Duke Energy Ohio Customers to Pay $14 Million

NEW YORK ( TheStreet) -- Duke Energy ( DUK) made a bold move to become the biggest utility in the U.S. on Monday when it announced the planned $13.7 billion acquisition of Progress Energy ( PGN). Inherent in optimism about the mega-utility merger gaining regulatory approval is cost-savings to be passed along to electricity customers.

Duke Energy said in announcing the Progress Energy deal that as much as $600 million to $800 million in cost savings would be passed on to rate payers.

In a minor footnote to the big savings that Duke and Progress say their deal will bring to consumers, an Ohio regulatory body announced this week that Duke Energy Ohio customers will pay $14.1 million for the utility's repair costs from Hurricane Ike-related windstorm in 2008.

The $14.1 million that Duke Energy customers are left to cover was a victory of sorts for the consumer. Duke Energy was looking to pass on $28.4 million in hurricane-related costs to electricity customers in Ohio.

The Public Utilities Commission of Ohio on Tuesday approved a portion of Duke's request for hurricane expenses, which mean the average residential customer will pay 35 cents a month over three years, or a total of about $12.60 per customer.

Ohio regulators cut in half the amount of expenses asked for by Duke Energy, including overtime for salaried employees and contractor costs that Ohio regulators think neighboring states should pay.

Duke Energy has 30 days to review the ruling and request reconsideration. A Duke Energy spokesman told the AP, "We believe that the costs we incurred in the power restoration were appropriate operating and maintenance expenses."

The Public Utilities Commission of Ohio argued that the costs that weren't reasonable based on commission guidelines.

A consumer counsel representative told the AP that the victory was short of complete: it had asked Ohio to reject up to $23.3 million of Duke's request, leaving customers on the hook for only $5.1 million.

When the mega-merger in the utility sector was announced on Monday, shares of both Duke Energy and Progress Energy slipped in trading, though they have since ticked up slightly as the markets have moved bullishly in the past two trading sessions.

-- Written by Eric Rosenbaum from New York.

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