If the customer authorized the charge and was charged the correct amount causing Reg E not to apply how should we respond when we provide credit. I assume we should not say it is final because when we charge it back the merchant could dispute chargeback?

There is no need to make credit final until you resolve your investigation. Since Reg E does not apply you are not bound by the provisional credit/final credit timeframes so take your time work through the chargeback process until you are able to resolve.

So when a chargeback is processed we should communicate that it is provisional correct?

Since Reg E doesn't apply, why even provide provisional credit? Wait and see what you learn from the merchant.