Delaware suit alleges conspiracy by Duke Energy board
Posted July 17, 2012
RALEIGH, N.C. — A Duke Energy shareholder filed suit in Delaware Tuesday charging the company's board of directors with acting in bad faith and conspiracy in their ouster of Progress Energy CEO Bill Johnson from the leadership role of the newly merged utility. The suit names 11 members of the Duke board and the company itself as defendants.
The company has been under fire since Johnson's July 2 resignation, minutes after the merger created the largest utility in the country. Duke CEO James Rogers, who stepped into the role Johnson had been expected to fill, told the North Carolina Utilities Commission last week that Duke leadership had lost faith in Johnson and scrapped their stated plan to let him lead the company after the merger was complete.
The utilities commission and state Attorney General Roy Cooper are separately investigating what other back-door deals may have contributed to the merger.
Lesley C. Rupp, the shareholder and plaintiff in the new lawsuit, alleges every member of the Duke board knew they planned to give Johnson the boot as soon as the merger was finalized and that they intentionally withheld that information from the utilities commission.
"The Director Defendants knew that by omitting to advise the SEC, NCUC, SCPSC and numerous other regulatory bodies, as well as their own shareholders, that they had changed their mind about top management appointments, they were materially misleading these bodies," the suit says.
The North Carolina Utilities Commission will hear Johnson's side of the story Thursday. He and two other members of the Progress Energy Inc. board of directors have been called to testify.
On Friday, two members of the joint board who previously served on the Duke board and defendants in the lawsuit will take questions from the commission. WRAL.com plans to carry that testimony live.
Late on Tuesday, Duke Energy filed a motion requesting a postponement of Friday's hearing. Tom Williams, the utility's director of external relations, said the company's two directors had not yet been served with the NCUC's July 12 order requesting their appearance.
Although the commission cannot compel people living outside the state to attend the hearing or testify at it, Williams said, Duke Energy's directors plan to appear voluntarily.
Therefore, he said, it was fair to request a postponement.
"Given the commission's request for documents and other information, we believe it would be more appropriate and productive for our directors to testify after those documents have been submitted," Williams said in a statement. "We value our relationship with the commission and will continue to cooperate with its requests."
State law allows the commission to rescind or change its decision approving the merger. The regulatory board also approves electricity rate increase requests. Both Duke Energy and Progress Energy, which remain separate operating companies in the Carolinas, are expected to seek rate increases later this year.