Southern Ohio Businesses, Customers Sue Duke Energy

January 16, 2008

A group of local businesses and consumers filed a class action lawsuit today on behalf of southern Ohio electricity users who purchase electricity from Duke Energy. The lawsuit alleges that cincinnati Gas & Electric ("CG&E") and Cinergy Corp. ("Cinergy"), now Duke Energy, violated federal and Ohio law by granting significant price advantages for electricity to certain large corporate customers in southern Ohio, at the expense of all of the electric utility's other customers. The suit was filed in federal district court in Cincinnati by two Cincinnati law firms, Freking & Betz and Waite, Schneider, Bayless & Chesley.

The suit claims that, because large corporate customers entered into "side deals" with CG&E and Cinergy under which the corporations would pay less for electricity than the law required, hundreds of thousands of other CG&E (now Duke Energy) customers were forced to pay more--including small businesses and individual consumers all over southern Ohio. The complaint includes claims against Duke Energy for conspiracy, violation of federal antitrust law, fraud, and unjust enrichment, and asks the Court to certify the case as a class action on behalf of all Duke customers who were not parties to any alleged "side deals."

According to Stan Chesley of Waite, Schneider, Bayless & Chesley, "We believe CG&E signed sweetheart side deals with large corporate customers in greater Cincinnati knowing that small businesses and ordinary consumers all over southern Ohio would end up picking up the tab. These side deals are still in effect."

Added Randy Freking, "We don't think the timing of these side deals was a coincidence. One minute, CG&E's large corporate customers in southern Ohio were complaining to the Ohio Public Utilities Commission about a rate increase that CG&E was then proposing. Then all of a sudden the corporations dropped their opposition to CG&E's proposed rate increase."

Freking also noted that Duke Energy has gone to great lengths to conceal the existence of the side deals. Attached to the complaint (Exhibit A) was a DVD showing a CG&E lawyer arguing a case before the Supreme Court of Ohio on April 25, 2006, after the side deals went into effect. On the DVD, CG&E's lawyer tells the state's highest court "it is unknown" whether there are any side deals.

According to Chesley, Duke Energy also has refused to make public the actual language of the side deals it signed with large corporate customers. The utility would only agree to make public copies of the agreements with the critical portions blackened out. Copies of such heavily redacted documents were attached to the complaint (Exhibit B). Said Freking: "This is hardly the transparent rate-setting process that the rate-paying public deserves and has been promised."