NC WARN urges Attorney General Cooper to investigate improper negotiations, citing similar deal that led to felony case against Indiana utilities commissioner
Statement by Executive Director Jim Warren:
Durham, NC – Last week the Charlotte Observer published an interview in which Duke Energy CEO Jim Rogers said he had resolved the major scandal following his acquisition of Progress Energy by personally negotiating the settlement with NC Utilities Commission Chairman Ed Finley. Today NC WARN called on state Attorney General Roy Cooper to investigate that negotiation, which we believe was an unlawful communication that led to a multi-billion dollar miscarriage of justice against North Carolina’s electricity customers.
Both Duke and the regulators had announced the December 3rd settlement as having been brokered by Commission staff, its Public Staff, and Duke – then brought to commissioners for their review. At that time, NC WARN denounced both the anti-consumer terms of the agreement and the closed-door deal-making that produced it.
But at least it seemed that the judges in the case (the commissioners) had remained at arm’s length as the deal was negotiated.
As our petition to Attorney General Cooper explains, in the interview, Rogers appears to have admitted to a direct violation of state law, which explicitly prohibits private communications between commissioners and the parties in a case. The Commission has authority to “investigate companies under its control,” but commissioners are forbidden from negotiating private deals with the companies they regulate.
Potentially tens of billions of dollars were riding on that settlement – which resolved not only the merger investigation but other contentious merger issues too. 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.
This situation appears to be similar to Duke’s ongoing scandal in Indiana over a mere billion dollars in cost overruns during construction of the Edwardsport power plant. Improper communications in that case led to several terminations of senior Duke executives and regulators, and a four-count felony case against the former chairman of the Indiana Utility Regulatory Commission, David Hardy.
It’s not clear whether Finley’s fellow commissioners knew that he directly negotiated the deal with Rogers. If so, they could be in jeopardy too. Either way, it seems Finley may well have usurped their authority to exercise their independent judgment.
We’re calling on Attorney General Cooper to use his authority to help the public to finally get clear on whether this backroom deal-making was legal and, by implication, whether it has prejudiced a full and fair review of the effects of the merger on North Carolina electricity customers. Throughout the merger proceeding, NC WARN has maintained that the Commission must make certain that every part of the process, every hearing and every negotiation was conducted in an open and transparent manner.
As our petition to the Attorney General states, we are deeply concerned that the Commission failed that duty.
NC WARN is contesting the merger in the NC Court of Appeals, arguing that the Utilities Commission shielded Duke from explaining the customer impacts of potentially five different billion-dollar expenditures that Duke failed to disclose during the merger proceeding and which were never considered in judging whether the merger met the legal standard requiring it to be in the public interest. We’re seeking to revoke or modify the merger so that Duke’s management and stockholders – not its customers – bear the costs of its corporate mistakes and secret deal-making.
Duke is still fighting to keep thousands of pages of board meeting minutes and other documents from being released as part of post-merger investigations by the Commission and the Attorney General. NC WARN is fighting to make these documents public, and it’s very possible that they contain information that neither Duke nor the Commission would prefer to deal with openly.
We are also asking Cooper to investigate statements Rogers made to the Observer that his position throughout the process was that the merger was an acquisition, and not a merger of equals. This directly contradicts his sworn testimony about the advantages of combining the companies into one, rather than a direct acquisition of one company by the other.