By John Downey
The N.C. Court of Appeals says state regulators properly excluded watchdog group NC WARN from participating in the hearing over whether Duke Energy lied to them about plans for its 2012 purchase of Progress Energy Inc.
Judge Martha Greer, writing for the unanimous three-judge panel of the court, says the N.C. Utilities Commission’s order in the investigation ruling in that hearing did not alter its original order approving the merger.
Thus, Greer writes, the commission correctly found that NC WARN had only a “generalized and unsubstantial” interest in the investigation. The commission was under no compulsion to allow the group to participate in the probe.
At issue in the investigation was whether Duke misled the commission by contending for 18 months that Progress CEO Bill Johnson would run the merged company. When the deal closed on July 2, 2012, Johnson was briefly made CEO but then forced by a majority of the divided corporate board to resign. Duke’s pre-merger CEO, Jim Rogers, was appointed to replace him.
The commission held hearings in that investigation within days of Johnson’s ouster. NC WARN sought to intervene in the case, but on July 13, 2012, the commission declined to allow it. NC WARN appealed that decision.
In November 2012, the commission’s staff and Duke entered into a settlement of the investigation. The settlement left the original merger order intact, but it added conditions that included a reshuffling of some top executives and required Rogers to abide by his stated plan to retire from Duke at the end of 2013. NC WARN also appealed the final ruling.
NC WARN Executive Director Jim Warren says the ruling is disappointing because the commission and Duke negotiated the settlement in closed meetings that included Commission Chair Ed Finley and Rogers.
“I think the court has just endorsed back-room dealing between corporations and regulators,” Warren says. “That deal was worked out behind closed doors, where Finley and Rogers locked out the public advocates.”
Duke and the commission have defended the negotiations, which also included the public staff of the commission, which is assigned to protect the interests of utility customers in commission proceedings, and a representative of the pre-merger Progress board.
NC WARN has not decided whether it will appeal the ruling to the N.C. Supreme Court, says its attorney, John Runkle. Since the appeals court decision was unanimous, the group cannot not demand an automatic review and will have to petition the high court for a discretionary appeal.
NC WARN did technically win on one issue in the appeal, Runkle notes.
The commission had at one point ruled that the group had no standing to appeal its order in the investigation. That ruling overstepped the commission’s authority, the court found.
But that had no impact on the ruling because the court found that the commission was correct in excluding NC WARN, and it upheld the commission’s order in the investigation.