Citizen

• photo by Bob Geary
• Ousted CEO Bill Johnson (right) with lawyer Wade Smith in foreground

[Update, 3:50 pm: Phase one of the case is over. Chairman Finley announced that the Commission is following the evidence where it leads, and where it leads is a next phase that will be more "traditional" and "evidentiary." Meaning it's going to be long and hard-fought. Duke Energy's attorneys, up to and including former NC Supreme Court Chief Justice Burley Mitchell, have been complaining that they weren't allowed to cross-examine witnesses. Next phase, that will change. But so will the stakes.

[Finley, in afternoon questioning, elicited from Gray an acknowledgement that it's within the Commission's power to rescind its approval of the merger. If that's true, he asked, isn't it also true that we have other, less severe options here, including — he implied — putting Johnson back in as CEO? Gray said choosing the CEO was solely within the Duke board's corporate prerogatives. So do you think we're "helpless," Finley asked Gray, to enforce a promise you made in the merger hearings [that Johnson would be CEO]? No, Gray replied.

[Last word from Finley: Duke should think about settling this thing before it goes to a full-blast confrontation with cross-examinations and such. "We never rule out settlements," Finley said. He added that the Commission will do whatever it must to maintain the "reputation and integrity of this governmental body."]

What follows is the original post from noon today —

It's hard enough — often — to know what one person is thinking even when you're talking to him/her face to face. So fathoming what was in the minds of the 10 outside directors of Duke Energy over an 18-month period, or in the minds and hearts of the Duke Energy executives who were in contact with their board, is better handled by a novelist.

I do think it's a fair inference from the testimony yesterday and today at the N.C. Utilities Commission that the Duke board — at least three of them and, from what their lead director Ann Maynard Gray has said, probably more than three — took an instant dislike to Bill Johnson the first time they met him. That was in June, 2011, some six months into the Duke-Progress Energy merger deal.

Whether they took this dislike to him because they didn't ever intend Johnson to be CEO of the merged firm, we'll never know and perhaps they don't even know. But Gray's testimony is clear that the Duke board spent the next year looking for reasons to justify their low opinion of Johnson. They found one — or she did, anyway — in "the Crystal River incident," which she described as an unacceptable failure by a prospective CEO.

(I won't digress to describe the "incident." I'll just say that the way Gray talked about it, she was gunning for Johnson by then and was determined to see the thing in the worst possible light for Johnson — without any effort to hear what Johnson himself might have to say about it.)

So whether the Duke board decided from the jump, or in mid-2011, or in the spring of 2012 that Johnson would not do as CEO of the post-merger Duke, it's obvious that they were eyeing his neck and sharpening their axes long before the merger was consummated, and the blade dropped, on July 2.

Yet Duke Energy officials told the Utilities Commission again and again that Johnson would be the CEO and that the fact that he would be the CEO was an important reason why the merger would serve the public interest.

I was present at the hearing yesterday. (This morning, I watched on WRAL.) A big topic in the room was, What's the Utilities Commission after? And what will they do about it?

• Bill Johnson testifies in Utilities Commission probe

From the questioning, there's no doubt at all that the commissioners are pissed and do, indeed, think (suspect? are trying to prove?) that they were intentionally misled.

The second question, though, continues to hang in the air. If the Commission was intentionally misled, what will it do?

Commission Chairman Ed Finley was explicit yesterday when he said that he and his fellow commissioners considered the merger a good deal for the public when they approved it — and they still do.

Whether it is a good deal for the public — for consumers, that is — is arguable. My point here is that if the Commission still thinks it is, it won't attempt to unravel the merger by reversing their decision to approve it. That would be bold. And probably proper. But they'd need to do it fast, and from what I read, they're hiring investigators, and the Attorney General is investigating, so this won't be fast.

We (media) are not allowed to approach the commissioners during or after the sessions (!). So what follows is speculative. Short of reversing the merger approval, I think the Commission may:

1) Hit Duke with a whopping fine.

2) Require a shake-up of the Duke board as a condition for leaving the merger in place.

3) Force Jim Rogers out as CEO, and require that his replacement be named by the newly reconfigured Duke board or by some combination of the legacy Progress Energy and the pre-merger Duke Energy board, with the Progress Energy side given an equal voice. (Or more.)

On the third point, I was struck yesterday by Bill Johnson's testimony about the merger deal and its contingency plan had either Johnson, as the CEO named in the deal, or Jim Rogers, as the prospective executive chairman, turned out to be "unable or unwilling" to perform their designated role(s).

In that case, the Duke board and the Progress were to agree on a mutually acceptable replacement.

Well, obviously the Duke board, perhaps as early as 2011, decided that Johnson was unable to be the CEO.

Under the merger deal, the Duke board would have been obligated to raise that concern with the Progress board, to say nothing of being obligated to share it with the Utilities Commission.

But it didn't. Not until the merger was completed. When it was complete, the Duke board cut Johnson from the roster without bothering — as Commissioner Bill Culpepper sarcastically said — even to make it appear like they'd tried to work with him. (And honor their word to the Commission.)

Johnson himself testified that, at that first meeting with Duke board members in June, 2011, he'd been told that his job as the prospective (promised) CEO was to "fold Progress into Duke," and not to bring Progress's values to Duke.

