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Browning ordered to testify over Duke Energy CEO's ouster

July 17, 2012

Indianapolis real estate developer and Duke Energy Corp. director Michael Browning has been ordered to appear Friday before the North Carolina Utilities Commission, which is investigating the unexpected ouster of the utility’s new CEO just hours after the company merged with Progress Energy Inc.

Browning and other directors also are targets of a civil probe being conducted by North Carolina Attorney General Roy Cooper.

North Carolina regulators had approved the $32 billion merger, completed July 2, predicated on Progress CEO Bill Johnson replacing Duke CEO James Rogers as head of the merged utilities. Duke, which provides electricity to 69 of Indiana's 92 counties, is based in Charlotte; Progress in Raleigh.

Regulators and former Progress directors were furious when Duke’s new board asked for Johnson’s resignation this month and offered him a severance package worth $10.3 million.

Rogers was reinstalled as CEO of Duke.

Appearing last week for a grilling before the North Carolina Utilities Commission, Rogers testified he met June 23 with Browning and top Duke director Ann Gray. 

Browning has been director of Duke and its predecessor utilities in Indiana and Ohio under Rogers’ leadership since 1990. The chairman of Browning Investments Inc. is a member of the Central Indiana Business Hall of Fame.

Rogers said the two directors conveyed the Duke board’s growing lack of confidence in Johnson and asked if Rogers would be prepared to stay on as CEO.

“I wasn’t part of their deliberations on this,” Rogers said of the board. “I was just informed. And if they felt strong enough to inform me of that, I was practical enough to realize I couldn’t … there was no way I could change their mind,” Rogers told the commission last week.

Rogers said Duke’s board wasn’t comfortable with Johnson’s leadership style and questioned decisions he made regarding Progress’ nuclear plants in the southeast.

Both Browning and Gray are to be questioned by the utility commission on Friday. 

Browning did not respond to phone and e-mail messages seeking comment.

Last week, North Carolina’s attorney general launched a civil inquiry into the merger and the ouster of Johnson. Borwning is among those from whom he’s seeking documents and phone and travel records.

The former lead director of Progress, John Mullin, called the ouster of Johnson “an incredible act of bad faith” and said that he doubted that any Progress director would have voted for the merger knowing Rogers would remain as CEO.

“In my opinion this is the most blatant example of corporate deceit that I have witnessed during a long career on Wall Street and as a director of 10 publicly traded companies,” Mullin told the Wall Street Journal on July 5.

Duke’s stock price dropped nearly $5 per share after the Johnson ouster. Standard & Poor’s put Duke’s ratings on credit watch.

Duke Energy, the largest electric utility serving Indiana, already is entangled in scandal over spending on its Edwardsport coal-gasification plant, which is nearly $1 billion more than original estimates.

Rogers and his former top Indiana executives are accused of improperly influencing Indiana regulators, leading to Indiana Gov. Mitch Daniels' decision to fire former Indiana Utility Regulatory Commission Chairman David Hardy.

Moreover, a former IURC judge, with Hardy’s assistance, wrangled for a job with Duke even while hearing cases before the commission. He later got the job but was fired along with Duke’s top Indiana executive.

The IURC this week is conducting hearings on a proposed settlement between Duke, industrial customers and the Indiana Office of Utility Consumer Counselor that would cap ratepayers’ share of Edwardsport at $2.6 billion.

The estimated cost of the plant, which won’t begin commercial service until the first quarter of next year, has risen to more than $3.3 billion.

 

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