CHARLOTTE, N.C. — The nation’s new largest electric utility is facing trouble from North Carolina regulators after its last-minute decision to swap CEOs.
North Carolina’s attorney general is seeking documents and all communications from inside Duke Energy to determine whether consumers were misled prior to the merger that created the utility giant with 7 million customers.
The North Carolina Utilities Commission said Friday it’s launching an investigation and is ordering new Duke Energy CEO Jim Rogers to appear at a hearing Tuesday.
Progress Energy chief executive officer Bill Johnson was planned to head the combined company, but hours after the merger, the new company said he had resigned. Duke Energy announced Tuesday that Rogers was the new CEO.
The Charlotte, N.C.-based company has refused to disclose the reason for the last-minute change.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
Former board members of Progress Energy are upset the chief executive of the Raleigh-based company, Bill Johnson, was ousted as head of the new Duke Energy Corp. just minutes after the companies closed their buyout deal this week.
Former board member Alfred Tollison Jr. says he felt he was misled about the plans for Progress Energy’s chief to head the newly combined company, forming the nation’s largest electric utility.
“Just from circumstantial evidence you would have to think it didn’t happen overnight, that there was a lot of forethought given to it,” said Tollison, who was on the Progress board until the merger was completed.
Duke announced Tuesday that the Charlotte, N.C.-based company’s Jim Rogers was the new CEO, saying Johnson had resigned by mutual agreement.
Duke Energy completed the buyout of Progress Energy Inc. to form the nation’s largest electric company. The deal was valued at $32 billion when it closed.
The North Carolina Utilities Commission, which had approved the merger last week based on the plans for Johnson to lead the combined companies, is considering whether to investigate the change in leadership.
The commission could use its subpoena powers to demand documents and witness testimony if it chose to hold hearings into the surprising switch in the corporate suite.
“We are still considering what next step to take,” the commission’s general counsel, Sam Watson, said Friday.
Another former Progress board member, John Mullin III, wrote the Wall Street Journal on Thursday, stating: “I do not believe that a single director of Progress would have voted for this transaction as structured with the knowledge that the CEO of Duke, Jim Rogers, would remain as the CEO of the combined company.”
Standard & Poor’s Financial Services has put Duke on a watch list for a potential credit downgrade because Johnson was removed. The Wall Street credit rating service said the leadership change raises questions about Duke’s internal stability, planning and management.
Duke spokesman Tom Williams says the utility looks forward to resolving those concerns soon.
Another Wall Street service, Moody’s Investor Services, kept its ratings and its “stable outlooks” for Duke and Progress, citing the merger benefits. But Moody’s did say Johnson’s departure does create uncertainty over long-leadership and could lead to additional turnover in senior management.
A number of former Progress executives recruited by Johnson were moving to Charlotte to take their new jobs.
Johnson several weeks ago said he was planning to move. He had signed his new contract June 27. By resigning, Johnson is entitled to a $10.3 million severance.
Credit: The Associated Press.