Duke Energy’s NC president reacts to merger settlement
DURHAM –Brett Carter, Duke Energy’s North Carolina president, said Tuesday that he believes the investigations sparked by the management shake-up after the merger between Duke and Progress Energy were a bigger distraction for company senior management than to anyone else in the company.
“I think that now that the settlement has been reached, everyone in the company is ready to …focus,” Carter said on Tuesday in an interview at the Greater Durham Chamber of Commerce’s 2012 Legislative Forum & Holiday Reception, where he was the keynote speaker.
The event, held at the conference center at the Washington Duke Inn & Golf Club, was slated to allow chamber members to speak to area elected officials. Carter was expected to talk about the utility’s merger with Progress Energy.
On Monday, the N.C. Utilities Commission approved a settlement agreement with Duke Energy ending the investigation into whether the commission was misled by the utility in regard to its merger with Progress.
The commission had approved the merger earlier this year with the understanding that Progress CEO Bill Johnson would take over as CEO of the combined company. The companies closed on July 2, and Duke announced July 3 that Rogers would replace Johnson as president and CEO.
The agreement approved by the commission stipulates management changes, including that the utility will hire a new general counsel and will name a former Progress executive as executive vice-president for regulated utilities.
Rogers will retire as CEO of Duke Energy Dec. 21, according to a news release from the commission about the settlement, as he had originally planned to do in conjunction with the merger. A committee of the Duke Energy board will recommend a replacement.
The committee is slated to use its “best efforts” to recommend a successor to Rogers to the full board by July 1, but no later than Dec. 31 next year.
In addition, a settlement was reached Monday between the state’s attorney general and Duke Energy resolving a separate investigation. As part of the agreement, Duke is to have an independent entity survey N.C. customers about their electric utility service, as well as to survey employees about the merger.
“These settlements are positive for consumers and help to set right the problems surrounding the merger,” Attorney General Roy Cooper said in an emailed statement.
“As we continue our fight for lower rates in the Supreme Court and before the commission, these settlements will provide a framework for ensuring more complete and accurate information from Duke Energy in the future.”
In his talk on Tuesday, Carter touted benefits of the merger that he said includes the $650 million for customers from fuel and fuel-related cost savings, as well as the additional $25 million in fuel savings for North Carolina customers that was agreed upon as part of the settlement.
He also spoke about potential opportunities for innovation from the merger, such as updates to its generation fleet that he said could result in environmental benefits.
He said the combined utility has a larger workforce that allows it to respond faster. The utility sent nearly 3,000 people to help restore power following Hurricane Sandy, and he said there’s “no way” the utility could have done that as a standalone entity.
“Our economic development efforts are getting stronger,” Carter also said. “Duke Energy and Progress Energy had two very different models in economic development – we’re adopting the best of both.”
The company has hired a head of business development who will be based in Raleigh, he said. He also spoke of the company’s commitment to keep at least 1,000 employees in Raleigh for at least five years.
“I want you all to realize that we are very focused on the Durham area, we're going to continue to move things forward with our economic and business development efforts,” Carter said.
Carter also spoke of the requests filed - and expected to be filed - for rate increases that will affect Progress Energy Carolinas as well as Duke Energy’s North Carolina customers.
Progress Energy Carolinas filed a request Oct. 12 for a net increase of 14.2 percent for its residential customers, which Carter said would be the first base rate increase for Progress in 25 years. If approved, it would go into effect in mid-2013.
Duke Energy is expected to file early next year for its North Carolina customers.
Carter said it’s the third of three previously announced rate increases.
He said that the second initial request was expected to have been the largest. The utility initially had requested an increase of 17 percent, but was approved for an average increase of 7.2 percent.
“Our costs are very competitive when you think bout the value…we know we’re in a rising cost environment,” Carter said. “We want to keep it competitive.”