www.DukeEmployees.com - Duke Energy Employee Advocate
Duke - Page 14 - 2002
are having the rug pulled out from under them by the Bush administration." - Congressman George Miller
Duke to Refund Over $40 MillionReuters – December 24, 2002
(The following statement was released by the ratings agency)
NEW YORK, Dec 24 - The Alberta Energy and Utilities Board (EUB) ordered Engage Energy Canada, a subsidiary of Duke Energy Corp. (A/Negative/A-1), to refund $40.3 million to the province's Transmission Administrator by Jan. 15, 2003. Engage had anticipated and reserved an amount representing the majority of the mandated refund. As a result, there will be minimal, if any, effect on earnings. However, the $40.3 million cash refund, much of which had been anticipated in the company's projections, is still a negative for credit quality; Duke Energy has been experiencing a string of negative events that contributed to Standard & Poor's revising its outlook to negative from stable on Dec. 13, 2002.
One Notch Above Junk StatusTheStreet.com – by Melissa Davis – December 24, 2002
(12/23/02) - Duke might have preferred coal to its holiday "gift" from Moody's.
After all, Duke could use the coal to fire a power plant or something. But credit downgrades, like those issued Monday for Duke, aren't so easily exploited.
At best, Duke can feel thankful the cuts aren't any deeper. The North Carolina energy giant, which has escaped the brunt of the merchant energy meltdown, doesn't have a junk credit rating -- yet.
Most of Duke's credit ratings remain within the strong A category, even after Moody's cut some of them by as much as two notches Monday. But the senior unsecured debt for Duke Capital -- which carries the burden for Duke's troubled unregulated businesses -- has fallen to Baa2, just one notch above junk status.
Moody's pointed to ongoing turmoil throughout the merchant energy sector as a trigger for its actions.
"Moody's lowered Duke Capital's ratings in response to lower actual and anticipated earnings and cash flow as a result of continued weakness in wholesale energy markets both in the U.S. and abroad," the ratings agency wrote Monday. "Duke Capital has taken on substantial amounts of leverage in order to build out its merchant energy subsidiary ... and now faces diminishing cash flow to service that debt."
Moody's outlook for Duke's credit remains negative.
The credit downgrades, together with a stock downgrade by Lehman Brothers, weighed the company down on Monday. The stock slid 33 cents Monday, to $19.76.
Lehman Brothers analyst Daniel Ford cited a possible credit downgrade -- just hours ahead of Moody's action -- as one of many reasons to avoid the stock. He also lowered his 2003 earnings forecast for the company, dropping it from $1.80 to $1.71 a share, and cut his 12-month price target for the stock to $15.
"A critical element of the company's performance is the merchant power and energy trading and marketing results," Ford wrote. "We believe the current lack of liquidity in the power markets and the decrease in creditworthy counterparties will make this a very challenging endeavor."
In response to deteriorating industry conditions, Duke laid out plans last week to restructure its troubled merchant energy unit. The company intends to curtail its high-risk speculative trading operations, but it has stopped well short of following weaker players -- like Aquila and Dynegy -- out of the trading business altogether.
"Our energy marketing function will be a key focus area for us going forward," Duke announced last Thursday. "We are moving quickly to position the organization for stability and certainty and look forward to a productive 2003 and beyond as we implement this business model."
Duke shares have lost roughly half their value since Enron's bankruptcy triggered an industrywide meltdown more than a year ago.
Duke Alledgely Overcharged for PowerReuters - December 23, 2002
CALGARY, Alberta, Dec 19 (Reuters) - Alberta regulators ordered a Duke Energy Corp. unit to refund the province's power grid administrator C$62.6 million ($40.4 million) it said the firm overcharged for short-term electricity supplies last year.
The Energy and Utilities Board ruled Engage Energy Canada LP, a subsidiary of big U.S. power and pipeline company Duke, charged the Transmission Administrator C$125.7 million for demand power to balance the system, when the value of the deal should have been C$66.1 million.
The board ordered Engage to pay back C$59.6 million plus C$3 million in interest by Jan. 15.
Under Alberta's two-year-old deregulated system, Engage has the right to sell electricity from its Rainbow generators in the northwestern part of the province.
