NC power brokers steer clear of power company power struggle
Posted July 13, 2012
RALEIGH, N.C. — The fallout over the merger between Duke Energy Corp. and Progress Energy Inc. and the subsequent management shake-up is a sensitive issue for both Democrats and Republicans in North Carolina.
Hundreds of jobs in Raleigh are on the line. Electric customers are worried about their rates. And, as with most things in politics, money is involved.
Progress Chief Executive Bill Johnson had been slated to become president and CEO of the combined company – the nation's largest utility – but the Duke-controlled board of directors forced him to resign an hour into his tenure, replacing him with Duke President and CEO Jim Rogers, who was to have been board chairman after the merger.
The North Carolina Utilities Commission questioned Rogers for four hours on Tuesday about the timing of the move. The commission approved the merger three days before Johnson was ousted.
Johnson and four members of the new Duke board – two from Progress and two from Duke – will appear before the commission next week. The company also must turn over two years' worth of internal communications by the end of the month.
Under state law, the commission has the power to rescind its approval or amend it by adding conditions Duke must meet.
North Carolina Democrats worry the controversy could hamper Rogers' ongoing fundraising for the Democratic National Convention, which is scheduled for early September in Charlotte.
Meanwhile, Pat McCrory, the Republican nominee for governor, is a former Duke employee. According to state financial disclosure forms, he owns more than $10,000 in Duke stock.
"The Utilities Commission is doing their job, but my main focus is, will the merger provide lower electric rates?" McCrory said Friday.
Democratic gubernatorial nominee Walter Dalton owns at least $10,000 in Progress stock, according to his financial disclosure form. Duke-Progress merger sensitive issue for Dems, GOP
“We are looking forward to finding out more about what happened and are glad the state Utilities Commission and Attorney General's Office are looking into this matter,” said Ford Porter, a spokesman for Dalton's campaign.
North Carolina Attorney General Roy Cooper has launched a separate investigation into the merger, demanding copies of communications between Duke board members and executives.
Longtime political insider Rufus Edmisten said the merger issue is like a live wire for politicians.
"I don't think you're going to hear much out of the gubernatorial candidates," he said. "They're both fine people, but I don't think they'll say much because the utility companies have a lot of money (and) they've got huge PACs."
Edmisten tussled with utilities as attorney general in the 1970s and 1980s, and he said they "blistered me" pretty good when he ran for governor in 1984 and lost.
He criticized the way Johnson was dismissed and the way Rogers disparaged him to the Utilities Commission.
Rogers said the board had lost confidence in Johnson's leadership ability because of troubles with Progress' nuclear power plants, tepid financial results and what Rogers described as Johnson's "autocratic" management style.
"This is, in my opinion, corporate malfeasance. This is pretty bad stuff," he said.
Johnson will still walk away with up to $44.7 million in severance, pension benefits, deferred compensation and stock awards. The commission has ordered that Duke shareholders, not customers, pick up the tab.
Three other former Progress executive who quit in the wake of his departure also will pocket millions through their stock ownership in the new company, according to Securities and Exchange Commission records.
John McArthur, executive vice president of regulated utilities, could earn $7.7 million; Mark Mulhern, executive vice president and chief administrative officer; could make $6.9 million; and Paula Sims, chief integration and innovation officer, could earn $4.4 million.