Jim Rogers Warns that Duke Energy Could Exit NC
Duke Energy CEO Jim Rogers delivered a threat to Charlotte and state officials this week about the future of the company’s headquarters in NC. Rogers was discussing implications of the outcome of the NC Utilities Commission’s (NCUC) investigation into the morass surrounding the merger. According to the News and Observer, Rogers was speaking at a conference out of state. He noted that if the merger inquiry findings are not favorable to the company, Duke may choose to relocate out of state. A Duke spokesperson quickly emphasized that this was not a threat to leave NC, but it sure sounded like one.
Rogers may have been feeling a little pressure given other recent events. Duke was recently interviewed by the Securities and Exchange Commission about the merger, which will be followed soon by the NCUC’s contracted investigator also interviewing Duke.
Meanwhile Attorney General Roy Cooper’s case before the NC Supreme Court was heard on Tuesday. The AG rightfully argues that the 10.5% profit margin that the NCUC allowed in the recent rate case is high, given how many people are unemployed, under employed and hurting financially in NC. The allowed return on equity is factored into the electricity rate. In the recent rate case, Duke and the NCUC agreed on a 7.2% increase for residential customers, down from the original request of 15.2%.
In reviewing Duke’s historical return on equity since 2007, the highest was 7.9%, the lowest 3.13%, with an average of 6.5%. Given those numbers, 10.5% is excessive, if not greedy. The timeline for the NC Supreme Court to deliver a verdict is not known. If the AG wins, the case would go back to the NCUC. Under that scenario, Duke’s troubles will only mount, as it plans to ask for another electricity rate increase in 2013.