IN THE MATTER OF INVESTIGATION REGARDING THE APPROVAL AND CLOSING OF THE BUSINESS COMBINATION OF DUKE ENERGY CORPORATION AND PROGRESS ENERGY, INC
Heard in the Court of Appeals December 11, 2013.
This Decision is not final until expiration of the twenty-one day rehearing period. [North Carolina Rules of Appellate Procedure 32(b)]
North Carolina Utilities Commission. No. E-7, SUB 1017.
No brief filed on behalf of appellee State of North Carolina ex rel. Utilities Commission.
Chief Counsel Antoinette R. Wike for appellee Public Staff -- North Carolina Utilities Commission.
Law Offices of F. Bryan Brice, Jr., by Matthew D. Quinn; and John D. Runkle, for proposed intervenor-appellant North Carolina Waste Awareness and Reduction Network, Inc.
Womble Carlyle Sandridge & Rice, LLP, by James P. Cooney III; Allen Law Offices, PLLC, by Dwight W. Allen; and Duke Energy Corporation, by Deputy General Counsel Lawrence B. Somers, for appellees Duke Energy Corporation, Duke Energy Carolinas, LLC, and Duke Energy Progress, Inc. (formerly Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc.).
For State of North Carolina (Ex. Rel), et al, Appellee: Sam Watson, General Counsel, Raleigh, NC; Margaret A. Force, Assistant Attorney General, N.C. DEPARTMENT OF JUSTICE, Raleigh, NC; Gail L. Mount, Raleigh, NC.
James N. Horwood, Attorney at Law, SPIEGEL & MCDIARMID LLP, Washington, DC.
David G. Schiller, Attorney at Law, SCHILLER & SCHILLER, PLLC, Raleigh, NC.
For Public-Staff NC Utilities Commission, Plaintiff-Appellee: Antionette R. Wike, Chief Counsel, Raleigh, NC.
GEER, Judge. Judges BRYANT and CALABRIA concur.
Appeal by proposed intervenor from orders entered 13
July 2012, 12 December 2012, and 29 April 2013 by the North Carolina Utilities
Proposed intervenor North Carolina Waste Awareness and Reduction Network, Inc. (" NC WARN" ) appealed two orders of the North Carolina Utilities Commission (1) denying NC WARN's motion to intervene in an investigation conducted by the Commission and (2) approving a settlement agreement by the parties to the investigation and closing the investigation. The Commission entered an order dismissing that appeal on the grounds that NC WARN lacked standing to appeal. NC WARN has appealed the dismissal order.
We hold that the Commission acted in excess of its jurisdictional authority in dismissing NC WARN's appeal for lack of standing, and we, therefore, vacate that order as void ab initio and address the merits of NC WARN's first appeal. We hold that the Commission properly denied NC WARN's motion to intervene and, therefore, affirm the order denying intervention. Since NC WARN was not a party to the Commission's investigation and had no standing to appeal from the settlement order, we also affirm that order.
On 4 April 2011, Duke Energy Corporation and Progress Energy, Inc. filed an application requesting that the Commission approve their proposed merger (the " merger docket" ). The companies indicated in the application that William D. Johnson would be named president and CEO of the merged company (" Duke" ) for a three-year term. Mr. Johnson filed written testimony in the merger docket stating he would be president and CEO of Duke, and James Rogers filed testimony stating he would be the executive chairman of Duke's board of directors. On 29 June 2012, the Commission entered an order approving the merger subject to regulatory conditions and code of conduct. Duke closed the merger on 2 July 2012. The next day, on 3 July 2012, Duke announced that Mr. Rogers would replace Mr. Johnson as president and CEO of the company.
On 6 July 2012, the Commission opened an investigation, pursuant to N.C. Gen. Stat. § 62-37 (2011), into the change in leadership immediately following the merger. NC WARN filed a motion to intervene in the investigation on 10 July 2012, alleging it was a non-profit corporation, with approximately 1,000 individual members, established for the purpose of " reduc[ing] hazards to public health and the environment from nuclear power and other polluting electricity production through energy efficiency and renewable energy resources."
The motion alleged that most of NC WARN's members resided in North Carolina and were customers of Duke, and its members were " concerned about the merger's potential impacts on the cost of their electricity." NC WARN stated that it had intervened in the merger docket, and that if allowed to intervene in the investigation, it would " assist and support the Commission." Attached to the intervention motion were NC WARN's " initial scoping comments to assist the Commission in defining the investigation."
