Thursday, July 26, 2012

Duke drops industry rate-break plan

The N.C. Utilities Commission this week let Duke Energy withdraw its plan to offer industrial and commercial customers a temporary 6 percent rate cut.

Duke floated the idea in May, saying some of its biggest customers were struggling. The one-year test program would have cost Duke shareholders $13 million.

As part of a 7 percent N.C. rate hike in January, Duke had agreed to donate $11 million of shareholder money to help low-income residents with their energy bills.

NC WARN, the Durham advocacy group that frequently fights Duke, protested help for big customers. WARN argued the program was a "kickback scheme" intended to win support for its merger with Progress Energy. The commission's Public Staff, which advocates for consumers, investigated but took no immediate position.

Last week Duke withdrew the plan. It cited "overwhelming interest from customers" who collectively asked for more aid than Duke had budgeted. Duke said it will continue to look for ways to help customers with their energy bills.

Thursday, July 12, 2012

Law firm trolling for Duke lawsuit

A Boston law firm that represents investors claiming securities violations is already looking for clients amid the debris of the Duke Energy merger.

Block & Leviton said it's "investigating possible breaches of fiduciary duties" by Duke's board, which canned its intended new CEO, former Progress Energy chief Bill Johnson, hours after closing the merger.

The firm noted Standard & Poor's placing Duke stock on a credit watch list soon after Johnson's abrupt departure and an investigation launched by N.C. Attorney General Roy Cooper.

Duke's stock has dropped about 5 percent between July 2, when the merger closed, and Wednesday's market close. It's up slightly on Thursday morning.

Progress investors joined a number of class-action lawsuits after the merger with Duke was announced in early 2011. All were settled within a few months.

With passions aflame now, law firms aren't likely to struggle to find aggrieved stockholders. 

"It appears that this action was pre-planned by the board of Duke and smells badly of dishonesty in the board's dealings with stockholders and, apparently, your commission," Duke, and former Progress, stockholder Philip Carter of Raleigh wrote the N.C. Utilities Commission last week.

He added: "I strongly urge the Commission to use its authority to investigate whether there was disingenuous communications between Duke's leadership and the Commission, its stockholders and the public."

Thursday, July 5, 2012

S&P puts Duke on credit watch

Wall Street's reaction to the Duke Energy merger minus intended CEO Bill Johnson has been swift.

Standard & Poor's Financial Services has placed Duke's A- corporate credit ratings on its CreditWatch with negative implications "in response to abrupt change in executive leadership."

Hours after the $32 billion merger closed Monday, Duke stunned employees, regulators and analysts by announcing that CEO Jim Rogers would stay on as president, chief executive and chairman. Johnson had been set to become chief executive since the merger was announced in January 2011.

"The sudden shift in management raises concerns about effective corporate governance, successful handling of the anticipated merger integration, and the ongoing effective management of pending challenges that face the combined entity," said S&P credit analyst Dimitri Nikas.

Credit ratings are critical to utilities, which depend on capital markets to finance power plants and other infrastructure projects that can cost billions of dollars. Including Progress projects, Duke has about $5 billion in new power plants under construction.

S&P said it was also revising its CreditWatch implications on Progress Energy's BBB+ credit rating from positive to developing. The change includes Progress subsidiary Progress Energy Carolinas, which will continue to operate under Duke's ownership.

Standard & Poor said it would resolve the credit watch listing "in the near term" after more assessment of the implications of the leadership change.