Duke's 'new' CEO Rogers tries to calm skeptical Progress Energy employees in merger fiasco
New J.D. Power customers satisfaction rankings out this week show Progress Energy Florida once again is worst. But Duke Energy just bought Progress. Alas, this same survey finds Duke's satisfaction in the Carolinas is also below regional average. So what happens when a sub-par provider of service buys the worst provider of service? Don't look for much of an uptick in customer satisfaction in Florida. Read survey details here.
Wake up and good morning. More than 1,000 Progress Energy employees piled into Raleigh's downtown Marriott Wednesday to hear "new" CEO of Duke Energy Jim Rogers try to make nice to a worker base who had just heard Rogers call their former boss and now ousted leader Bill Johnson "autocratic" and someone who had lost the confidence of Duke's board of directors.
For two and a half hours, Rogers urged his Progress Energy crowd, many more listening online, to let him regain their trust. The gathering occurred one day after Rogers testified under oath for four hours by mostly deferential North Carolina utility regulators about the first-day management coup that tossed Johnson in favor of Rogers -- in spite of an 18-month Duke-Progress acquisition process that assured investors, regulators and employees that Johnson would be CEO and in charge of day-to-day matters.
Why do we care in Florida? Because Duke now controls Progress Energy Florida and we need to try and understand who Duke is in the wake of some extremely questionable actions that critics call deceptive and unethical.
* Because Duke, by absorbing Progress Energy, is now the biggest power company in the United States and -- let's get real -- behemoth monopolies inevitably gain a sense of impunity, tend to become bigger bullies and grow more detached from their customers.
* Because a primary reason for the ousting of Johnson, according to Rogers, is the sorry state of Progress Energy's handling of the Crystal River nuclear plant north of Tampa Bay, which remains shuttered since 2009.
* And because Duke says higher electricity rates are coming, despite Progress Energy Florida customers already 25 percent or more for power than Floridians who live and work just south of Tampa Bay and whose electricity is provided by Florida Power & Light.
We also care because Florida regulators are largely powerless to influence the Duke-Progress Energy merger or insert their concerns into the ongoing controversy. There is an August hearing by the Florida Public Service Commission which will involve the first time the PSC will face Duke officials over the matter of the Crystal River plant. Don't hold your breath there will be much backbone showing in Tallahassee.
On Wednesday, unfortunately, a Wall Street analyst suggested Duke Energy's shenanigans during the merger with Progress Energy would cost the company dearly. As reported by Raleigh's News & Observer, analyst Hugh Wynne of Sanford C. Bernstein expects those costs to include a "substantial fine" from the North Carolina Utilities Commission, a possible fine from the North Carolina attorney general, likely handsome severance payments to three executives now leaving Duke in response to Johnson's exit, "unfavorable treatment" in upcoming rate reviews by regulators and extra expense from defending and settling shareholder lawsuits no doubt spawned by Duke's unorthodox merger behavior. Read more from the News & Observer here and this N&O column here.
One Progress Energy executive who did speak after Wednesday's appeal to employees by Rogers is Jeff Lyash (photo, left, shows him at his former St. Petersburg office), who used to serve as CEO of Progress Energy Florida in St. Petersburg and who acknowledged the skepticism in the Marriott meeting. He left and was replaced in Florida by Vinny Dolan. Lyash ran Progress Energy's nuclear business and will remain at Duke in a similar role and an executive vice president title. His remarks reflect his pragmatic style, his good-soldier sense of duty and presumably the 7-figure compensation package he receives.
"I am an officer of this company and I feel a very deep responsibility to the customers we serve, our investors and most of all to the people in that room," he told the Wall Street Journal, gesturing to the hotel ballroom. "I have great optimism for this company," he said in remarks reported by the News & Observer. "There is a great opportunity for this company to set the industry standard."
Exactly what standard he meant remains to be seen. Setting a higher ethics standard is a start.
(Lyash photo by Tampa Bay Times Cheri Diez.)
-- Robert Trigaux, business columnist, Tampa Bay Times