The past few weeks have played out like a soap opera here in North Carolina. Duke Energy, now the nation’s largest energy utility, has had quite a bit of controversy surrounding its recently approved merger with Raleigh-based Progress Energy. Only a few days after the long anticipated merger between Duke and Progress Energy has passed its final regulatory hurdles with approval, the next episode to the saga began.
As with any good soap opera, there have been some key moments to highlight. The media spotlight began when former Progress Energy director John Mullin wrote in an open letter to the Wall Street Journal: “this is the most blatant example of corporate deceit that I have witnessed during a long career on Wall Street.”
He was of course referring to the “CEO for a Day” phenomenon where former Progress Energy CEO Bill Johnson was ousted from his promised title as President and Chief Executive Officer of Duke after only 20 minutes. Johnson didn’t walk away empty handed—in total he was paid $44.7 million in severance, bonus and other benefits. While Rogers tried to assure regulators in a public hearing last week that this money would not come from the pockets of already hurting rate payers, most are rightfully skeptical to trust him at his word.
Why was Johnson ousted? In what has been called a "corporate coup", CEO Jim Rogers and Director of the Board Ann Gray offered a few reasons: 1. increased operating costs at the Florida based Crystal River Nuclear Plant 2. Progress' poor performance for its entire nuclear fleet 3. Progress' overall poor financial performance and last but not least, the differences in culture and leadership style between Johnson and Duke Energy. While most of the questioning by the NC Utilities Commission has been surrounding the questionable business practices Duke has employed, these justifications may pose even larger threats for rate payers and local communities.
According to initial estimates, Progress' failing NC nuclear plants will cost Duke (and its customers) over $2.2 billion. This is more than 3 times what the promised savings to Duke rate payers would be from the merger agreement ($650 million over 6.5 years). This increased cost announcement comes after requests for rate hikes have been popping up across Duke's service territory from Ohio to North Carolina to cover already existing expenses. How much more does Duke expect us to take? We already pay for the cost of their poor business model with our health, our environment and soon even more with our paychecks. If Duke continues to engage in dirty business, its 7 million rate payers can expect their bills to increase to pay for dirty and dangerous energy.
But Duke Energy rate payers know that this merger coup isn’t Duke's only dirty business. Only a week after its 2012 Annual Shareholder’s Meeting, Duke Energy sponsored the now infamous corporate bill mill group ALEC (American Legislative Exchange Council) in Charlotte where its own corporate headquarters is based.
Even dirtier is Duke’s continued reliance on coal despite extensive PR statements in support of renewable energy resources. Duke now operates 28 coal fired power plants across the US, and 14 of those plants are in North Carolina. From blowing up beautiful mountains and communities across Appalachia to contaminating the air and water in cities across the Midwest & Southeast to being a leading contributor to global climate change and CO2 pollution, Duke operates a dirty business. Duke Energy and its CEO Jim Rogers have to do a lot to clean up not only its image, but also its business practices.
Now that the world is watching, the question on everyone’s mind is how CEO Jim Rogers will continue to lead this new utility. If it’s anything like what we have seen in the past couple of weeks, Duke can continue to expect outcry from local community members. Will Jim Rogers do what it takes to lead Duke into a clean and stable future, or will he continue to do whatever it takes for his own personal gain?