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Duke Energy to seek new CEO to settle merger investigation

Posted November 29, 2012

— Duke Energy Corp. and the staff of the North Carolina Utilities Commission have agreed to settle a state investigation into Duke's ouster of its new chief executive immediately after its acquisition of Progress Energy Inc.

The settlement agreement, which will be presented Monday to the commission for its approval, also calls for added savings for electric customers and job commitments in Raleigh, which had been Progress' headquarters.

"We’ve worked with the staff of the N.C. Utilities Commission and the Public Staff for several months to reach this agreement, which we believe is in the best interests of our customers, shareholders and employees. This is a positive step forward," Duke spokesman Mike Hughes said.

Progress Chief Executive Bill Johnson, who the companies had promised for 18 months would lead the combined utility, was forced to resign hours after the merger deal was done July 2 and was replaced by Duke Chief Executive Jim Rogers, who had been slated to be company chairman.

The move came three days after the Utilities Commission approved the $35 billion merger, which created the nation's largest electric utility. Irate commissioners held several days of hearings in July to determine whether Duke officials misled them about their plans for company management, and they have been reviewing thousands of pages of internal documents in recent weeks.

Duke Energy CEO to step down Duke Energy CEO to step down

Rogers and other Duke officials defended the management shift, saying they were uncomfortable with Johnson's leadership style and abilities. Johnson, who has since become chief executive of the Tennessee Valley Authority, told commissioners that Duke had "buyer's remorse" over the merger because of escalating costs and that he became a scapegoat.

But, in a statement Thursday night, Johnson said he wished Rogers well and hoped a new CEO would focus on nurturing employees.

"The company created by the merger has the potential to produce great results for customers, investors and employees," he said. "I wish them all much success."

Duke Energy Progress Energy logos WRAL.com video archive: Duke-Progress merger under scrutiny

Under state law, the commission has the power to rescind its approval or require Duke to meet additional conditions, such as those proposed in the settlement.

The conditions include Rogers retiring as chief executive by the end of next year and Duke's board creating a search committee for a new CEO that includes an equal number of members from the previous Duke board and the old Progress board, as well as a new board member who wasn't affiliated with either company before the merger.

"My continuing focus for the remainder of my tenure will be on positioning Duke Energy as a stronger, more efficient organization for many years to come, while continuing to fully realize the significant benefits of the merger for our customers and investors," Rogers said in a statement.

As part of the settlement, Duke's North Carolina customers will receive an extra $25 million in fuel and fuel-related cost savings beyond the $650 million the company initially promised, and Duke will up its $15 million contribution to workforce development and low-income assistance in North Carolina by another $5 million.

Duke raised its electric rates by 7 percent in February, and Progress is seeking its own rate increase next year.

The company also will maintain at least 1,000 employees, in Raleigh for at least five years, including the president of its North Carolina operations and the senior vice president of delivery operations for North and South Carolina.

During merger negotiations, Duke officials said they would shed at least 700 of the 2,000 Progress jobs in Raleigh, but no commitments were made beyond that.

Other management changes mandated by the settlement include Duke hiring a new general counsel and naming a former Progress executive as executive vice president for regulated utilities.

Duke's board also will appoint a committee to meet with the commission periodically to review board actions.

The North Carolina Attorney General's Office is conducting its own investigation into the merger, and spokeswoman Noelle Talley said that isn't affected by Duke's proposed settlement with the Utilities Commission.

Jim Warren with watchdog group NC WARN said Thursday's announcement would do little to prevent rate increases.

"This is a gift to Duke Energy. There is little penalty in this for them," Warren said. "It looks like the merger is a net public soaking instead of a savings."

53 Comments

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  • Rebelyell55 Nov 30, 7:55 p.m.

    That asset is in FL and not in NC or SC. Rates in the Carolinas will not be impacted by what happens in FL.

    Luv2Camp
    November 30, 2012 6:52 p.m......Wishful thinking there. It's a company thing, and they'll use it for rate increase in NC.

  • Luv2Camp Nov 30, 6:52 p.m.

    Retroconsultant - you are incorrect in that Progress customers in the Carolinas would pay for the Crytal River plant in FL. That asset is in FL and not in NC or SC. Rates in the Carolinas will not be impacted by what happens in FL.

  • pause to consider Nov 30, 3:57 p.m.

    I'd like to see the total golden parachute payments to these execs. Perhaps the $25M and the $5M bumped up in the 'charity' commitments reflect the cost of 'firing' these two CEO's?

    This business IS a monopoly and rates will continue to rise (beyond needed infrastructure improvements), so hold on tight to your wallets.

  • Karmageddon Nov 30, 3:18 p.m.

    PLEASE!!!!!! Can ANYone say MONOPOLY????? NC_Beach_n_Mtn_guy

    It's a REGULATED MONOPOLY

  • Karmageddon Nov 30, 3:17 p.m.

    First it was out with the old CEO (Jim) and in with the new CEO (Bill)
    Then it was out with the new CEO (Bill) and in with the old CEO (Jim)
    Now it's out with the old-old CEO (Jim) and in with a new-new CEO (?)
    Soon they'll get rid of the new-new CEO (?) and
    Bring back the first new CEO (Bill) and they'll have a new-old CEO (Bill)

  • mhsmith Nov 30, 1:45 p.m.

    The utilities and the media created the usual smokescreen by conflating this merger with the drama of the personalities (firing of executive), whereas it should have been about the cost to consumers and the viability and cost effectiveness of current nuclear facilites and particularly the safety of current wet pool storage at Harris. Of course, the merger was a done deal, as we knew from the beginning. Media only provides infotainment here.

  • NC_Beach_n_Mtn_guy Nov 30, 1:02 p.m.

    PLEASE!!!!!! Can ANYone say MONOPOLY?????

  • pappybigtuna1 Nov 30, 10:48 a.m.

    remember when Duke energy said "nothing will change" BUNCH OF LIARS, THE CHANGE WAS A HIKE IN OUR ENERGY BILLS

    Hope they all are forced to sit on a live wire

    The nuke plant in FL was not a disaster, it just never came on line, that was Turkey Point, maybe the name fit

    Let's make people scared, gimme a break!

  • retroconsultant Nov 30, 10:08 a.m.

    Not one word about the job that Progress did on Duke getting them to absorb the disastrous nuclear plant in Florida. That $2.5B would have been totally paid for by Progress customers without the Duke takeover. Say "thank you, Duke" if you are a Progress customer.

  • Rebelyell55 Nov 30, 9:56 a.m.

    Know why they didn't desovle the merger, Money and more Money. Besides it would of been the right thing to do. But they ain't going to lose all that money the state stands to make off of this at the expense of the tax payers.

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