State regulators had some tough questions for Duke Energy’s CEO at a hearing in Raleigh yesterday. They wanted to know why the company switched CEOs as soon as its merger with Progress Energy was completed.
Ed Finley: Mr. Rogers, if you'll come around and be sworn please.
Gurnal Scott: When CEO Jim Rogers took a seat in the center of the North Carolina Utilities Commission hearing room yesterday, the grilling began almost immediately. In four hours, commissioners asked dozens of questions trying to get at what prompted a surprise change in Duke Energy leadership after its merger with Progress Energy was finalized. It took three hours and 45 minutes of that time before Commissioner Susan Rabon asked the question.
Susan Rabon: Have we as a commission been misled, or as described by other duped in this process, to obtain approval for this merger?
Jim Rogers: I strongly believe that this commission has not been misled.
When the merger of Duke Energy and Progress Energy was completed last week, everyone thought the CEO would be Progress Energy's Bill Johnson. The day the deal was done, we learned differently. Johnson was out, Rogers was in and eyebrows were raised. Rogers was ordered to appear before commissioners to explain. He says he wasn't privy to the Board of Directors' discussions..but learned later it was a matter of confidence
Jim Rogers: They felt his style was autocratic and discouraged different points of view. I would say that they also suggested to me they were concerned whether he would seek to impose the culture and leadership from Progress without finding the balance between the two cultures in a way that would bring all the employees of the combined company together.
Rogers said he was asked..and agreed..to serve as CEO of the company. Johnson was CEO for roughly 20 minutes. He and the board agreed he should walk away with his pockets 44 million dollars heavier. Rogers assured the commission none of that money would come from customers. What Rogers didn't seem to convince commissioners of was that this change at the top wasn't kept from regulators. Commissioner Bryan Beatty.
Bryan Beatty: If Duke makes a representation to this committee and you know you're not going to fulfill that beyond the closing. That is..as soon as the closing occurs, he's out. Don't you see how that might affect the credibility at least of the company with the commission?
Commissioner ToNola Brown-Bland took that one step further.
ToNola Brown-Bland: Mr. Rogers, can you see that the sudden announcement of a change in the planned management of new Duke has affected and even undermined public confidence in the company?
Rogers had been careful with his responses all afternoon..but was adamant that, in his mind, customers aren't all that concerned about who sits in the corner office.
Jim Rogers: In my judgement, the customer's number one concern is price..whether prices are going up or prices are going down.
The six-member commission has options. They can stand by their decision to accept the merger. They could decide to modify or even take back their acceptance of the deal to create the nations’ largest utility. Commission chairman Ed Finley said he and his colleagues have a lot to mull over.
Ed Finley: We'll just have to go back and assess what the evidence was here, try to digest it all and determine what path we're going to take.
As for the odd man out, Bill Johnson's attorney Wade Smith released a statement saying that the respect Johnson has earned in the utility industry and the business community speaks volumes about his leadership. As for the trust factor commissioners spoke about, Rogers will have to earn that in his CEO role. Last night, three Progress Energy executives chose to walk away from the new Duke Energy. Today, Rogers will meet with Progress Energy employees in Raleigh hoping to convince them that bigger still means better.
