Nearly 130,000 eastern North Carolina electric customers could soon have a new corporate parent, as NextEra Energy moves to acquire Dominion Energy in a $66.8 billion utility megamerger.
The companies announced last week that they have entered into a merger agreement, creating what they described as the world’s largest regulated electric utility business by market capitalization.
The combined company would serve about 10 million utility customer accounts across Florida, Virginia, North Carolina, and South Carolina, and own 110 gigawatts of generation from a mix of energy sources.
In last week’s merger announcement, the companies stated that the combined firm aims to better address growing power demand and keep bills affordable by reducing operational, procurement, construction, and financing costs.
The proposed merger comes as utilities across the country are preparing for increased electricity demand driven by population growth, economic development, electrification, and energy-intensive industries, such as data centers and artificial intelligence.
“Electricity demand is rising faster than it has in decades,” NextEra CEO John Ketchum said in the announcement. “Projects are getting larger and more complex. Customers need affordable and reliable power now, not years from now. We are bringing NextEra Energy and Dominion Energy together because scale matters more than ever — not for the sake of size, but because scale translates into capital and operating efficiencies. It enables us to buy, build, finance and operate more efficiently, which translates into more affordable electricity for our customers in the long run.”
In a conversation with Carolina Journal, Stephen Haner, senior fellow for state and local tax policy at the Thomas Jefferson Institute for Public Policy, supported the claim that rising electricity demand is a leading reason behind why Dominion is pursuing the merger.
“Dominion’s estimates show they are going to need $500 billion over the course of the next 10 years, so $60 billion a year to build new generation, transmission, and substation facilities,” Haner said. “Dominion is looking at a queue of applications, actual engineering sign-ups, and actual data center demand that is now approaching 70 GB for a 25-gig-watt utility, so this is a problem, and they need cash fast. I think, to some extent, I buy the argument that there’s an economic requirement, at least on the part of Dominion, to do this. I think that on the part of NextEra, it’s an economic opportunity.”
Under North Carolina law, mergers, consolidations, and combinations involving public utilities require approval from the North Carolina Utilities Commission. The commission must determine whether a proposed transfer, merger, or change of control is in the public interest and will not adversely affect public utility service.
That review could put a spotlight on how the merger would affect North Carolina customers’ monthly bills, storm response, reliability, local operations, and future infrastructure costs.
Haner said the merger review is likely to increase the combined company’s influence in Raleigh and Washington.
“The combined entity will also be a political player far more formidable than either company was on its own,” he said. “Both companies have proven they are happy to leverage that power within state capitals and in Washington.”
Dominion CEO Robert Blue said in the release that the deal focuses on customers, citing bill credits, ongoing generation investments, reliability, storm resiliency efforts, and employee protections.
“Dominion Energy and NextEra Energy share a deep commitment to delivering reliable and affordable energy and to the customers and communities we are honored to serve,” Blue said. “This combination brings together two strong operating platforms and creates an even stronger energy partner for Virginia, North Carolina, South Carolina and Florida, with the scale and balance sheet to deliver the generation, transmission and grid investments our customers and economies need.”
The most immediate promised benefit for customers is a one-time bill credit. NextEra and Dominion say they would provide $2.25 billion in bill credits to Dominion Energy customers in Virginia, North Carolina, and South Carolina over the first two years after the merger closes.
“Most importantly, this combination is built around our customers,” Blue added. “The bill credits we are committing to, the continued investments in generation, reliability and storm resiliency and our commitments to retain our team and dual headquarters in Juno Beach and Richmond.”
But it remains unclear how much of that money would go to North Carolina customers, how the credits would be divided, or how much the average Dominion Energy North Carolina customer would see on their monthly bill, leaving some skeptical.
“Power bills are going up no matter what happens,” Haner added. “Our bills are going up, and they’re going to keep going up, and all the political promises in the world are not going to change the fact that power bills are going up. In my mind, it’s not a question of whether this will lower bills; it’s a question of whether this will accelerate or decelerate that process. I think in terms of the average consumer who’s watching his power bill go up and fuming about it, he probably won’t notice much difference.”
The companies expect the transaction to close in 12 to 18 months, pending shareholder and regulatory approvals.
The reported sale would leave NextEra Energy shareholders owning approximately 74.5% of the combined company and Dominion Energy shareholders owning approximately 25.5%.
The deal has been approved by both companies’ boards of directors.