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Venture

Robert Trigaux

Duke Energy CEO Rogers testifies for four hours but this inquiry's just getting under way

11

July

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Botched repairs at Progress Energy's Crystal River nuclear power plant (above), shuttered since 2009, factored in the "loss of confidence" in incoming CEO Bill Johnson at Duke Energy. Photo: Will Vragovic, Tampa Bay Times

Wake up and good morning. It seems the fiasco at Duke Energy in the wake of its corporate cold-cocking Progress Energy CEO Bill Johnson and tossing him out of the new company may not be coming to an end. It's just warming up.

After an extraordinary 4-hour hearing Tuesday (covered in person and reported here by Tampa Bay Times reporter Ivan Penn) at the North Carolina Utilities Commission -- at which Duke CEO Jim Rogers (sort of) answered questions about the apparent executive coup that ousted Johnson and installed Rogers himself as CEO -- there's plenty more vetting of this issue ahead. Some highlights of what to expect:

* Will Bill Johnson break his silence and tell his side of this bizarro tale? Duke conveniently paid Johnson an additional $1.5 million (as part of an overall exit package that could reach $44.7 million) specifically to keep his mouth shut and not "disparage" Duke. The state utilities commission could probably get that condition tossed if it appears Johnson has plenty to say and does not like the gag order. (On the other hand, Johnson could forfeit the $1.5 million given the staggering treasure he will receive anyway and go ahead and speak up... right.) Raleigh's newspaper, the News & Observer, cites state utilities commission chairman Edward Finley Jr., suggesting his agency might ask Johnson to testify.

An interesting sidebar, noted in the Wall Street Journal, few apparently knew: Commission chairman Finley was Bill Johnson's former law partner at the Raleigh law firm of Hunton & Williams where they worked together for a decade.

Said the News & Observer: "Johnson's lawyer, Wade Smith, said it is looking more likely that Johnson will have to be called to clear his name." Johnson did not attend the hearing but did listen on line.

* This Wednesday morning, the News & Observer states, Rogers will scheduled to meet with "angry and emotional" Progress Energy employees at the downtown Raleigh Marriott hotel. It's unclear whether Rogers lengthy appearance before the state utilities commission on Tuesday did much to ease Progress Energy workers' anxieties. What did emerge in the hearing was that when Rogers tried to reach out to some senior Progress Energy executives after the tossing of Johnson, he encountered a stone wall. Three Progress execs who were supposed to be part of the new Duke told Rogers they would not continue with the company and to contact them only through their attorneys. They include Mark Mulhern, evp and chief administrative officer; John Arthur, evp of regulated utilities; and Paula Sims, with the more creative title of "chief integration and innovation" officer.

Rogers did make a big deal in noting that other Progress Energy execs will stay on, including Jeff Lyash (to head Duke's nuclear plants) who served several years as CEO of Progress Energy Florida in St. Petersburg. Lyash's successor in Florida, Vincent Dolan, looks like he will also stay (though a Duke spokesman was a bit mushy in confirming that). The question for Dolan, though, is: Since Duke blamed poor management by Progress Energy for the tossing of Johnson, and cited the bungling at the Crystal River nuclear power plant in particular, will Duke eventually want to put of one of its own managers in Florida?

* Rogers, in testimony Tuesday, used one word repeatedly to describe Johnson's management style that worried the Duke board and prompted his removal. Autocratic. This is the definition: "Taking no account of other people's wishes or opinions; domineering." Isn't it curious that Duke and Progress Energy -- one based in Charlotte and the other in nearby Raleigh -- could not pick up on Johnson's alleged "autocratic" management style and recognize this in an 18-month courtship between the two companies before the deal was completed?

* Let's not forget the separate investigation into the CEO Switch now under way by North Carolina's attorney general. Roy Cooper is requesting documents, including emails between directors and Duke officials. This editorial in the Winston-Salem Journal offers insight into why this is so important.

annmaynardgraydukeenergydirector.jpg* Finally, one name crops up over and over again as someone on the Duke Energy board who was obviously responsible for much of the decision to oust Johnson but who thus far has evaded public scrutiny. That is Duke's lead board director, Ann Maynard Gray (photo, left). Here's her bio.

Bottom line? Duke's obviously good at appeasing deferential state regulators who did not exactly grill Rogers for the supposedly deceptive tactics used to unseat Johnson. Duke officially is not the biggest electric power company in the United States. The company will take its publicity lumps for awhile and probably go on its merry way to raising rates, as the company has long promised, in a broad service territory that now includes Florida.

-- Robert Trigaux, Business Columnist, Tampa Bay Times

 

 

[Last modified: Wednesday, July 11, 2012 9:09am]

    

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