Citizens Action Coalition Opposes Duke/Cinergy Merger

Body: 

Citizens Action Coalition

NEWS RELEASE

For Immediate Release
November 29th, 2006

Contact: Grant Smith at 317-205-3535
Mike Mullett at 812-376-0734
Jerry Polk at 317-636-5165

Citizens Action Coalition Opposes Duke/Cinergy Merger

Today, the Citizens Action Coalition issued a statement opposing the Duke/Cinergy merger. CAC opposes the merger for three basic reasons:

  1. Duke/Cinergy would be in position to manipulate natural gas and electric prices.
  2. Both Duke and Cinergy have a history of cheating customers as it is.
  3. Savings to PSI customers would be minimal while the risk of customer abuse would be very high.

CAC has intervened before the Indiana Utility Regulatory Commission to get the best deal possible for PSI customers at the state level and is coordinating an effort with other consumer groups at the federal level to stop the merger if possible.

Grant Smith, CAC executive director, said, “A Duke/Cinergy merger will not benefit customers in the least. It is meant to accelerate the ongoing process begun by Cinergy of converting utility customers into involuntary financiers of a huge holding company accountable to no one but itself. Ratepayers would be faced with the largest electric power marketer in the country and a company that controls much of the natural gas pipeline capacity in the eastern United States. A history of customer abuse by Duke suggests the combination would only make Cinergy’s bad corporate track record worse.”

Smith said that Cinergy CEO, Jim Rogers, and Duke CEO, Paul Anderson, “have regularly demonstrated their disdain for the law and their customers.”

Smith pointed to Cinergy’s recent fine of $3 million for natural gas price manipulation and Duke’s $200 million plus in fines over the last few years relating to price gouging during the California energy “crisis” and to natural gas price manipulation. Duke also was issued a cease-and-desist order for accounting fraud with respect to its power marketing and gas trading operations.

CAC reports that is has also had run-ins with Cinergy. Smith complained that Cinergy does not negotiate in good faith. Smith said, “Cinergy cannot keep promises. Rogers is an opportunist, reneging on Cinergy commitments to its customers in order to increase profits for shareholders.”

As examples, Smith used Cinergy’s reversal of position on two merchant power plants and its implementation of the operating agreement between Cinergy’s two principal subsidiaries, Cincinnati Gas and Electric and PSI Energy.

Smith said, “Cinergy executives testified under oath that PSI customers would never pick up the costs of the merchant power plants that its unregulated subsidiaries built in Henry County, Indiana and Madison County, Ohio. But, as soon as wholesale power markets shifted and the plants were in jeopardy of failing financially, Rogers ran to the Utility Regulatory Commission to get the plants put in the PSI rate base to make PSI responsible for their costs and to prevent a shareholder loss.

“Moreover, after promising not to do so, Cinergy engaged in self-dealing to the detriment of PSI customers. Cinergy had PSI sell power at cost to CG&E. CG&E, in turn, sold the power at prices well above cost on the wholesale market. Cinergy then kept the profits rather than passing them through to PSI customers as they would have been required to do had PSI made the market sales directly rather than through CG&E.”

And it doesn’t stop there, Smith said. He said that Public Citizen, a Washington D.C-based consumer advocacy organization, is accusing Rogers and Anderson of violating federal sunshine (open door) laws by meeting in secret with members of the Federal Energy Regulatory Commission, who will be approving or disapproving the merger at the federal level.

Smith said, “It’s clear that Duke/Cinergy would exploit the huge size of their corporate structure and the great complexity of their intra-company transactions to benefit shareholders at the expense of customers to the maximum extent possible. And experience shows that it is simply impossible for regulators to protect customers from such abuses with a utility holding company of this size and complexity.”

Mike Mullett, legal counsel for CAC, commented on the small amount of customer savings projected to result from the Duke/Cinergy merger. “According to the Company’s own testimony, the savings to an average residential customer in Indiana will only be approximately $1 in the first year following the merger and no more than $7 in the fifth year after the merger. These projected savings to customers here in Indiana resulting from this merger are simply too small to justify the risks they will face in becoming the western-most subjects of a huge utility empire to be headquartered on the east coast.”

###

Categorize this content under: