                           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.
                                          -2-



    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
                                          -3-
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

1
 Duke would acquire all issued and outstanding common stock of
Progress in exchange for Duke common stock.
                                            -4-
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
                                       -5-
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.
                                        -6-
     Orangeburg and NC WARN appealed from the merger order to

this Court.2

                              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




2
 NC 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.
                                 -7-
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,
                                     -8-
         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
                                            -9-
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
                                       -10-
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.
                                        -11-
      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.
                                   -12-
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.
                                         -13-
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.
                                   -14-
    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
                                            -15-
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
                                            -16-
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
                                          -17-
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
                                      -18-
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
                                          -19-
             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.
                                          -20-
       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
                                      -21-
      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   low-

income 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.”
                                             -22-
    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-
                                         -23-
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
                                      -24-
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
                                        -25-
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 Commission-

favored    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
                                           -26-
              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.



3
 The 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.
