC has approved Duke Energy’s plans to merge its two Carolina utilities — DEC and DEP — into DEC, a single utility referred to as "Carolinas 1U,"
- Duke still needs sign-off from utility regulators in both North Carolina and South Carolina, where contested proceedings continue.
- Google, Walmart, and others back the deal in a negotiated settlement, with Google also pushing for a Clean Transition Tariff for large-load customers.
- An industrial ratepayer group opposes the merger, warning that projected savings may never materialize and that transmission upgrades to integrate the two systems could be prohibitively expensive.
Duke Aims to Consummate Deal by January 2027
A proposed merger that would combine Duke Energy's two Carolinas utilities into a single entity is gaining momentum — but not without challenges.
Duke Energy Carolinas, LLC (DEC) and Duke Energy Progress, LLC (DEP) each have service territories spanning North and South Carolina. The two companies came under common ownership with the 2012 merger of Duke Energy and Progress Energy, but have operated as separate but closely coordinated utilities since then. They are now seeking regulatory approvals to consolidate the companies into one entity under the banner "Carolinas 1U," a deal that Duke says will deliver more than $1 billion in net savings to customers.
Federal regulators have already signed off, but the merger still needs approval from both the North Carolina Utilities Commission and the South Carolina Public Service Commission, where industrial customers are raising concerns about the merger and a broad coalition including Google and Walmart has negotiated settlement terms. The question of who really benefits is still being considered in both North Carolina and South Carolina.
The stakes are high. Duke projects the merger will result in system savings for customers by removing legal and regulatory barriers that currently prevent the two utilities from operating as a fully integrated system. The combined entity would serve retail and wholesale customers across both North Carolina and South Carolina under one roof, with DEC surviving as the merged utility and remaining a wholly-owned subsidiary of Progress Energy, itself a subsidiary of Duke Energy.
The merger would be accomplished in two steps: first, Duke would contribute DEC to Progress Energy, and then DEP would merge into DEC. Duke has set an ambitious target, seeking to consummate the deal by January 1, 2027. Regulatory approval is required from three bodies: the North Carolina Utilities Commission, the South Carolina Public Service Commission, and the Federal Energy Regulatory Commission (FERC). FERC has already signed off, approving the merger on January 30, 2026.
Google Backs the Deal, Calling for Clean Energy Innovation
Among the intervenors supporting the merger before the North Carolina Commission is Google, whose witness, Dr. Carolyn Berry, told the Commission that the deal promises real benefits for Duke’s customers.
Dr. Berry testified that large-load customers like Google bring stability to the grid. Their consistent, predictable energy consumption helps utility planners optimize existing generation and transmission infrastructure, potentially delaying costly new investments and improving overall system efficiency.
One of the most compelling advantages, Dr. Berry explained, is geographic flexibility. Under the current structure, DEC and DEP are restricted to building generation within their own service territories. The merger would eliminate that constraint, allowing Duke to build solar resources in DEP's territory — where costs are lower — and use them to serve DEC customers.
But Google’s support came with a condition: Google urged the Commission to require Duke to implement a Clean Transition Tariff (CTT), modeled after a similar program run by NV Energy in Nevada. The CTT would allow large-load customers to bring their own clean energy resources and shoulder the financial risk of meeting their capacity needs — accelerating the shift to 24/7 carbon-free energy without passing costs along to non-participating ratepayers.
Industrial Customers Push Back
Not everyone is convinced that the merger will bring savings and is a good idea. In North Carolina, the Carolina Industrial Group for Fair Utility Rates II & III (CIGFUR) opposed the merger, with two witnesses recommending that the Commission reject the deal outright.
CIGFUR witness Bradford D. Muller warned that the projected savings may never materialize and urged the Commission to impose safeguards if it does approve the merger. Among his recommendations: a performance management penalty in future rate proceedings if Duke fails to deliver on its savings promises; amendments to Duke's Code of Conduct to address evolving reliability needs; and a requirement that Duke hold ratepayers harmless for any solar-related transmission investments triggered by the merger.
According to Mr. Muller, the costs for new transmission triggered by the merger are not hypothetical. Mr. Muller pointed out that DEP's service territory has limited interties with DEC's territory, meaning that building solar in DEP's region to serve DEC customers would likely require significant — and expensive — transmission upgrades to move electricity between the two systems. Mr. Muller did not make this argument with regard to transmission costs associated with non-solar resources.