The Transmission Administrator did not have a contract with Engage, but it occasionally calls on the Rainbow station to maintain system integrity when it needs more power.
The administrator had argued it should only have paid C$25.7 million in the 2001 transaction.
"The EUB believes this (C$66.1 million) amount reflects what could have been achieved by Engage in a competitive market situation, while recognizing the unique circumstances associated with the Rainbow generators in 2001," it said.
The board first urged Engage and the administrator to come to a settlement themselves, but could not reach a deal, an EUB spokesman said.
The regulator said it expected the grid administrator's tariffs will decrease by the C$62.6 million amount in 2003.
A Duke spokeswoman in Houston said company officials had not seen the decision and could not comment.
The Charlotte, North Carolina-based company said on Thursday it was cutting 275 jobs, or about 21 percent of the staff at its Duke Energy North America unit in a move that was seen as signaling a de-emphasis of its merchant generation and energy trading operations.
More Duke LayoffsThe Charlotte Observer – by Stan Choe – December 20, 2002
Duke Energy Corp. will cut about 275 jobs in its North American merchant power and trading division, after consolidating its Salt Lake City and Calgary trading operations into its Houston base.
The layoffs, virtually all in the three cities, are in addition to the 1,500 job cuts Duke announced earlier this year. This round of cuts will be completed by the end of January.
Once considered the biggest star of Duke Energy, its North American power-generation and trading division has been walloped recently by falling revenues, government inquiries and the stain of being in the same business as Enron Corp.
To extract better results from the weakened division, Charlotte-based Duke shook up its management earlier this month. It pushed out both the president of Duke Energy North America, Jim Donnell, and his boss, Harvey Padewer.
This is the first major move by Duke Energy North America's new president, Robert Ladd.
He said he hopes it will also be the division's last restructuring for a while.
Duke spokesman Bryant Kinney said, "We want to do it right this time, so we don't have to do it again."
About 50 of the layoffs will be within the trading organization, which has already endured about 75 job cuts this year. It will have about 250 employees after this round.
The other 225 cuts will be in finance and other support divisions in Calgary, Houston and Salt Lake City.
Duke Energy North America will employ just over 1,000 after the cuts.
Duke will keep marketing offices in Calgary and Salt Lake City, where the small offices will continue to woo new customers and serve existing ones.
The company wanted to consolidate its trading desks to save money -- about $30 million annually -- and build a consistent culture. Through the years, the three offices have developed different policies and systems, Kinney said.
The Duke Energy North America restructuring comes just days after Duke decided to pull out of European electricity trading. Duke Energy International will cut an unknown number of jobs in that move, as it focuses on the European natural-gas market.
Duke Trading DownsizingHouston Business Journal – by Monica Perin – December 20, 2002
(12/18/02) - Duke Energy Corp., headquartered in Charlotte, N.C., confirmed Wednesday that it plans to make a major announcement by week's end about the further reorganization and consolidation of its energy marketing and trading business, as well as other operational areas.
Many Duke employees in Houston are expecting to be laid off, following the 1,500 or more layoffs that have already occurred companywide. Rumors were flying this week regarding the future of the company in Houston, where Duke Energy North America, also known as DENA, is headquartered.
But company spokesman Bryant Kenny said Wednesday he couldn't confirm trading layoffs because "all the details and the numbers haven't been finalized yet."
But, he said, the company will be consolidating its marketing and trading operations in Houston, moving some people and activities from trading offices in Salt Lake City, Utah, and Calgary, Canada.
Headquartered in Houston are Duke Energy Marketing and Trading, Duke Energy Gas Transmission and Duke Energy International. Duke Energy North America's headquarters at 5400 Westheimer contains a 21,600-square-foot state-of-the-art trading floor that was inaugurated in June 2001, as well as secure control centers that remotely operate the company's independent power generation plants and gas pipelines throughout the country. These latter facilities would be difficult and costly to relocate or rebuild elsewhere.
Duke Power, the company's regulated power business, is based in Charlotte, and that division is expected to undergo downsizing as well.
Duke recently appointed a new CEO for DENA, Rob Ladd, who reports to the president and chief operating officer of the company, Fred Fowler. Ladd, a Rice University graduate, is based in Houston. Fowler, a former Houston-based PanEnergy executive, has his office in Charlotte.
