Group claims Duke Energy's talks with state regulators were improper

N.C. WARN asks state to look into Duke’s talks with regulator on merger probe

bhenderson@charlotteobserver.comJanuary 28, 2013 

A Durham advocacy group has asked attorney general Roy Cooper to investigate whether Duke Energy and the N.C. Utilities Commission engaged in illegal “backroom deal-making” during talks to settle the Duke-Progress Energy merger probe.

Duke CEO Jim Rogers told the Observer this month that he negotiated the settlement terms, working with commission Chairman Edward Finley. The agreement, approved in December, ended an investigation into the firing of former Progress chief executive Bill Johnson, who was to lead the combined companies.

N.C. WARN, a clean-energy group that has complained of unwarranted secrecy surrounding the merger, says the contact between Rogers and Finley apparently violated a state law against private communication between commissioners and the parties to a case.

“Under no circumstances should the CEO of the regulated utility, which was then under investigation by both the commission and the attorney general, have negotiated directly with the chairman to make such a deal,” WARN said in a news release.

Duke calls WARN’s claims “factually and legally baseless.”

Because the commission initiated the merger investigation, Duke said, any settlement agreement would have to be negotiated directly between it and Duke. Officials of the N.C. Public Staff, which advocates for consumers, attended negotiations and helped draft the settlement with Duke and commission staff.

Duke distinguished between an investigatory proceeding – the merger probe – and a judicial proceeding, such as a rate case, to which the private-communication standard would apply.

WARN was not a party to the settlement agreement, which it claims exposed Duke customers to billions of dollars in hidden costs arising from the merger. The group is challenging the agreement before the N.C. Court of Appeals.

Duke said the attorney general’s staff, which conducted a separate investigation of the merger and reached a separate settlement with Duke, knew about efforts to settle the commission probe.

Cooper’s spokeswoman, Noelle Talley, said his staff was reviewing WARN’s petition.

Sam Watson, general counsel for the utilities commission, declined comment.

WARN likened the circumstances to those two years ago, when private emails between a Duke executive and the former chairman of the Indiana Utility Regulatory Commission were published as cost overruns plagued a power plant under construction. Duke executive Jim Turner resigned; former commission chairman David Hardy was fired and faces prosecution.

Henderson: 704-358-5051; Twitter: @bhender

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