North Carolina Attorney General Roy Cooper said Dec. 3 that he has agreed to settle with Duke Energy (NYSE:DUK) regarding the company’s July merger with Progress Energy.
The attorney general had said days before that his office was not signing onto the proposed settlement between Duke and the North Carolina Utilities Commission (NCUC).
In effect, the attorney general now agrees to the major issues outlined in the Duke settlement with the commission, with certain exceptions regarding the attorney general’s ability to challenge certain rate cases.
Another commitment obtained by the attorney general is that Duke has agreed to independent surveys of its customers and employees. The customer survey will address satisfaction with the electric utility service. The employee survey will involve feedback on merger integration issues.
Duke anxious to move forward
“Today’s actions by the North Carolina Utilities Commission (NCUC) and the attorney general resolve these matters, and enable us to move forward in a constructive manner with officials in North Carolina,” said outgoing Duke CEO Jim Rogers.
Cooper and NCUC both launched investigations after Duke’s merger with Progress. The state had been told by the companies that once the merger was complete that Progress CEO Bill Johnson would become chief executive of the combined company and Rogers would take on an executive chairman role.
But within hours after the merger closed on July 2, Johnson was forced to resign and Rogers stepped backed in as CEO of Duke. Johnson was recently named as the incoming CEO of the Tennessee Valley Authority.
Under the NCUC settlement, approved by the commission on Dec. 3, Rogers agrees to retire as chairman, president and CEO by the end of 2013. A search committee that includes legacy Duke and Progress board members would be in charge of finding a successor.
As part of the NCUC settlement, Duke also agrees to certain additional financial and structural concessions to the state. Duke admits no wrongdoing or improper actions. The company notes that the Rogers’ contract expires at the end of 2013 anyway.
As it did with NCUC, Duke agreed to pay the attorney general fees incurred in the investigation.
The settlement closes the attorney general’s investigation into the circumstances surrounding the changes in governance after the merger. It does not settle an ongoing rate case in which the attorney general is challenging in the North Carolina Supreme Court. It also preserves Cooper’s right to fully challenge all aspects of future rate cases, Cooper said.
The settlement helps to assure the state that the new utility will comply with state law regarding “truthful information” to the commission, and its new governance structure will provide the attorney general with accurate and complete information upon request, including new surveys of customers and employees, Cooper said in a statement.
“These settlements are positive for consumers and help to set right the problems surrounding the merger,” Cooper said.
Meanwhile, South Carolina Public Service Commission (PSC) Chairman David Wright said he was glad to see the lingering merger issues put to rest. South Carolina ratepayers are already benefitting from the Duke/Progress joint dispatch agreement (JDA), Wright said.
The PSC will also “welcome the additional benefits for South Carolina ratepayers derived from today’s settlement,” Wright said.
“Today’s action is a positive and necessary step toward restoring the trust needed for a productive relationship between regulators, utilities and the ratepayers they serve,” Wright said.
Not everyone was thrilled with the settlement, however. The North Carolina Waste Awareness and Reduction Network (NC WARN) filed its opposition to the settlement agreement Nov. 29. In a subsequent brief filed Dec. 3, NC WARN said that many of the stipulations outlined in the settlement change the substance of the initial merger agreement.
NC WARN claims that NCUC approval of the settlement agreement without a public evidentiary hearing is improper.