The former chief executive of Progress Energy said Thursday he was “stunned” by his quick ouster after completing a merger with Duke Energy and defended his handling of massive problems at the Crystal River nuclear-power plant, reports Jim Saunders of the News Service of Florida.
Progress and Duke finalized a long-awaited merger July 2, creating what Duke says is the largest utility in the country. The merger agreement called for Progress CEO Bill Johnson to become president and chief executive officer of the newly combined company that day, but he was asked to resign just hours after taking over the duties.
Johnson on Thursday told North Carolina regulators probing his dismissal that he had received no warning that he would lose the job — and that his wife had even bought a new tie for him to wear on the day the deal was finalized.
“I had no idea to expect this,” Johnson said. “My wife very rarely buys me a new tie. This was a special day.”
The newly combined company has taken Duke’s name, and a majority of its directors previously served on the Duke board. Johnson was replaced as CEO by Jim Rogers, who had served earlier as Duke’s chief executive and had been slated to become executive chairman under terms of the merger.
Duke has pointed, in part, to concerns about Johnson’s handling of a botched repair job that has shut down the Crystal River nuclear plant since 2009. It remains unclear whether subsidiary Progress Energy Florida will repair or permanently shutter the plant and whether an insurer will cover at least part of the costs.
In a document filed this week in North Carolina, Ann Maynard Gray, the lead director on Duke’s board, said the Charlotte-based company was aware of “certain business issues and challenges” facing Progress when the companies reached agreement to pursue the merger, including the problems at Crystal River. She said that understanding was based on information provided by Progress.
“We understood that the Crystal River nuclear plant had been shut down for repairs since 2009,” Gray said in the document. “However, we were told that Progress expected Crystal River to resume operations in April 2011 and that Progress expected significant insurance recoveries in connection with the repairs.”
Responding to questions during Thursday’s hearing, Johnson said he had been transparent about the continuing problems at Crystal River. He said, for example, he had allowed Duke to station an employee at the plant to have immediate access to information.
“I did not fail to inform anybody about anything,” he said.
Johnson said Gray told him that the Duke board wanted to replace him because of his “leadership style.” But he said he thinks Duke had wanted to back out of the merger earlier and had a feeling of “buyer’s remorse.”
He said he had insisted on carrying out the deal, and Duke would have faced financial penalties if it scrapped the merger.
“I continue to believe to this day it’s going to be good for everybody when the dust clears,” Johnson said.
Duke’s decision to force Johnson’s resignation and quickly replace him with Rogers has overshadowed other details of the deal. The North Carolina Utilities Commission is holding hearings about the executive changes because of concerns that Duke misled it and other regulators who approved the merger.
North Carolina Utilities Commission Chairman Edward Finley appeared highly critical of Duke’s replacement of Johnson.
“We had no reason to believe … that one of the parties was contemplating altering one of the primary factors of the deal,” Finley said.
The Florida Public Service Commission this week called Rogers to appear at an Aug. 13 meeting to discuss the merger. The PSC that day also is scheduled to get an update about the Crystal River project.
The state’s Office of Public Counsel, which represents consumers in utilities matters, has said the Crystal River situation likely is unprecedented. Also, with the insurance issue unresolved, it is unclear how much the problems could ultimately cost consumers.
The plant was first damaged in 2009 during a project to replace a steam generator. Workers needed to create an opening in a containment building to allow the generator to be replaced, but the project caused a separation in part of the building’s concrete.
Early last year, as the plant was being prepared to operate again, another concrete separation was discovered in a different part of the containment building. That has led to massive engineering work to determine whether to repair the plant.
Johnson said pursuing repairs was the best idea. If the plant is shut down, for example, the utility would have go to through a lengthy process known as “decommissioning,” which includes making sure the nuclear site is safe for the future.
Johnson said a shutdown also would increase Florida’s already-heavy reliance on natural gas to fuel power plants, adding to concerns about a lack of diversity in fuel sources.
“For the customers in Florida, the best economic answer is to repair the plant, if you can,” Johnson said.