published Thursday, November 29th, 2012

Duke Energy CEO to leave in North Carolina merger settlement

Jim Rogers, Chairman and CEO of Duke Energy gestures during a discussion about energy policy at the Commonwealth Club in San Francisco.
Jim Rogers, Chairman and CEO of Duke Energy gestures during a discussion about energy policy at the Commonwealth Club in San Francisco.
Photo by Associated Press /Chattanooga Times Free Press.

RALEIGH, N.C. — Duke Energy CEO Jim Rogers will step down as head

of the largest U.S. electric utility by the end of 2013 as part of a

settlement with the North Carolina utilities regulator that ends an

investigation into the company's takeover of in-state rival Progress

Energy.

The North Carolina Utilities Commission and Duke Energy said Thursday

the deal concludes the regulator's probe into whether the company misled

the commission ahead of the merger approval. The commission had the

power to reverse or alter its approval.

Hours after the merger was completed July 2, Duke Energy's board ousted

Progress Energy CEO Bill Johnson, who was supposed to take over the

combined company. It had promised to keep him in place throughout the

18-month process of merging the two Fortune 500 energy companies

headquartered in North Carolina. The deal created the nation's largest

electric company.

The state regulator and Attorney General Roy Cooper launched

investigations that demanded several internal Duke documents and

communications. The commission hired a former federal prosecutor to

probe whether Duke Energy executives and board members were telling

regulators that Johnson would head the combined company while secretly

arranging to dump him. A Cooper spokeswoman said the attorney general's

investigation will continue.

Johnson was hired earlier this month as chief executive of the Tennessee

Valley Authority, the nation's largest public utility.

"This settlement agreement is an important step forward for the company

because it resolves one of our key near-term priorities: bringing

closure" to the commission's review, Rogers said in a statement. His

retirement will take effect by Dec. 31, 2013.

Duke Energy now has 7.1 million residential and business customers in

North Carolina, South Carolina, Ohio, Kentucky, Indiana and Florida. It

did not name a replacement CEO immediately.

Duke Energy also required the regulator's approval to raise electricity

rates for its 1.9 million North Carolina customers, a request the

Charlotte-based company plans to file as early as February.

Rogers became president and CEO of Duke Energy after its 2006 merger

with Cincinnati, Ohio-based Cinergy, which he had headed for 11 years.

Rogers had planned to retire as Duke's CEO at the end of this year

before the shakeup with Johnson.

When he took over as head of the combined companies, now called Duke

Energy, his departure date was no longer set.

The commission is scheduled to stamp its approval on the deal on Monday.

While the settlement specifies several management comings and goings, it

does not involve the regulator in the company's decision-making, as some

of the company's supporters had feared.

Chief Legal Officer Marc Manly will give way to a new top lawyer by the

end of the year. Lloyd Yates, who moved from Progress Energy, will take

over as executive vice president responsible for its regulated state

power subsidiaries. Former Progress Energy General Counsel John

McArthur, who resigned after the takeover, will get a two-year position

advising on regulatory and legislative matters in North Carolina.

Duke Energy agreed to stock the committee searching for Rogers'

successor with a balanced number of former Duke and former Progress

board members, plus a new outside board member. The committee also will

search for two new board members to replace former Progress directors

who resigned in protest this summer.

A new board committee will meet with the utilities commission to hear

what they think about the board's activities.

Duke Energy promised to pass along to North Carolina customers rather

than shareholders an extra $25 million in merger-related savings, spend

another $5 million on workforce development and low-income assistance,

and promise to keep at least 1,000 employees in Raleigh for at least 5

years.

While Duke Energy denied wrongdoing, the utilities commission said the

settlement includes the company issuing a statement acknowledging it has

"fallen short of the commission's understanding of Duke's obligations"

as a regulated utility.

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