A watchdog group is claiming that Duke Energy Florida, which operates the second-largest investor-owned utility in Florida, improperly charged customers for hundreds of millions of dollars of executive compensation and says it wants a recent rate settlement re-opened for review as a result.
In an April 30 letter sent to the Florida Public Service Commission (PSC), the Colorado-based “Better Jobs Coalition” said it conducted a study that found evidence that Duke Energy Florida customers may have paid as much as $300 million in executive bonuses and incentives that should have been disallowed.
The Coalition describes itself as a “non-profit that supports free markets, fairness, and competitiveness, and opposes cost increases on job creators and working families caused by unnecessary government intervention.” The Coalition is headed by Frank McNulty, an attorney and former Speaker of the Colorado House of Representatives. The letter was signed by Coalition Chairman Rick Enstrom
The letter arrived just before the PSC was scheduled to consider a pending settlement of a Duke Energy Florida rate case in early May. Despite its allegations, the letter received no attention at the time and the settlement was approved without objection.
The Coalition had called on the PSC to delay any agreement on news rates for Duke until the matter had been resolved, but the PSC moved forward with a settlement agreement that the Commission and Office of Public Counsel said was good for customers and good for the state.
“It is clear that more research needs to be done and tough questions asked to ensure the ratepayers are treated fairly and know the truth. More to the point, ratepayers deserve clear answers on this point before any decision is made about a proposed 2021 settlement agreement on general base rate increases for DEF,” the Coalition said in its letter.
For its part, Duke, already reeling from nationally publicized allegations of widespread mismanagement by the hedge fund Elliott Investment Management, came out swinging against the Better Jobs Coalition.
“We strictly follow the spirit and letter of the law with respect to compensation,” said Ana Gibbs, a spokeswoman for Duke. “The timing of inquiries like this is interesting, coming from a Colorado-based dark money group at a time when a well-connected hedge fund is trying to break up Duke Energy for the benefit of its own investors.”
The hedge fund referenced by Gibbs, Elliott Investment Management, has a reputation for aggressive tactics in pursuit of its investment goals. According to the Wall Street Journal, Elliott is one of the 10 largest investors in Duke Energy, with a stake of over $900 million. Elliott sent its own scathing letter to Duke’s board of directors, calling on the company to split itself into three companies — one in Florida, one in the Carolinas, and one operating across Indiana, Ohio, and Kentucky.
Duke Energy pushed back aggressively, describing Elliott’s letter as just the “latest in a series of proposals” that the hedge fund has offered to the company since July 2020.
This is not the only ongoing controversy Duke is entangled in when it comes to ratepayers.
In January, in response to a historic coal ash spill of over 39,000 tons from a Duke plant in North Carolina, the company agreed to pay $1.1 billion in clean-up costs and fines. It initially tried to collect those costs from customers.
Just weeks later, Duke Energy Corporation said it would sell a 20 percent stake in its Indiana operating arm to a sovereign wealth fund based overseas in Singapore. The $1.1 billion deal is being challenged by advocacy organizations and scrutinized by regulators.
The Better Jobs Coalition previously provided an expert witness to participate in a review of Duke’s IGCC power plant in Edwardsport, Indiana. The Sierra Club has called that plant a “monument to cost overruns, mismanagement and malfeasance.” The plant was originally estimated to cost $1.3 billion to $1.6 billion but ultimately cost over $3.5 billion.
In Florida, Duke has a checkered history of failed nuclear projects with a price tag in the billions of dollars that customers will continue to pay as part of their monthly bills over two decades, the Coalition noted.
“Duke wants to distract you by slinging ‘dark money’ allegations. The reality is that we plan to shine a light on its pervasive mismanagement and the impact of that mismanagement on its customers. That is why we are going to formally request that the PSC re-open Duke’s rate case in Florida to ensure that Florida customers are made whole and are no longer improperly paying for executive bonuses,” Enstrom said.