The Empire Strikes Back!: Cinergy Management Takes Sharp Turn to Dark Side
The 1994 PSI/Cincinnati Gas & Electric merger that created Cinergy was the result of a model settlement. It benefitted both Cinergy shareholders and PSI customers. But Cinergy management has taken a different approach in a new merger bid with Duke Energy out of Charlotte, North Carolina.
Duke/Cinergy Management Proposes Raw Deal for Indiana: Ratepayers Can Expect Higher Rates and Deteriorating Service
Duke/Cinergy Management Demands the Hog’s Share of Merger Savings
Cinergy CEO, Jim Rogers, and Duke CEO, Paul Anderson, want 70% to 80% of the savings allocated to PSI from the merger for shareholders. They also want 100% of the savings allocated to PSI’s unregulated affiliates, giving shareholders $1.2 billion of the $1.5 billion of all savings within the first 5 years after the merger. By contrast, in the 1994 merger of PSI and Cincinnati Gas & Electric, shareholders received only 15% of savings.
Least Cost for Customers v. Highest Profits for Company
PSI customers will be the westernmost service territory in a huge utility empire headquartered hundreds of miles away on the east coast. Given the one-sided proposal filed by Cinergy and Duke, we can expect a future with more and more for shareholders and less and less for ratepayers. Ratepayers can expect:
- Higher Rates: Duke/Cinergy wants to drop least cost options, such as energy efficiency, and push the highest cost options available, such as unneeded new coal gasification and nuclear plants; and,
- Poorer Service Quality: The savings claimed for the merger are derived from lost jobs and closed facilities in Indiana. Duke/Cinergy will probably close the customer service center in Plainfield and has declined to make commitments to preserve Indiana jobs – even for critical repair personnel.
Stop Cinergy’s Turn to the Dark Side! The Force Is in Your Hands! Contact the Governor’s Office and Utility Consumer Counselor Today!
Tell them that:
- Customers like you should receive 85 to 100% of PSI merger savings, not just 20 to 30%.
- As provided in Indiana law, PSI should be required to provide reliable, least-cost service to its customers and not be permitted to force wasteful, high cost options down your throats.
- Duke/Cinergy should be required to make binding legal commitments to protect your service quality.
Governor Daniels can be called at 317-232-4567
Utility Consumer Counselor Susan Macey can be called at 317-232-2494 or 888-441-2494
Key Steps in Duke/Cinergy Management’s Turn to the Dark Side
- 2005: Cinergy CEO Jim Rogers and Duke CEO Paul Anderson met in secret with FERC Commissioners, who will decide the merger case at the federal level, in violation of the federal sunshine (open door) law.
- 2005: Duke issued a cease-and-desist order for accounting fraud with respect to its power marketing and gas trading operations.
- 2004: Cinergy fined $3 million for manipulation of natural gas prices
- 2004: Duke fined almost $550,000 for violating California energy market rules.
- 2004: Duke fined another $19 million for even more California violations.
- 2003: Duke fined $207 million for electricity price gouging as a result of an investigation into the California energy crisis.
- 2003: Duke fined $28 million for manipulating natural gas markets.
- 2003: Duke fined $2.5 million for intentionally withholding electricity from the California electricity market.
- 2002: After promising not to, Cinergy got permission from the Indiana Utility Regulatory Commission to put its failed Henry County merchant plant into the PSI rate base so it could avoid financial loss by having customers pay.
- 2000 to 2004: After promising not to, Cinergy had PSI sell power to CG&E at cost while CG&E sold the power at market rates, without flowing the difference back to PSI customers who paid to produce the power.