Duke Customers to Profit from $81M Settlement

Duke Energy announced on October 21 that it had reached an $81 million settlement agreement to end a 2008 lawsuit related to contracts between a former Duke Energy subsidiary – Duke Energy Retail Sales – and certain large corporate and industrial (C&I) electric customers of Duke Energy Ohio.

The agreement would end a class-action lawsuit (Anthony Williams et al. v. Duke Energy Corp. et al.), brought by two subclasses of ratepayers:

• Business ratepayers that received retail electric generation service from Duke Energy and/or Cinergy or their subsidiaries/affiliates at any time between January 1, 2005, and December 31, 2008, in the Cincinnati Gas & Electric (CG&E)/Duke electric service territory and who did not receive rebates under the side agreements; and
• Residential ratepayers who received retail electric generation service from Duke Energy and/or Cinergy or their subsidiaries/affiliates at any time between January 1, 2005, and December 31, 2008, in the CG&E/Duke electric service territory and who did not receive rebates under the side agreements. in which the plaintiffs asserted that contracts between Duke Energy Retail Sales and certain large industrial and business customers of Duke Energy Ohio violated state and federal anti-trust laws.

In the suit, the ratepayers alleged that the entity at that time known as Cinergy Retail Services (and later purchased by North Carolina-based Duke Energy) offered kickbacks – through alleged "side agreements” with specific large customers – so that those customers would cease their stated opposition to a Cincinnati Gas & Electric (CG&E, later renamed Duke Energy Ohio) rate increase pending before the Public Utilities Commission of Ohio (PUCO).

In other words, the plaintiffs claimed those customers received financial benefits through the contracts that other customers did not receive.

For its part, Duke Energy, which sold Duke Energy Retail Sales to Dynegy last March, denied the allegations and maintained it complied fully with state and federal laws. The company asserted that the contracts, which were in effect from 2005 through 2008, were legal under state and federal laws.

Duke also asserted that all Duke Energy Ohio electric customers were treated equally and fairly, and paid appropriate rates as approved by the Public Utilities Commission of Ohio during the years in dispute.

Duke Energy agreed to settle the case to avoid the costs and uncertainties of continued litigation, the company said. The agreement is subject to approval by the U.S. District Court for the Southern District of Ohio, in Columbus. Duke Energy shareholders, not customers, would cover the cost of the agreement.

Under the final agreement, the $81 million settlement would be allocated as follows:

• Up to $25 million to Duke Energy Ohio residential customers who were customers at any time during the period beginning January 1, 2005 and ending December 31, 2008.
• Up to $25 million to Duke Energy Ohio non-residential customers (such as businesses and local governments) that were customers at any time during the period beginning January 1, 2005 and ending December 31, 2008.
• About $8 million to fund energy-related programs to benefit Duke Energy Ohio customers who were customers at any time during the period beginning January 1, 2005 and ending December 31, 2008. Program details would be determined at a later date.
• Remaining funds to pay plaintiffs’ legal fees, settlement fund distribution costs and other expenses.

The plaintiffs who filed the lawsuit – not Duke Energy – would distribute the settlement fund through a claims administrator. Duke Energy customers who have questions about the settlement fund can call the plaintiffs’ claims administrator at 1-844-322-8220.