Citizen

As expected, the N.C. Utilities Commission today ended its "investigation" of Duke Energy's tactics in the merger with Progress Energy, approving a settlement which IMHO falls short of even slapping Duke E. on the wrist.

On the pinkie finger, maybe.

Joining in the NCUC's unanimous "OK, whatever ... " decision, state Attorney General Roy Cooper — through his consumer protection chief, Kevin Anderson — announced that he, too, is finished investigating and isn't going to do anything either.

Rather, as Cooper's separate settlement with Duke states, the AG wants to "move forward in a positive manner" as he recites what Duke Energy told him, i.e., it "expressly denies that it engaged in any illegal or improper acts."

Cooper did require of Duke Energy that it hire an "independent entity" (I think IndyWeek is available) to take a survey of its customers and report back on their satisfaction with its service. Oh, and the utility is also required to hire an indy entity to survey its employees and report back on how the merger is going.

I'll bet they'll be some serious page-turners :)

Bottom line: Neither the NCUC nor the AG laid a glove on Duke Energy, which is now the big jumbo elephant when it comes to electricity-generation policies in North Carolina. Cooper's our elected regulator. The commission members are our appointed regulators. If they can't regulate Duke Energy, we'll have to depend on the General Assembly to do the job.

And on that amusing note ...

Is there any other way to read this than that the N.C. Utilities Commission, having huffed and puffed at Duke Energy's sleight-of-hand in the "merger" with Progress Energy, is now issuing a collective, "Never mind"?

The alternatives included revoking its merger approval, a whopping fine, ousting Jim Rogers and installing a new CEO (or, if Duke balked, revoking the merger) ... am I missing any?

Instead, we have a trivial levy, Rogers stays on for another year, the Duke Energy board remains in control, but it is required to "receive comments" from time to time from the Commission. I thought it was already required to receive their comments.

Anyway, here's the statement from the NCUC. You be the judge:

Settlement Agreement Entered Into in Merger Investigation

RALEIGH — Today the Staff of the North Carolina Utilities Commission entered into a Settlement Agreement with Duke Energy and the Public Staff — North Carolina Utilities Commission. If approved by the Commission, the agreement will conclude the Commission’s investigation arising from the termination of William D. Johnson as CEO of Duke on July 2, 2012.

Salient provisions of the settlement are:
· Duke will make several changes in its top management positions, including naming a new General Counsel and naming a former Progress executive as Executive Vice-President for Regulated Utilities. In addition, James E. Rogers will retire as CEO of Duke on December 31, 2013, as he originally planned to do in conjunction with the merger.
· Duke’s Board of Directors will create a CEO and Board Member Search Committee with a balanced number of former Duke and former Progress Board members, plus a new Board member not previously affiliated with either of the two companies. This search committee will identify candidates for the CEO and new Board member positions.
· Duke will create and maintain a new committee of its Board of Directors to meet with the Commission periodically to receive comments from the Commission on the activities and actions of the Duke Board.
· Duke will guarantee that Duke's North Carolina retail ratepayers will receive an additional $25 million in fuel and fuel-related cost savings over and above the amount that Duke is obligated to provide pursuant to the Commission’s Order approving the merger.
· Duke will contribute an additional $5 million to workforce development and low-income assistance in North Carolina over and above the amount that Duke is obligated to provide pursuant to the Commission’s Order approving the merger.
· Duke will maintain at least one thousand (1,000) employees, including the President of Duke Energy North Carolina and the Senior Vice-President of Carolinas Delivery Operations, in Raleigh for at least five (5) years.

The Settlement Agreement will be presented to the Commission for approval at its regular Staff Conference on Monday, December 3, 2012.

So yesterday we learned that neither Barack Obama nor Mitt Romney has N.C. on their travel schedules for the rest of the campaign. Then we learned Michelle Obama will be in Charlotte Monday. And now we know that Bill Clinton is due in Raleigh on Saturday morning Sunday. [Update: The campaign has moved it back a day.]

Where in Raleigh? Don't know. When? Early, I think — but don't know. I'm sure the campaign is scrambling to find a suitable venue — and have it help with Early Voting turnout, not get in the way.

N.C. State, maybe?

More when we have something more.

Everything I see tells me Obama is pulling ahead of Romney by 2-3 points nationally, more in critical states for Romney (Virginia, N.H., Wisconsin, Iowa, Colorado, Nevada, and the all-important Ohio). Obama is focusing his efforts there, as he should. He doesn't need North Carolina to win. That doesn't mean he can't win it.

Similarly, Romney must assume that he'll win in North Carolina and try to make up ground in the other states where he's trailing. But the fact that he must look past N.C. doesn't mean he'll win it. Every recent poll but one says N.C. is dead even — a tossup.

This morning's jobs report is huge for Obama, as is the fact that New Jersey Gov. Chris Christie, a Republican, is showing him the kind of respect for the president that no Republican in Congress has shown him since, well, since Obama was inaugurated. It's a reminder of what bipartisanship would look like if the Republicans weren't so damnably, cynically partisan.

The headline from the Elon University Poll is that Obama has pulled into a tie with Romney in North Carolina among likely voters, 45-45. Way down is the news that Obama leads by 2 points with registered voters.