"Houston is our largest trading presence," Kenny says. "We will continue to trade around our assets. We are committed to maintaining our trading operations in Houston."
But, he added, some "new leadership" will be announced, along with other measures to "improve efficiencies."
"Specific numbers and structure will be announced Thursday," Kenny said.
Before all the upheaval in the merchant energy sector began early this year, Duke had more than 250 energy traders in Houston, plus more in Salt Lake City and Calgary.
Kenny said the company's management has been talking to employees today. Other sources said employees in Houston were told each of them will be handed an envelope on Friday that will tell them their future at the company. Employees said several senior executives in accounting in Houston were let go earlier this week.
Meanwhile, an online real estate trade publication, "Real Estate Alert," reported Wednesday that Duke Energy is "quietly seeking a buyer" for its 614,000-square-foot Houston office building — along with a 20-year lease for presumably smaller space in the building. The trade pub reports that the company has retained Dresdner Kleinwort Wasserstein as its advisor. The building reportedly could fetch up to $75 million.
Kenny said he was aware of this story but could not confirm it.
New Duke Class Action SuitPortland Business Journal - December 20, 2002
(12/18/02) – A class action lawsuit filed in Multnomah County Circuit court against 44 power companies seeks to compensate Oregon's electricity rate payers for inflated rates charged during the energy crisis.
The complaint alleges California's 1996 effort to deregulate its market allowed defendants to "unlawfully manipulate the wholesale energy market resulting in supply shortages and skyrocketing energy prices across the western United States, including Oregon."
According to the lawsuit, defendants engaged in, among other unlawful practices, unfair and deceptive acts by:
The long list of defendants includes companies such as Dynegy, Duke Energy, San Diego Gas & Electric and El Paso Corp. but no Oregon-based utilities. The Oregon Public Utilities Commission holds the task of regulating utilities on behalf of Oregon ratepayers.
The lawsuit, filed by attorneys Andrew Kierstead, Michael Donovan and Matthew Rossman, is one of a few filed on behalf of consumers throughout the West who saw rates spike in 2000 and 2001.
Rossman said the attorneys will seek damages and refunds for Oregon consumers in excess of $100 million.
Portland resident Sharon Lodewick is class representative.
Duke to Quit Trading in EuropeBloomberg News – by Mark Johnson – December 20, 2002
Duke Energy Corp. said it will quit trading electricity in Europe, eliminating some jobs, as the company focuses on the continent's natural-gas market.
Duke, based in Charlotte, currently employs 80 people in its European trading offices in London, The Hague and Milan, spokesman Terry Francisco said. The number of employees who will lose their jobs hasn't been determined, Francisco said.
Earlier this month, Duke forced out two senior executives who led the company into energy trading and wholesale power sales. Those businesses declined this year as electricity prices slumped and trading collapsed after the bankruptcy of Enron Corp., once the world's biggest trader.
Duke in October said it would cut 1,500 jobs after third-quarter profit fell 71 percent. Duke's trading unit had a loss in the period. Companies such as El Paso Corp., Williams Cos. and Aquila Inc. are shutting trading businesses amid hundreds of million in losses.
In September Duke said it would scale back its European trading operations and eliminate jobs. Francisco wouldn't say exactly how many jobs were cut in the earlier round.
Power trading outside the United States, including Europe and Latin America, represents about 10 percent of Duke's total power-trading business, Francisco said. The company didn't have an estimate for severance pay and doesn't expect any charges as a result of quitting the business.
Shares of Duke rose 24 cents to $19.42 in New York Stock Exchange composite trading Monday. They have fallen 45 percent in the past year.
Duke Halts Power Trading in U.K., FranceCharlotte Business Journal – December 18, 2002
(12/17/02) - Charlotte-based Duke Energy Corp. says it will exit the British and French electricity-trading markets.
A company spokesman, who says Duke doesn't have any power plants in Europe, confirms that Duke is seeking to cut costs and shift its focus in Europe to the natural-gas markets in the Netherlands and Great Britain.
The withdrawal is effective immediately and involves two traders who have been active in the British and French electrical power markets.