On 13 July 2012, the Commission entered an order denying NC WARN's motion to intervene. The order explained that the proceeding was " an investigation pursuant to the Commission's supervisory authority under Article 3 of Chapter 62 [of the General Statutes], rather than an application or rate case being conducted pursuant to the Commission's authority under Article 4." The Commission also found that " NC WARN is not a party affected within the meaning of G.S. 62-37, requiring the Commission to 'make no order without affording the parties affected thereby notice and a hearing.'"
Relying on State ex rel. Utils. Comm'n v. Carolina Util. Customers Ass'n, 163 N.C.App. 1,
592 S.E.2d 277 (2004) (hereinafter " CUCA " ), the Commission further found that its " order in this proceeding will have only a generalized effect on NC WARN's members, no more and no less than it will have on all of Duke's and Progress' ratepayers." In addition, the Public Staff of the North Carolina Utilities Commission (" Public Staff" ) and the Attorney General were parties to the investigation, and the Commission found that those parties " represent the interest of all consumers who will be affected by the Commission's investigation."
On 29 November 2012, the Staff of the North Carolina Utilities Commission, the Public Staff, and Duke entered into a settlement agreement regarding the investigation. The agreement provided that Mr. Rogers, Mr. Johnson, and other individuals had testified before the Commission during the investigation; that Duke had filed thousands of pages of documents with the Commission pursuant to orders during the investigation; and that the parties desired to resolve " all matters and issues . . . without further litigation and expense and to move forward in a positive manner." The terms of the settlement agreement included that: (1) Duke maintain certain staff in Raleigh; (2) Duke create a board committee for regulatory compliance; (3) Duke provide retail ratepayers an " additional $25 million in fuel and fuel-related cost savings" and contribute " an additional $5 million to workforce development and low-income assistance," each on top of amounts provided for in the merger order; (4) Duke make certain executive-level staffing changes; (5) Duke bring in two new outside board members and retire current board members in a certain manner; (6) Mr. Rogers retire in December 2013 and the new top executive be hired from outside the company; and (7) Duke " issue a statement of acknowledgement to the Commission that its activities have fallen short of the Commission's understanding of Duke's obligations under its regulatory compact that frame the duties for a regulated utility in this state."
Although denied intervention, NC WARN continued to file comments in the investigation docket during the investigation, and NC WARN filed a motion opposing the settlement agreement on 3 December 2012. The Commission entered an order approving the settlement agreement and closing the investigation on 12 December 2012. The order provided that the " integrity of the Commission to carry out its statutory mandate relies on the openness and honesty of the regulated public utilities . . . ." The order further provided, however, that the settlement agreement " restore[d] the balance between legacy Duke and legacy Progress in the merged company . . ., reaffirm[ed] the regulatory compact and continued public confidence in the integrity of utility regulation, and allow[ed] the merged company to focus on its mission to provide affordable, reliable electric service to North Carolina consumers."
On 9 January 2013, NC WARN timely appealed the intervention order and the settlement order. Prior to NC WARN's service of the proposed record on appeal, Duke filed a motion to dismiss NC WARN's appeal with the Commission on 7 March 2013. The Commission entered an order dismissing NC WARN's appeal for lack of standing on 29 April 2013.
The majority of the Commission concluded that NC WARN had no right to intervene in the investigation under CUCA, and, as a non-party, NC WARN had no right to appeal. The majority further determined that it had jurisdiction to dismiss NC WARN's appeal for lack of standing. It reasoned that under N.C. Gen. Stat. § 62-90(c) (2011) and Farm Credit Bank of Columbia v. Edwards, 121 N.C.App. 72, 464 S.E.2d 305 (1995), the Commission retained certain jurisdiction over appealed orders until the appeal is docketed in the appellate court, including jurisdiction to dismiss an appeal by a non-party.
Commissioner ToNola D. Brown-Bland concurred in the result. Commissioner Brown-Bland reasoned that because the investigation was pursuant to the Commission's Article 3 powers and was wholly separate from the Commission's Article 4 judicial function, the only party affected by the investigation was necessarily Duke, the party investigated, since there was no assertion by any party during the investigation that the public's interests were not adequately protected. ...