Jim Rogers, Chairman and CEO of Duke Energy gestures during a discussion about energy policy at the Commonwealth Club in San Francisco.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.