Duke Energy Lawsuit Over Ohio Rate Increase Bid Reinstated

Duke Energy Corp. (DUK) must face a lawsuit alleging the power company used unfair tactics in seeking a rate increase in Ohio, a federal appeals court ruled.

Ohio consumers can proceed with a suit alleging that Duke officials gave large electricity customers kickbacks for “withdrawing their opposition to a major rate increase,” a federal appeals court in Cincinnati ruled today. A lower court had thrown out the case.

“We are disappointed with the decision,” Tim Pettit, a spokesman for Charlotte, North Carolina-based Duke said in a telephone interview. “We continue to believe there is no merit or basis for this lawsuit and will continue to vigorously defend the company.”

Some of Duke’s southern Ohio customers sued the power company in 2008 in federal court in Cincinnati saying they were using improper tactics, such as rebates to large electricity users such as General Motors Co. (GM), to win support for a rate increase. Duke denied the kickback allegations in court filings.

Alan Adler, a GM spokesman, declined comment in a telephone interview today on the appeals court’s ruling reinstating the case. GM is named as a defendant in the consumers’ suit.

A judge concluded in 2009 that he lacked jurisdiction to hear the suit, and that the Public Utilities Commission of Ohio had exclusive control over the case, according to court papers.

“No circumstances exist here that would deprive the district court of jurisdiction,” a three-judge panel of the U.S. Court of Appeals in Cincinnati wrote in a 22-page decision reinstating the suit.

The panel also found consumers “have adequately alleged injury and competitive disadvantage” because of the rebates to large electricity users and they can press claims for violations of Ohio’s Corrupt Practices Act.

The case is Williams v. Duke Energy International Inc., 08-cv-046, U.S. District Court, Southern District of Ohio (Cincinnati).

To contact the reporters on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net; Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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