Next TVA CEO Bill Johnson hit for prior work

Next TVA CEO Bill Johnson hit for prior work

November 28th, 2012 by Pam Sohn in Business Around the Region

TVA's Bill Johnson

Photo by Dan Henry/Times Free Press.

A nuclear watchdog group is touting a memorandum sent by Bill Johnson -- TVA's soon-to-be new leader --as the smoking gun that should reopen the Duke-Progress energy merger that formed what is now the nation's largest utility company.

Jim Warren, director of NC WARN in North Carolina, filed legal papers this week with the North Carolina Utilities Commission claiming that an April memo from Johnson to his Progress board shows he and Duke merger officials may have withheld information about the rising costs at the crippled Crystal River Nuclear Plant in Florida.

Those ballooning costs could have offset the public savings claimed for the utility merger, Warren said.

Johnson, now the incoming TVA president and CEO, was the former Progress CEO who served as the Duke CEO for one day before he was ousted at Duke.

He will replace the retiring Tom Kilgore at TVA in January.

"The Johnson memo to his board members strongly suggests Duke misled regulators in various states," Warren said Tuesday.

On Tuesday, TVA chose not to comment on the group's allegations about TVA's new leader, who was unanimously approved by the TVA board last month.

"Mr. Johnson doesn't begin his employment with TVA until Jan. 1, 2013, and we won't be handling media inquiries for Mr. Johnson until that time," said TVA spokeswoman Gail Rymer.

"TVA is not a party to the Duke/Progress merger and questions regarding the merger should be directed to them," she added.

Johnson could not be reached for comment.

Warren said his group found the memo amid 3,000 pages of partially censored documents the Commission ordered unsealed during an ongoing investigation of the propriety of Duke firing Johnson on the day the merger closed.

The North Carolina state attorney general also is investigating the matter, Warren said. But he added that neither is looking at the propriety of the merger itself.

The final item in the Johnson memo, dated April 17, 2012 and tagged "Confidential," states that Progress is "accommodating a request from the Duke Board to allow an independent team, commissioned by Duke, to conduct a review of the [Crystal River Unit 3] project. Duke retained Zapata Engineering to conduct the review. They currently have about 25 team members at the [Crystal River 3] site. A report of their review will be presented at the Duke Board meeting in late June."

The Duke Energy Board meeting was held on June 26. The North Carolina Utilities Commission approved the Duke and Progress Energy merger on June 29.

A summary of the final Zapata report, dated Aug. 1, was released to Florida regulators in October, as was a censored version of the full report, Warren said. Zapata's summary states their review began in March.

"With Duke's board pressing for the truth about the repair estimates, it's impossible to believe they didn't have at least the preliminary findings before the merger closed," Warren said. "It's a pretty standard game to claim a controversial report 'is still in draft form' as a way to withhold its release."

The Crystal River Plant has been idle since it was damaged during a 2009 generator replacement like the one currently underway at Sequoyah Nuclear Plant's Unit 2 reactor near Soddy-Daisy.

The Charlotte Observer reported the repair bill at Crystal River could run as high as $3.4 billion, and the reactor could be off-line until 2016. The initial repair costs were estimated at $1.5 billion.

Johnson, 58, had been slated to be head of the new merged company, Duke Energy, which has become the nation's biggest electric utility. But the Duke board replaced Johnson with former Duke CEO Jim Rogers within a day of the merger's closure.

In ousting Johnson, Duke officials cited "lack of transparency."

Duke lead director Ann Gray told the North Carolina Utilities Commission in July that the energy giant lost confidence in Johnson, in part, because he "had withheld information from the board about rising repair costs at Progress's troubled Crystal River, Fla., nuclear plant."

Contact Pam Sohn at psohn@timesfreepress.com or 423-757-6346.