Duke claims it doesn’t have to reveal merger costs to the public; NC WARN argues nuclear fleet corrections dwarf public benefits and were key reasons in CEO firing
Durham, NC – Today NC WARN filed a motion urging the NC Utilities Commission to compel Duke Energy to justify plans to charge customers more than $2.2 billion for nuclear plant corrections over two years, an amount that dwarfs the alleged public savings in the utility’s contested takeover of Progress Energy.
Today’s filing is being made in the original merger docket, which remains open, and follows Duke’s rejection of our July 18 data request calling for justification of the planned charges. We’re urging the Commission to overrule Duke by forcing disclosure of when and why the Carolinas plant corrections – and billions more in repairs to a broken plant in Florida – were estimated, how much they are estimated to cost, and why Duke didn’t disclose them prior to the merger’s recent approval.
NOTE: This legal move is separate from NC WARN’s motion last Thursday for the Commission to reopen evidentiary hearings into the merger, although that motion was also based largely on Duke’s withholding of information regarding the billions in plant costs that we believe invalidate the merger.
It’s been 18 days since we first predicted that Duke CEO Jim Rogers’ July 10 testimony about “pouring money” into the Progress fleet could run into the billions, 13 days since we began formally calling for disclosure, and 13 days since the Triangle Business Journal reported Duke’s $2.2 billion plan to remediate the Progress fleet (not counting billions to repair Florida’s Crystal River plant).
If Duke had a solid explanation as to how the $2.2 billion in fleet corrections is either not relevant to the merger, or how the “public savings” still outweigh planned rate hikes for those corrections, they would have formally offered it in past 18 days and put this issue to rest.
Instead, Duke’s lawyers continue protecting the information from release while its PR people variously claim that, 1) the $2.2 billion has nothing to do with the merger, 2) it represents routine spending, or 3) the figures are only for planning purposes.
But Jim Rogers cited the need to “pour money” into these nuclear plants as a key reason for firing Bill Johnson as CEO. That alone makes it part of the merger proceeding.
In providing the Triangle Business Journal with a list of $2.2 billion in 2012-2014 plant upgrades, Duke likely was trying to justify a key reason that Rogers and Duke board members described for firing Johnson. But the very next day Duke began trying to have it both ways, by claiming everyone should forget about the $2.2 billion – and the rate impacts on customers.
Plant investments of that scale are far from “routine.” Would they occur even without the merger? That cannot be judged based on the available information. The list of upgrades represents a sizeable profit center for Duke, and therefore must be fully investigated – especially after Johnson vigorously rejected Rogers’ claimed need to “pour money” into the plants.
Cumulatively, the fleet corrections equal a $2.5 billion power plant being added to Duke’s rate base (including corporate mark-up) in just two years, with an accelerated recovery from ratepayers. That’s quite a deal for investors but a loser for customers, whose rates could rise 12-15 percent.
We urge the news media to put Duke on record. When were the fleet corrections first planned? Where is the documentation? Where is the all-important Crystal River study? What are the rate impacts on customers? Why is Duke resisting putting the key information on the table?
After all, of the several reasons Duke cited for firing Johnson, the fleet upgrades and the Crystal River fiasco have the greatest financial impacts on the merger and ratepayers.
At the very least, NC WARN has a strong argument that the balance between the merger’s public costs and benefits must be examined out in the open. Better at this juncture than later by the NC Court of Appeals.