Friday, June 22, 2018
Business

Amid claims of fraud and deceit, Duke Energy could use ethics role model

Critics of Duke Energy's devious coup last week that installed its own CEO at the top of the country's largest electric utility are focused on today's hearing in Raleigh, N.C.

That's where newly skeptical state regulators will demand that Duke chief Jim Rogers explain the first-day ousting of Bill Johnson, the Progress Energy CEO long promised to serve as CEO of the merged company.

Former Progress Energy directors have cried foul. And North Carolina's attorney general separately has launched his own inquiry.

Those allegations of deceit alone would embarrass most Fortune 500 companies. But Duke is also embroiled in another controversy rife with claims of "fraud" and "gross mismanagement" involving a major, over-budget power plant project in Indiana.

Together, the two disputes raise questions of character flaws at Duke Energy as the Charlotte, N.C., company takes control of Progress Energy's Florida business and its 1.6 million customers.

Today's performance by Rogers before North Carolina utility regulators pits an ambitious business executive with close ties to President Barack Obama — Rogers helped bring the Democratic National Convention to Charlotte later this summer — against utility regulators who will soon consider Duke's third substantial rate hike request in three years.

Duke also wants to win approval of new rules in the Carolinas to allow the utility to charge customers higher rates in advance to pay for high-priced energy projects like new nuclear power plants. Floridians may be familiar with this notion. Progress Energy already has charged Florida customers hundreds of millions of nonrefundable dollars for a nuclear power plant in Levy County that the utility has proposed but still has not committed to build.

Duke's long spate of controversies at its Indiana power plant is troubling and could shed light on how the company may approach the broken Crystal River nuclear power plant in Florida.

Duke has fought charges for the past year that it hid key information from Indiana regulators over Edwardsport, a huge power plant being built to produce gas from coal to generate electricity. Problems at the plant, one of the most expensive construction projects in state history, have pushed costs way over budget.

The Indiana Utility Regulatory Commission next week will open hearings on a proposed settlement over who should pay more than $1 billion in cost overruns.

As part of the settlement, the regulators could dismiss fraud, concealment and gross mismanagement charges against Duke that were formally raised by critics of the plant and the state's Office of Utility Consumer Counselor, says the Indianapolis Star.

Duke promised only to charge customers about $2.6 billion for Edwardsport even though costs already exceed that amount.

But Indiana consumer groups say that's misleading. They say that deal rewards Duke for grossly mismanaging a plant with an original bill of $1.985 billion.

One grass roots group claims Duke's bullying behavior with Progress Energy should be taken into consideration by Indiana regulators because, the Star reports, it raises "similar allegations of deceit and bad faith."

Somebody needs an ethical role model. Duke's first days as the nation's biggest utility are off to a very rough start.

Contact Robert Trigaux at [email protected]

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