Market Commentary and Intraday News
Regulators to quiz CEO ousted in utility takeover
305 days ago
By EMERY P. DALESIO
AP Business Writer
(AP:RALEIGH, N.C.) North Carolina regulators awaited testimony Thursday from the CEO ousted by Duke Energy Corp. within hours of becoming the top executive of the country's largest electric company.
The North Carolina Utilities Commission said it wants to know what it wasn't told as the company pushed regulators to meet a deadline earlier this month for the takeover of Raleigh-based Progress Energy Inc.
For a year and a half, the regulatory body had been told the combined company serving 7 million electricity customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky would be headed by Progress Energy CEO Bill Johnson.
But within hours after the merger closed July 2, Johnson was out and pre-merger Duke Energy CEO Jim Rogers regained his job atop the Charlotte-based company. Johnson left with nearly $45 million in severance, pension benefits, deferred compensation, and stock awards.
The commission's hearing constitutes an exception to a condition of Johnson's separation agreement barring him from speaking ill of the company. Johnson and his attorney did not respond to calls and emails seeking comment this week about Thursday's scheduled testimony.
On Wednesday, the commission rejected the company's request to delay testimony scheduled Friday from two Duke Energy directors who asked Rogers if he would stay on as CEO if Johnson was dumped. The company said they would appear.
Johnson is expected to address his leadership style and his handling of costs at a troubled Florida nuclear plant, reasons Rogers offered during testimony to the North Carolina commission last week for the surprise CEO switch.
Duke Energy's directors "felt his style was autocratic and discouraged different points of view," Rogers had said.
Johnson supporters disagreed with that assessment.
"To use the word autocratic in the same sentence as Bill Johnson could not be further from the truth. I've never met someone more interested in the thoughts of his employees regardless of their level within the company," said Aaron Perlut, who owns a St. Louis, Mo., public relations firm and previously worked as a Progress Energy spokesman in North Carolina and Florida.
Perlut created a web site for Johnson's supporters to share their experiences of him as a leader. One fan is Caroline Choi, who spent 14 years at Progress Energy and is now vice president of regulatory and environmental policy at Southern California Edison.
"I see an autocratic leadership style as one that's characterized by a person dominating the decision-making and not seeking and listening to the advice and counsel of others," Choi said. "That's not my experience with Bill."
Investigations into whether electricity consumers truly would benefit from the Duke-Progress combination have expanded since Rogers's comments last week.
North Carolina Attorney General Roy Cooper demanded records from a New York communications firm that Duke Energy hired in late May as discussions about Johnson's future heated up. He also sought records from the Indianapolis real estate investment firm of Duke Energy director Michael Browning, who has been a director for two decades of companies led by Rogers.
The Florida Public Service Commission wants Rogers to appear at a hearing next month after mentioning an internal Duke Energy study about problems with Progress Energy's Crystal River nuclear plant. The study was due to be presented to Duke Energy board members days before the merger's completion and Johnson's ouster. The Florida regulator said it requested a copy of the study but has not yet received one.
The Crystal River plant has been shut down due to cracks in a containment building since Progress Energy launched an upgrade and maintenance project in 2009. It isn't expected to operate until 2014.
Duke Energy's directors lost faith with Johnson in part because they weren't sure they were getting "realistic assessments" on whether to repair or replace the plant, Rogers said.
Updates on Crystal River, how much would really be covered by insurance, and other problems from Johnson's side "caused us concern" and Duke Energy's directors began discussing Johnson's future in early May, lead director Ann Maynard Gray said in a regulatory filing this week.
"A board relies on the CEO to provide the board with full information, to present the options available for any major decision, and to provide a realistic assessment of the risks and benefits of each," she said.
The likely multi-billion-dollar expense of fixing or scrapping Crystal River could hamper Duke Energy's ability to borrow money cheaply, making the repair and renovation of nuclear plants in the Carolinas more expensive, said John Runkle, an attorney for the anti-nuclear group North Carolina Waste Awareness and Reduction Network. He said that could potentially translate into higher electric rates.
Emery Dalesio can be reached at http://twitter.com/emerydalesio
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