Give the N.C. Utilities Commission credit: Although it operates in the slow-moving world of utility regulation, it’s digging quickly into Bill Johnson’s sudden, surprising departure as head of the newly merged Duke Energy and Progress Energy. The commission has summoned Jim Rogers, the man who replaces Johnson as CEO, to Raleigh, where he is scheduled to testify this afternoon before the commission.
An on-the-record, in-public examination is just what the situation calls for. Certainly it will be useful to hear what Rogers – a gifted speaker – has to say. Getting to the bottom of what happened in Charlotte last week, however, will require additional steps, and more than talk.
One necessity is the retention and production of Duke and Progress documents relating to the merger and last week’s controversial announcement. The Utilities Commission and state Attorney General Roy Cooper say they’re already seeking paperwork and electronic records.
Another sensible step would be to take testimony from members of the board of directors of the new Duke Energy. Those directors, at a minimum, approved the new management setup. They may have had a deeper role in deciding to make the switch.
Boardroom squeeze
It was Ann Maynard Gray, lead director of Duke Energy’s board, who announced that contrary to stated plans and filings with the Utilities Commission, the head of Raleigh-based Progress Energy would not be leading the nation’s largest utility after all. Instead Rogers, president and CEO of the “old” Duke Energy, who was slated to become executive chairman of the merged company, would in fact be its CEO, president and chairman of the board. Johnson, although he leaves with a pile of money, is out entirely.
It was billed as a resignation, but apparently the Duke board made Johnson an offer he couldn’t refuse. Why the board did that, and when it decided to do so, are key questions for today’s hearing. Whether Rogers will answer them fully is another question, given the corporate penchant for reticence in sensitive matters, but a perceived lack of cooperation will not help his company’s cause.
One factor that should not inhibit frank discussion of what went on in Charlotte is the “non-disparagement and confidentiality” covenants involving the new Duke and Johnson in connection with his resignation. The Utilities Commission, which as the home-state regulator of both companies had the most important role in approving the just-completed merger, has compelling reasons to get to the truth of developments that have placed the company on a credit watch.
Members of the former Progress Energy board of directors have been candid about their feelings of betrayal at Johnson’s ouster. At least one has said that Progress wouldn’t have gone ahead with the merger (Progress essentially sold itself to the larger utility) if Johnson had not been slated to head the combined companies.
The straight scoop
Whether Progress board members were naive in trusting things would work out that way is one thing – Rogers has a history of coming out on top in utility mergers. But whether consequential misrepresentations were made in connection with the transaction is quite another, and the Utilities Commission has an overarching mission here that surpasses anyone’s separation agreement.
So: what happened and when?
Beyond that, larger issues are being mentioned in connection with Johnson’s departure. One is Florida, a state Progress Energy is heavily invested in (via its 2000 acquisition of Florida Power), and where one of its nuclear plants has long been off-line and in need of ultra-costly repairs. Was Progress/Johnson less than forthcoming about the troubles, or seemingly unable to fix them?
Duke ratepayers, here and elsewhere, are due real answers, not just reassuring talk about keeping up the corporate presence in Raleigh – to be sure, a key promise that helped pave the way for the merger, and one that Johnson was expected to take seriously. It’s good that the Utilities Commission (and AG Cooper) are moving swiftly, but they will need to work hard as well.
