Duke Energy has agreed to an $81 million settlement of a lawsuit in Ohio that claimed contracts by a former subsidiary improperly benefited large industrial and business customers.
Duke and Duke Energy Ohio denied the claims but settled the class-action lawsuit to avoid litigation costs and the chance a verdict would go against them.
As a scheduled trial date in July approached, the parties said they were negotiating a settlement, court records show.
The lawsuit, filed in 2008 by an Ohio customer and three corporations, followed a 2003 rate increase application by Cincinnati Gas & Electric. CE&G was part of Cinergy, with which Duke merged in 2006.
In 2004, the lawsuit claimed, Cinergy created a “sham” entity that funneled kickbacks to large corporate customers in exchange for their withdrawing opposition to the rate hike.
Ohio’s utility commission later approved the rate increase.
Duke sold the entity involved, Duke Energy Retail Sales, to Houston-based Dynegy earlier this year as part of a $2.8 billion sale of power plants in the Midwest.
While Duke asserted that all Ohio customers were treated fairly, the company agreed to pay up to $25 million to residential customers during the 2005-2008 period in question.
Duke will pay up to another $25 million to non-residential customers during that time, and $8 million will go to energy programs. Duke will also pay the plaintiffs’ legal fees and related costs.
Duke recorded a $81 million charge against earnings earlier this year to account for the settlement.
The settlement has to be approved by a federal court in southern Ohio.