$80.875 Million Settlement Over Duke Energy Secret Rebate Scheme

Between January 2005 and December 2008, Duke Energy Ohio's predecessor, Cincinnati Gas and Electric, arranged millions of dollars in secret rebates for roughly two dozen large industrial and commercial customers. The payments were routed through an unregulated affiliate, Cinergy Retail Sales, keeping the arrangement off the books of the regulated utility. The purpose, plaintiffs alleged, was to secure those customers' support for a rate stabilization plan Duke intended to push through the Public Utilities Commission of Ohio. Roughly one million residential and smaller business ratepayers paid their bills during the same period with no knowledge of the scheme and received nothing.

A whistleblower who claimed wrongful termination after raising concerns about the arrangement brought the conduct to light. Attorneys filed suit in January 2008 in the Southern District of Ohio, asserting claims under federal civil RICO statutes, federal antitrust law, Ohio's anti-rebate statutes, common-law fraud, and civil conspiracy. The plaintiffs sought class certification on behalf of all Duke Energy Ohio customers in the affected period.

The case moved through prolonged procedural battles. In June 2012 the Sixth Circuit Court of Appeals issued a significant ruling on the scope of the claims, and in January 2013 the Supreme Court declined to hear Duke's petition for further review. Class certification followed in March 2014. Bill Markovits and Paul DeMarco of Markovits, Stock and DeMarco served as lead co-counsel alongside co-counsel from Freking Myers Reul, pressing the litigation through each of those stages.

After seven years of litigation, the parties reached a settlement of $80,875,000 announced in October 2015. Of that total, $25 million was allocated as direct payments to residential class members, $25 million to non-residential class members, and $8 million to fund energy-efficiency programs for Duke customers. Residential ratepayers who filed claims could receive payments up to several hundred dollars, while non-residential customers qualified for larger amounts scaled to their electricity usage. The remaining funds covered legal fees and administrative costs. Judge Edmund Sargus held a fairness hearing on April 19, 2016, and approved the settlement.

Duke Energy denied the allegations and admitted no wrongdoing as a condition of the settlement. The $80.875 million figure represents the gross settlement fund before any allocations.