Duke dropped out of the German and Nordic power-trading markets in September, after the company lowered its earnings estimates for 2002.
At that time, the company said it would continue trading power and natural gas in Britain, along with power in France.
S&P Revises Duke Energy Outlook to NegativeReuters - December 16, 2002
(The following press release was provided by the rating agency)
NEW YORK, Dec 13 - Standard & Poor's Ratings Services today revised its outlook for Duke Energy Corp., Duke Capital Corp., and the subsidiaries to negative from stable. All ratings are affirmed.
Charlotte, N.C.-based Duke Energy had $22.9 billion in consolidated debt outstanding as of Sept. 30, 2002.
"This action reflects the continuous negative developments facing the company in both its regulated and unregulated operations," said Standard & Poor's credit analyst Cheryl Richer. "Of particular concern is a weaker than anticipated economic environment in its service territory which is likely to lessen the cash flow contribution from the regulated electric business and potentially further dampen cash flow from merchant generation," Richer added.
Standard & Poor's also expects the growth of gas transmission revenues to slow as the company reduces total capital expenditures. Subsequent to the downgrade of Duke Energy corporate credit rating to 'A' from 'A+' in August 2002, three gas-fired power generation facilities have been indefinitely postponed in the U.S., and two power generation facilities have been postponed in Brazil.
Duke Energy has also experienced several other minor setbacks: a $25 million rate refund at Duke Power, recognition of a $772 million charge to retained earnings due to unfunded pension obligation (although no immediate cash outflow), and yet to be quantified costs resulting from the recent, severe ice storm in the Carolinas.
Consequently, Duke Energy must reduce debt to counter the attendant erosion in revenues in order to maintain its financial cushion and ratings. Standard & Poor's will need to review Duke Energy's progress on its divestiture strategy as well as updated financial projections to determine the likelihood and timing of financial improvement. Investigations of energy traders continue to be an overhang.
Rick Priory Made Another ListEmployee Advocate – www.DukeEmployees.com – December 13, 2002
Rick Priory made yet another list, according to Graef Crystal, in a Bloomberg News article. No, this was not Money’s list of the “Greatest Intergalactic CEO’s. of All Time.”
This list was the “Dirty Thirty.” Mr. Priory made the list of “Thirty CEOs With Biggest Raises, Worst Returns.”
“They are the CEOs who got the biggest pay raises in 2001 and had the worst performances.”
Duke employees have been getting less for six years. Now shareholders are getting less. Ratepayers are getting less (some are getting zero power these days). Through it all, someone keeps getting more and more: Rick Priory!
He is so adept at squeezing money out of thin air, that he is now receiving much deserved recognition for his ability. There would be no harm done if he were actually squeezing the money out of air. But, realistically, the money comes from live humans. For some, the money came from pensions promised for a lifetime's work.
The article’s Las Vegas dateline was very appropriate. Mr. Priory does indeed love to roll the dice. It always seems works out for him, since it is never his own money that is at risk! No matter who loses, Rick Priory wins.
None of the Dirty Thirty had a decrease of pay in 2001. They did have the worse returns in 2001, for companies with greater than $8 billion in revenue.
Number were given:
The total return for Duke Energy was –5.4 percent.
The financial futures of many were dimmed to purchase a wider trough for a few.
Did Duke ‘Talk Up a Storm’?Employee Advocate – www.DukeEmployees.com - December 6, 2002
The Reuters article below reports that over half of Duke Power’s customers lost power, due to an ice storm.
Duke executives have been saying for months that their recent audit, many lawsuits, and negative press coverage created a “perfect storm” (as if this offered some sort of excuse).
In there incessant lamenting about a perfect storm, did they actually talk up the real thing?
Ironically, the real storm started as Duke implemented a pervasive management shake-up, designed to quell the “perfect storm.”
1.2 Million Lose PowerReuters - December 6, 2002
NEW YORK, Dec 5 (Reuters) - Duke Power said about 1.2 million Carolina customers, over half of its customers, were without power early Thursday after an ice storm downed lines in what Duke called the worst weather damage in its history.
The number of outages was expected to rise as accumulating ice continued to bring weigh down power lines and tree limbs, Duke Power said in a statement.
