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Duke Energy threatens advocacy group with legal action over financial claims

NC WARN is among the protesters that show up at a public hearings on Duke Energy's rate hike requests. In this file photo from 2013, a public hearing on that year's rate request brought Greenpeace, AARP, Consumers Against Rate Hikes and NC WARN protesters to the Mecklenburg County Courthouse.
NC WARN is among the protesters that show up at a public hearings on Duke Energy's rate hike requests. In this file photo from 2013, a public hearing on that year's rate request brought Greenpeace, AARP, Consumers Against Rate Hikes and NC WARN protesters to the Mecklenburg County Courthouse.

Duke Energy has escalated its longstanding feud against NC WARN with a demand, sent from the company's legal department, that NC WARN remove information from its web site about Duke's financial practices.

The Charlotte power company is infuriated over NC WARN's allegations that Duke uses $80 million a year — money collected from its electricity customers — to lobby, advertise and otherwise influence public officials.

The dust-up comes at a sensitive time, as Duke Energy enters a second week of public hearings before the N.C. Utilities Commission. Duke Energy has requested an 8.5 percent average rate increase for its 2 million Duke Energy Carolinas customers, including those in Durham and Chapel Hill. Last month, Duke's other utility, Duke Energy Progress, won a 4.7 percent average rate increase, which will go up to a 6 percent increase after four years, for 1.3 million customers, including those in Raleigh.

On Friday, Duke issued a cease-and-desist letter to the Durham environmental group, demanding the immediate removal of the offending material. "If NC WARN does not cease making these false statements, Duke Energy will have no recourse but to seek all remedies available to it under law," Duke corporate counsel Lawrence Somers wrote in the letter.

On Monday, NC WARN responded by issuing a press advisory about Duke's demand. The group's outspoken director, Jim Warren, said his organization has no plans to scrub its web site to appease the multi-state utility company.

Since it was formed 30 years ago, NC WARN's activism against the state's utility industry has been highlighted by lawsuits, protests, rallies and the occasional sit-in. The small organization has sought to lampoon, hector and discredit monopoly electric utilities for their reliance on nuclear, coal and, most recently, natural gas obtained through fracking.

Duke is not taking NC WARN's latest jab lightly. The company is required by state and federal law to keep customer funds separate from shareholder money. Thus Duke is restricted on using customer funds for lobbying and advertising. Customer funds are to be used primarily for generating and delivering electricity.

From Duke's perspective, NC WARN is insinuating that Duke is committing financial improprieties.

But the accounting distinction is immaterial to Warren, who said that he has an undergraduate accounting degree from UNC Chapel Hill. Warren said Duke's shareholders make their money from revenue supplied by customers, and he's not obligated to honor accounting categories that apply to Duke's bookkeepers.

"We call it accounting fiction," Warren said. "The key thing is the money is coming from one source, and that's customer bills."

In Duke's rate hearings, NC WARN contends that as a state-sanctioned monopoly, Duke shouldn't be advertising or lobbying in the first place. That money would be better spent on renewable resources or by returning it to customers, Warren said.

"They're using customer money to propagandize against their own customers," Warren said. "They successfully make the public think they're as green as can be."

Duke spokesman Tim Pettit countered that NC WARN's moral math is misguided. Money spent on political action committees was contributed by employees, he said, and the spending was decided by an employee governing board.

A substantial portion of Duke's capital financing comes from issuing stock and from corporate bonds, Pettit said.

Pettit also noted that NC WARN's web site lists $3 million that Duke donated to the Republican Governors Association in 2014, but omits mention of similar contributions to the Democratic Party governors organization.

Ultimately, Pettit said, what Warren dismisses as accounting tricks are financial categories observed by financial professionals and enforced by the Internal Revenue Service.

"Jim Warren is misleading the heck out of everybody when he throws these things out," Pettit said.

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