CIGFUR witness Brian C. Collins similarly called for the merger to be denied and offered an extensive list of conditions should the Commission allow it to proceed. Mr. Collins requested demand-side management and energy efficiency (DSM/EE) reforms, including compensation for non-residential customers that reflects avoided costs and a bifurcation of collaborative programs for residential and non-residential customers. He recommended adjustments in the Carbon Plan and Integrated Resource Plan (CPIRP) proceeding, including updated coal retirement analysis under merged-system assumptions and transparent, all-inclusive customer bill impact projections broken down by customer class. Mr. Collins further advocated for expanded voluntary clean energy procurement programs — including wheeling for off-site clean generation and a CTT. He also recommended that any transmission upgrades triggered solely by the merger undergo a cost-benefit review before Duke can recover those costs from ratepayers.
Two North Carolina Settlements Support the Merger
As the proceeding progressed in North Carolina, Duke, the Public Staff, and a number of intervening parties moved to find common ground. Two key settlements resulted.
On February 19, 2026, Duke and the Public Staff reached an Agreement and Stipulation of Settlement on the Regulatory Conditions and Code of Conduct, agreeing to revisions and committing to ongoing good-faith discussions about related issues.
Eight days later, a broader deal came together. On February 27, 2026, Duke entered into a Comprehensive Agreement and Stipulation of Settlement with a coalition of parties — the Public Staff, Google, Walmart, the North Carolina Sustainable Energy Association, the Southern Alliance for Clean Energy, the North Carolina Housing Coalition, the North Carolina Justice Center, Vote Solar, and Nucor Steel Lexington — collectively known as the "Stipulating Parties." The settlement fully resolved all issues among those parties.
At the heart of the agreement was the most contentious question in the case: will Duke’s projected savings actually materialize? Under the settlement terms, Duke guaranteed that the benefits will exceed both the costs to achieve them and the "Share the Benefits" contribution to South Carolina customers, backed by shareholder guarantees.
The settlement also established a framework for measuring and tracking benefits to North Carolina retail customers, ensuring transparency and accountability.
Sharing the Benefits Across State Lines
One of the settlement's most significant provisions addresses a contentious issue: the cost reallocation impact to customers in South Carolina.
Currently, South Carolina's retail jurisdiction makes up a larger share of the lower-cost DEC system. After the merger, South Carolina would absorb a large overall allocation of system costs from the higher-cost DEP system. To offset that financial impact, the Stipulating Parties agreed to a "Share the Benefits" plan that temporarily directs contributions from other jurisdictions to South Carolina retail customers.
Starting in 2030, North Carolina retail customers will contribute $25 million annually for six years, totaling $150 million. Wholesale customers have committed to $55 million per year for five years, totaling $275 million. The Stipulating Parties described this framework as a key element in achieving a balanced outcome across the North Carolina and South Carolina jurisdictions.
Another Settlement in South Carolina
A few weeks after the North Carolina comprehensive settlement was agreed to, on March 6, 2026, Duke entered into an Agreement and Stipulation of Settlement in South Carolina with some of the same parties to the North Carolina settlement -- the South Carolina Office of Regulatory Staff, Walmart, the South Carolina Coastal Conservation League, the Southern Alliance for Clean Energy, Upstate Forever, Vote Solar, and Nucor Steel-South Carolina. The South Carolina Stipulating Parties agreed to a reallocation of costs to South Carolina customers and Duke committed to overall system benefits. Like the North Carolina settlement, the South Carolina settlement required Duke to track overall system savings. If the expected financial benefits are not achieved, Duke’s shareholders will be on the hook for funding the shortfall.
What Comes Next
FERC has already approved the merger, but the North Carolina and South Carolina Commissions must also do so. Even though there are settlements in North Carolina and South Carolina, there is still opposition to the merger for the Commissions to consider.
Fox Rothschild is monitoring these ongoing regulatory proceedings and will provide updates on significant developments, including whether the North Carolina regulators will:
- require Duke to engage stakeholders in designing a Clean Transition Tariff;
- impose DSM/EE reforms affecting large-load customers; and
- change the rate recovery mechanism for transmission investments tied to new solar generation.
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