Gray just testified that, at that same meeting, Johnson tangled with a Duke board member (apparently in a sidebar conversation) over some question about a Duke "regulatory asset" and how it should be handled.

Several board members, she said, had a bad feeling about him over that.

Really?

It sounds to me like what Duke had in mind in designating Johnson as the future CEO was this:

Johnson would be their patsy. He'd be the CEO, but his job was to merge Progress out of existence and into Duke.

When he clashed, early on, with some of Duke's leaders over how business should be done, they realized he wasn't going to be their patsy.

Maybe they always planned to show him the door, and they had total disdain for the Utilities Commission's ability (or stones) to do anything about it.

Maybe they changed their minds in mid-course and only then decided to show Johnson the door. But as Culpepper said, they didn't worry at all about how firing him after 20 minutes as CEO would strike the Commission — and they didn't even try to hide their disdain for the Commission's feelings.

One more thought, and I'm sure I'll return to this subject.

Duke Energy is a political corporation. Post-merger, it's one of the biggest companies in the country.

Is it concerned that it has made the N.C. Utilities Commission, its ostensible regulator in this state anyway, look like idiots?

Probably not.

The Commission is currently dominated by appointees of former Gov. Mike Easley. Chairman Finley is an Easley appointee. Commissioners Beatty and Susan Rabon are too, and both were top aides of and friends of Easley's.

But the next governor may well be Pat McCrory, a former Duke Energy employee who was paid by Duke while he was mayor of Charlotte. Nothing illegal about that — the mayor of Charlotte is part-time, just like the mayor of Raleigh — and the fact the mayor was on Duke's payroll was remarkable only for the fact that he wasn't on one of the big banks' payrolls.

Still, if the current commissioners are pissed at Duke, future commissioners may all be FOD. Friends of Duke.

That's the whole idea of being a political corporation.

Watching the returns in runoff primaries. (That's right, today was the day. Were you among the 98 97 percent of registered voters who forgot?)

Here's a link to the State Board of Elections' returns.

[Update x 2: At 9:17 pm, with 87 percent of precincts in, on the Republican side John Tedesco is solidly ahead, Tony Gurley is far behind and Kenn Gardner looks like he's lost too. John Brooks is at 54% and looks to the the Democratic nominee for labor commissioner. Results here.

[With three GOP runoffs for congressional seats out west, the Wake candidates needed to pile up a big margin at home to have a chance. Tedesco did, leading in Wake by more than 12,000 votes. He ran even in Mecklenburg. Gardner's margin in Wake was less than half as much. Gurley is trailing in Wake and got killed in M'berg.

[By the way, Mike Causey won easily in the GOP primary for Insurance Commissioner, defeating former House Speaker Richard Morgan.

[Turnout in the only statewide Democratic runoff, for Labor Commissioner, was pitiful. Oddly, the apparent winner John Brooks lost Wake, his home county, and he also lost Durham, Orange and Medklenburg. But he won over Marlowe Foster, who is black, is almost all of the rural counties. Whoever wins, he'll be a weak challenger to incumbent Republican Cherie Berry.]

[Update: At 9 pm, two-thirds of the precincts are in, and on the GOP side, it looks like Tedesco will win. Gurley is losing badly. Gardner's behind and slipping, looks like he'll lose too. Brooks is pulling away from Foster on the Democratic side.]

Earlier:

In the early going With 59 percent of precincts reporting, the trio of Wake County Republicans are heading in different directions:

* John Tedesco is ahead in the race for DPI Superintendent, though not decisively.

* Tony Gurley is getting clobbered in the primary for Lieutenant Governor. (Come to think of it, there are four Wake Republicans running. Gurley, a county commissioner, is losing to Raleigh architect Dan Forest, whose political claim to fame is that former Congresswoman Sue Myrick, darling of Mecklenburg County, is his mom.)

* It's close in the primary for Secretary of State, but former Wake Commissioner Kenn Gardner is trailing Eddie Goodwin.

In the only statewide Democratic runoff, former Labor Commissioner John Brooks, a Raleigh resident, is ahead in his latest effort to win back the job he had and lost 20 years ago. He leads lobbyist Marlowe Foster.

These are primaries, remember. None of these folks, if they're nominated, will be a lock to win. I'd say Forest is the only one who'd be favored, in fact.

Gov. Perdue’s statement on Andy Griffith’s death at 86:

“North Carolina has lost its favorite son. Andy Griffith graciously stepped into the living rooms of generations of Americans, always with the playful charm that made him the standard by which entertainers would be measured for decades.

Throughout his career, he represented everything that was good about North Carolina: a small town boy and UNC graduate who took a light-hearted approach to some of the attributes he grew up with and turned them into a spectacularly successful career. And regardless of where that career took him, he always came back to North Carolina and spent his final years here.

In an increasingly complicated world, we all yearn for the days of Mayberry. We all will miss Andy, and I will dearly miss my friend.”

Update: President Obama remembers Andy fondly:

Statement by the President on the Passing of Andy Griffith

Michelle and I were saddened to hear about the passing of Andy Griffith this morning. A performer of extraordinary talent, Andy was beloved by generations of fans and revered by entertainers who followed in his footsteps. He brought us characters from Sheriff Andy Taylor to Ben Matlock, and in the process, warmed the hearts of Americans everywhere. Our thoughts and prayers are with Andy’s family.