By EMERY P. DALESIO
AP Business Writer
RALEIGH, N.C. (AP) - North Carolina utilities regulators have called the sacked CEO of Duke Energy Corp. to testify next week in their probe of whether they were misled before the merger creating the country's largest electric company.
The North Carolina Utilities Commission ordered two more days of hearings for next Thursday and Friday.
Former Progress Energy CEO Bill Johnson was called to testify under oath next Thursday along with two members of Progress Energy's former board of directors, E. Marie McKee and James B. Hyler Jr. The state regulatory body wants to hear from Duke Energy board members Ann Gray and Michael Browning.
The two companies said when their proposed merger was announced 18 months ago that Johnson would head Charlotte-based Duke Energy after it took over Raleigh-based Progress. But hours after the deal was done July 2, Johnson was out and former Duke Energy CEO Jim Rogers was back in the top job.
Rogers testified on Tuesday that directors told him they were disappointed with Johnson's authoritarian-seeming style, his handling of ongoing problems with Progress Energy's closed Crystal River nuclear plant in Florida and the company's financial performance.
Johnson has not responded to the criticism, in part because one of the conditions of his separation agreement is that neither he nor Duke Energy speak ill of the other. But legal proceedings are an exception, meaning that Johnson could offer his version of what swayed Duke Energy's board.
Johnson is due to receive up to almost $45 million in severance, pension benefits, deferred compensation, and stock awards.
Rogers testified this week he had no designs on the CEO job. But he said Gray and Browning confided in a private meeting in late June that they and other directors were concerned about Johnson's stewardship and asked Rogers whether he would stay in the top job after the merger. The utilities commission approved the merger June 29, removing the last major obstacle to the deal.
The state investigations come after former Progress Energy board members Alfred Tollison Jr. and John Mullin III said they felt misled and that they wouldn't have backed the merger if they knew Rogers would stay in charge. Progress Energy directors agreed to a relatively low sale price to Duke Energy due in part to being assured their top executive would lead the expanded company for three years.
State law allows the utilities commission to rescind or alter its prior decision approving the merger.
The commission also ordered Duke Energy to turn over all versions of Rogers' employment contracts, all emails between board members and Rogers since December, and two years' worth of board meeting notes, letters, emails and other communication about the CEO position.
The regulator is unlikely to unwind the deal, analysts said, but Duke Energy could expect increased doubts from the utilities commission when asking for electricity rate increases and shareholders could see a lower stock price.
Duke Energy's shares will likely be weighed down "in the near future given the potential for regulatory risk and concerns over integration and predictability thrown up by the post-merger surprises and lack of clarity," Deutsche Bank analyst Jonathan Arnold said.
Duke Energy spokesman Tom Williams said the company is concentrated on providing power to its more than 7 million customers in North Carolina, Kentucky, Ohio, Indiana, Florida and South Carolina.
"Our focus at Duke Energy is on bringing our two companies together to harvest our merger's savings for our customers and to deliver value to our shareholders," he said in a statement.
Emery Dalesio can be reached at http://twitter.com/emerydalesio
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