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Kentucky PSC Approves Cinergy-Duke Merger Bid

The Kentucky Public Service Commission (PSC) has approved an agreement resolving all issues related to the planned merger between Cinergy and Duke Energy. The Kentucky approval marks the second state-level green light given to the Cinergy-Duke deal (see Daily GPI, May 10).

The Kentucky PSC's approval follows several months of intense negotiations following the recommendation of Attorney General Greg Stumbo in September that the deal be rejected. Stumbo recommended rejecting the proposal due to what he said was Duke's unwillingness to fully disclose financial information relating to the merger, especially documents concerning customers' savings.

The agreement, which was reached with the attorney general, Kroger Co. and others, includes a $7.6 million merger savings rate credit. Cinergy utility subsidiary Union Light, Heat and Power Co. (ULH&P) will credit to its 129,000 gas and electric customers in Northern Kentucky a total of $7.6 million over a five-year period following the closing of the merger. Electric customers will receive a credit of $1.3 million and gas customers $183,000 in each of the five years.

The agreement also includes profit-sharing for off-system power sales. Cinergy/ULH&P will share profits from off-system sales, ensuring that in 2006 a minimum of $1.45 million of sales profits will go to Cinergy/ULH&P electric customers. Also, the agreement includes commitments that will protect Kentucky customers from adverse impacts in retail customer service, customer satisfaction and reliability in achieving merger savings, Cinergy noted.

As noted in previous filings with the Kentucky PSC, retail rates will not be impacted by the costs associated with the new Duke Energy acquiring Cinergy stock or any premium paid in the acquisition, Cinergy said.

Kentucky is the second state to approve the merger following South Carolina. Discussions are continuing in Indiana, North Carolina and Ohio.

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