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US: Duke Energy sued for alleged kickbacks

New Mexico Business Weekly
January 17th, 2008

Two lawyers have filed a class-action lawsuit in federal court in Cincinnati accusing Duke Energy Corp. of overcharging tens of thousands of residential and business customers.

The complaint by Randy Freking and Stan Chesley contends Charlotte, N.C.-based Duke (NYSE:DUK) and its predecessor companies, Cinergy Corp. and Cincinnati Gas & Electric Co., funneled kickbacks to corporate customers in exchange for their withdrawal of opposition to rate increases that Duke sought from Ohio regulators.

The suit alleges Duke paid up to $100 million in rebates since 2004 to its biggest customers as part of the scheme, according to The Associated Press.

The recipients were members of Industrial Energy Users-Ohio and Ohio Energy Group, groups that initially opposed a 2003 rate hike sought by Cinergy.

Duke says the allegations have no merit.

"The contracts in question were the subject of extensive litigation before the Public Utilities Commission of Ohio, which affirmed Duke Energy Ohio's rates after full disclosure and review of the transactions," Duke says in a written statement. Ohio regulators "properly determined that parts of the transactions should remain confidential, and Duke Energy will not comment further upon those transactions or the pending litigation," the company adds.

The suit seeks restitution and punitive damages.

Duke is one of the largest electric utilities in the U.S., delivering power to 4 million customers. The company has 36,000 megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky.

Duke Energy is the parent company of Duke Energy Carolinas and Duke Energy Field Services, a global energy company based in Houston, which is a joint venture between Duke Energy and ConocoPhillips Inc. (NYSE:COP). The latter has operations in New Mexico.

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