N.C. agrees to settlement over utility's altered accounts

Regulators' audit found Duke Energy Corp. under-reported profits

October 30, 2002|By BLOOMBERG NEWS

CHARLOTTE, N.C. - North Carolina regulators yesterday accepted Duke Energy Corp.'s offer of $25 million to settle a dispute over under-reported profit by the utility company.

Duke agreed to credit the money to customers in North Carolina and South Carolina after an independent auditor retained by the states found that the company misstated $123.7 million in profit from January 1998 to July 1 last year. The tactic enabled Duke to avoid lowering customers' rates, the auditor said.

The settlement hinges on acceptance by utility regulators in South Carolina, who postponed a decision Friday. About 75 percent of Duke's utility customers are in North Carolina.

"We accepted it unanimously, as proposed," said Jo Anne Sanford, chairwoman of the North Carolina Utilities Commission. The panel denied a request by a group of utility customers for a full audit of Duke.

The results of the audit and the settlement, worked out by Duke and the executive directors of the utility regulating agencies in North Carolina and South Carolina, were announced a week ago.

On Friday, Mignon Clyburn, chairwoman of the South Carolina Public Service Commission, postponed a vote on the settlement, saying members wanted more time to study it, said the agency's executive director, Gary E. Walsh.

"Duke Power undertook a coordinated effort" to alter its accounts and "lower Duke's net utility operating income reported to the state commissions," according to the Oct. 21 audit report prepared by Grant Thornton LLP of Boston. Some entries were "completely without accounting justification," the report said.

"We made some accounting mistakes," Duke spokesman Tom Williams said. "We deny there was any intent by our employees to mislead regulators or customers."

The Carolina Utility Customers Association expects to appeal the North Carolina commission's decision to the state Court of Appeals, said Sharon Miller, the group's executive director.

Shares of Duke Energy, based in Charlotte, fell 53 cents to $19.67.

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