Duke Energy overstated revenue requirements for wholesale and transmission customers by $79 million over a five-year period, federal regulators say.
Duke said it will refund $1.3 million to some of its wholesale customers in response to an audit by the Federal Energy Regulatory Commission. Retail customers won’t be affected by the audit, Duke said.
The FERC audit covered January 2011 through January of this year. It assessed Duke’s compliance with terms the commission set in approving Duke’s $32 billion merger with Progress Energy in 2012, and compliance by utility subsidiaries with tariff, accounting and financial reporting requirements.
The audit found Duke didn’t obey the rules in eight areas, and auditors made 37 recommendations for corrective action. Most of the findings relate to accounting, expense classifications and financial reporting.
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Duke Energy, in a response filed with FERC, said it accepts five of the eight findings. It disagrees with at least portions of three other findings but said it won’t contest them.
“Just in the interests of efficiency and moving forward, there were some differences in interpretation, but the company felt it was prudent to accept those and move forward,” spokesman David Scanzoni said.
The FERC said Duke overstated revenue requirements in two ways related to the Progress merger. One involved improperly including internal labor costs and overstating $17.5 million in revenue requirements. The other, an overstatement of $745,000, was due to Duke’s inclusion of outside services in rate service costs.
Duke said it disagreed with both findings but would not challenge them.
The audit also found that Duke utilities in the Carolinas and Florida misclassified non-operating expenses and receivables from transactions with subsidiaries, resulting in overstated revenue needs of $61 million. Duke said it disagrees with part of that finding but won’t contest it because the issue is part of another case pending before FERC.
Duke accepted findings that it included $2.4 million in lobbying expenses in operating accounts from 2011 through 2013, and recorded $490,000 of non-utility expenses in operating accounts in 2014.
Duke settled a lawsuit filed by shareholders over the Progress merger for $146 million in 2015. The litigation claimed Duke made misrepresentations about leadership of the combined companies.