Also, the poll was conducted Oct. 21-26, meaning that the first two days preceded the final presidential debate, in which Obama dominated. So, if anything, the poll may over-estimate where Romney stands in N.C. today.

Elon is one of the few live-interviewer polls, and its relatively large sample size of 1,200-plus reduces the margin of error to below 3 percent.

In the gubernatorial race, Pat McCrory is still ahead by double-digits. The internals are interesting. Here's the full poll release from Elon:

ElonPoll.pdf10-29-2012.pdf

[Update, 10-25: So yes, I did watch and McCrory was asked the Goldman question. He said he was "very concerned" at what he was reading about Debra Goldman's behavior and wondered if it was "appropriate for an elected official." Which behavior? He didn't say, and he didn't come right out and say what should be obvious, which is that Goldman, even if you give her the benefit of every doubt, isn't qualified to be state auditor.

[On the other hand, McCrory did give a shout-out to Democrat Beth Wood for "a good job" as auditor, which was the political equivalent of throwing Goldman's candidacy under the bus.

[Not a tough decision, really, but McCrory might've ducked the question completely ("I'm aware of the rumors, but that's all they are, and I won't comment on them ..."). So I give McCrory a passing grade on this basic test of leadership.]

The original post from yesterday afternoon follows —

I'll be watching the McCrory-Dalton debate tonight at 7 because, well, I still think who's governor is kind of important.

Pat McCrory is leading in the polls and brushing off all questions about everything. But here's one I hope he's asked and will answer:

If you're elected governor, do you think our state would be better served by having an auditor of the same party as yours — the Republican nominee, Debra Goldman — who is pretty obviously unqualified to be auditor? In other words, no auditor at all to be a watchdog over your administration?

Or, wouldn't it better for us and you, as governor, to retain Beth Wood as auditor, since she's done a good job in office, is a CPA, is qualified, and takes her responsibilities seriously?

The saga of Debra Goldman is well-known and I won't repeat it here. If you need a good recap of the recent Goldman-Malone caper, Carter Wrenn offers one today on the Talking About Politics blog.

I don't dislike Debra Goldman. I think she's tried, by her own lights, to be a good school board member. Her personal problems didn't help, obviously. I feel a little sorry for her actually. That said —

McCrory should make a clear statement that he doesn't support Goldman and is recommending that Wood be re-elected. Not to do so is to say, I'm a Republican hack, and I support Republicans regardless of the facts.

The three-judge panel of the N.C. Court of Appeals unanimously upheld Superior Court Judge Howard Manning's ruling. You can read the decision here.

Manning found, as part of his years-long ("Leandro") analysis of what the state constitution requires in the way of elementary and secondary education, that pre-K preparation is critical if at-risk kids, i.e., poor kids, are going to have a decent chance of success in the K-12 system. So he ordered the state legislature to step up and provide enough funding so that every such child can be served. Gov. Perdue agreed. But she didn't convince the Republican-led General Assembly.

As the appeals court found, in a decision issued this morning, Manning did not say that pre-K is a requirement for all time in North Carolina. Instead, Manning found — and the state Supreme Court has tasked Manning with doing the analysis and making his rulings operational — that the way our school system works now, in the early 21st century, pre-K is a must for kids from disadvantaged backgrounds.

Attorney General Roy Cooper appealed Manning's ruling. The State Board of Education, which was a co-defendant in the case, did not join in Cooper's arguments.

The Covenant With North Carolina's Children, an advocacy group, brought our attention to the Court of Appeals' action. Here's what the Covenant said:

RALEIGH — The State Court of Appeals issued its ruling this morning on the most recent iteration of the ongoing Leandro case. In its decision, the Court upheld Judge Howard Manning’s ruling that the state has a constitutional obligation to provide pre-kindergarten to all “at-risk” four-year-olds.

“This is great news for North Carolina’s children and families,” stated Rob Thompson, Executive Director of the Covenant with North Carolina’s Children. “Study after study shows that when children receive a high-quality early education, they do better in school and in life.”

Despite the clarity of the ruling, much uncertainty remains regarding access to NC Pre-K.

“The ball is now in the Legislature’s court,” continued Thompson. “Will it comply with the ruling and fully fund access to NC Pre-K? Will it appeal the ruling to the State Supreme Court? The reaction of legislative leaders will be the most important thing to monitor in the coming days and weeks.”

Specifically, the Court rejected the legislature’s claim that Judge Manning overstepped his authority by mandating open access to NC Pre-K as the sole remedy to educating at-risk four year olds:

“Under Leandro II, the State has a duty to prepare all “at-risk” students to avail themselves of an opportunity to obtain a sound basic education. Pre-kindergarten is the method in which the State has decided to effectuate its duty, and the State has not produced or developed any alternative plan or method.”

During the 2011-12 school year, NC Pre-k served just over 26,000 children. Another 40,000 children were eligible for the program, but not enrolled due to a lack of funding.

###

The Covenant with North Carolina’s Children is a non-profit, membership-based advocacy organization composed of service providers, professional associations and advocacy groups dedicated to promoting public policy that benefits children in North Carolina.

• 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.