The Chrysler brand logo at the 2012 Detroit Auto Show

Chrysler wants $2.5 million deposit back from Duke Energy of Illinois

When Fiat SpA took over the Chrysler Group in 2009, Duke Energy of Illinois required the company to pay a security deposit of $2.5 million dollars – money which the Chrysler Group wants back right now.

This whole situation began when Fiat SpA first purchased the Chrysler Group in 2009. At that point, Duke Energy of Illinois considered the newly formed (and government free) Chrysler Group LLC a new customer and due to the high levels of electricity used at the Chrysler Kokomo Illinois Transmission facility, Duke Energy required the “new” Chrysler Group to pay a security deposit of $2.5 million dollars. At that time, the Chrysler Group attempted to dispute this fact but Duke Energy was quick to threaten to cut off power to the Kokomo Transmission facility so Chrysler quickly cut the check as a power outage at the plant would have cost the company a fortune in down time and backups coming from product shortages.

Several years have passed and the Chrysler Group has still not gotten back their massive $2.5 million dollars security deposit so the automotive firm has filed an official complaint with the Indiana Utility Regulatory Commission. The original security deposit was to be held at terms set forth by Duke Energy, stating that the Chrysler Group would have to meet a variety of requirements in order to get their $2.5 mil back. The first requirement was that Chrysler had to make 12 consecutive payments which, considering it has been a couple years, we imagine that the company has done successfully. Next, the company has to maintain a long term credit rating of BB via Standard and Poor’s and right now, Chrysler holds a B rating so it has some work to do before meeting that requirement. The third and final term was that Duke will determine Chrysler's financial status and acceptability of risk but the automaker insists that Duke never set forth any criteria for that final portion and the Chrysler Group cannot work towards a goal when they don’t know how that goal is achieved.

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Utility companies have become one of the most faceless, emotionless companies in America and even though the “new” Chrysler Group LLC was trying to keep a great many Americans working in 2009 – Duke Energy made the call to take advantage of the situation and collect an extra $2.5 million dollars for doing nothing. It almost sounds like Duke Energy is run by the government. The fact that the Chrysler Group has reported healthy profits in the first half of 2012 should be reason alone for the automaker to be trusted but Duke seems to think otherwise.

In any case, things are going well for the Chrysler Group but having their $2.5 million dollars back from the senseless security deposit of 2009 would be a little extra padding for the company’s bottom line. Chrysler management will meet with Duke Energy officials on August 15th to discuss the details of their future dealings while also working out a solution for the repayment of the sizable security deposit.

Comments

Nothing like a power monopoly to make life grand.