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Delaware suit alleges conspiracy by Duke Energy board

Posted July 17, 2012

— 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.

Duke Energy statement on CEO change

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.

28 Comments

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  • DontVote4LiarsCheatsOrThieves Jul 18, 2012

    What a surprise!!! NOT!!!

  • OneLove Jul 18, 2012

    Rescind this merger. Period.

  • ConservativeVoter Jul 18, 2012

    It's a matter of who bought who.

    Nobody in their right mind thought Duke was going to buy Progress Energy and give control of the company to the guy running Progress Energy.

    Welcome to the ugliness of corporate politics.

  • ezLikeSundayMorning Jul 18, 2012

    What good is the power to deny or rescind mergers if it is never exercised. Rescind the merger to send a strong message to these big companies and the next one will give complete information.

  • gnewsome1 Jul 18, 2012

    Duke Energy has mislead everyone, including the NCUC regarding this matter. Who knows what they will do regarding the consumer and rate increases. The NCUC needs to exercise some backbone and rescind this merger.

  • puzzled Jul 18, 2012

    No city or state has the power to do anything to this company, we are going back to the days of Ma Bell and the way companies ran the government. Citizens have not ran the country since the days of Abe. We are all at teh power of the rich and the powerful, you have never heard of a poor person being elected to any office or CEO job.

    Amen to what you said. Do you wonder why you rarely see a honest, rich person? Wonder if that is why all the powers that be are mostly dishonest now? You're right, can't get into any position or politics without money and lots of it and they only way to get it is usually not honest. Our forefathers would disown their decendents if they knew.

  • gnewsome1 Jul 18, 2012

    This is the epitomy of hypocracy. Per Duke's Williams "the company's two directors had not yet been served with the NCUC's July 12 order requesting their appearance" Williams said, "Duke Energy's directors plan to appear voluntarily" If they in fact plan to appear voluntarily, stop posturing and do it.

  • Wendellcatlover Jul 18, 2012

    We all knew this merger was a mistake from the beginning. All the crooks have done now is confirm that. The bad part is that we probably can't do a dang thing about it...the bad guy wins again!!!

  • Sherlock Jul 18, 2012

    No city or state has the power to do anything to this company, we are going back to the days of Ma Bell and the way companies ran the government. Citizens have not ran the country since the days of Abe. We are all at teh power of the rich and the powerful, you have never heard of a poor person being elected to any office or CEO job.

  • lec02572 Jul 18, 2012

    They will never reverse the merger, but they should deny any rate increase for the next 10 years or so as punishment to Duke.

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