"This ice storm surpasses the damage from Hurricane Hugo in 1989, which had 696,000 outages," the company said.
Duke Power is a subsidiary of Duke Energy Corp.
The company, headquartered in Charlotte, North Carolina, has about 2.1 million electricity customers in North and South Carolina.
Padewer, Donnell Resign From DukeDow Jones Business News – December 5, 2002
(12/4/02) - CHARLOTTE, N.C. -- Duke Energy Corp. plans to restructure its energy services group into two lines of business, so it can focus on the weakened merchant power and energy trading and marketing businesses.
Bobby Evans, who is president and chief executive of Duke Energy Gas Transmission, will serve as "transition executive" for the restructuring.
The energy company Wednesday said that Robert T. Ladd, who is currently president of Duke Capital Partners, will become president and chief executive of Duke Energy North America, which will include merchant generation and energy trading and marketing.
Richard J. McGee will continue as president and chief executive of Duke Energy International.
"We're driving results in every line of business. We are focusing significant management attention and top talent on the weakened merchant power and energy trading and marketing businesses and expect improvements in the performance of those businesses," said Duke Energy President and Chief Operating Officer Fred Fowler.
Duke said that it also named Frank T. Webster president and chief executive of Duke Capital Partners, replacing Ladd. Webster is currently managing director of Duke Capital Partners.
Thomas C. O'Connor, who is currently president of its Duke Energy Gas Transmission unit's eastern operations, will become president and chief executive of the unit. Mr. O'Connor also is president of Maritimes & Northeast Management Co., which is responsible for the U.S. portion of the Maritimes & Northeast pipeline.
This reorganization eliminates the group president roles from Duke Energy Transmission, formerly occupied by Fowler, and from the Energy Services unit.
Harvey Padewer, group president of Energy Services, and Jim Donnell, formerly president and chief executive officer of Duke Energy North America have resigned from the company.
‘Share the Extra Charges’Durham Herald-Sun – by Virginia Bridges - December 3, 2002
(12/2/02) - By DURHAM -- Duke Power’s Share the Warmth program helps many, but one nonprofit director said the electric company’s payment policies are hard on people who struggle to pay their bills. Inserts in Duke Power customers’ bills invite them to contribute money to Share the Warmth. The money then is distributed through the Durham County Department of Social Services and 53 other community service agencies in North and South Carolina. Duke Energy Foundation matches the contributions dollar for dollar, up to $50 per customer or $500,000 per year.
"Our customers have shown tremendous compassion for those in need," said Scott Gardner, district manager of Duke Power, in a press release. "With current economic downturns, we know that these collective efforts are more important than ever."
About $60,000 has been raised per year, Gardner said.
Grace Marsh, executive director for Women in Action, a Durham nonprofit organization that helps people pay their rent and other bills, said Share the Warmth is an important part of that help. But she also criticized Duke Power’s conditions for restoring power after cutting it off for unpaid bills. Customers may have to pay two months’ average bill in advance -- besides the amount owed, a fee and sometimes an additional deposit.
Recently, Marsh said, she noticed the advance-payment requirement, which she didn’t notice among more than 500 clients the agency served last year. A Duke Power representative, however, said it has been a longstanding policy.
"Once the lights are cut off, it is a huge amount of money they are asking for," Marsh said.
The organization’s resources don’t begin to match clients’ requests, she added.
"If we paid the bills that come up here, we would never have enough money," she said. In four days last month, the agency received more than 100 calls for help, Marsh said.
"This year we are seeing people who are just in a financial crises, who have in the past worked and paid their bills, and now these people, because they are being laid off, are finding it difficult to pay their bills," she said.
Also, Marsh said, Duke Power used to send a cutoff notice as a separate piece of mail, but now it is part of the regular bill.
The utility cuts off power to an average of between 15,000 and 20,000 customers per month in North Carolina and South Carolina, which is 1 percent of its customers, said Guynn Savage, a company spokeswoman. Collecting past-due bills helps keep rates down for all the company’s customers, she said. The company warns customers by a notice in their bill and another hung on their door 24 hours before power is cut off. After January, it will also phone them, Savage said. Duke Power also works with customers to schedule payments on past-due balances and refers them to local assistance agencies, she said. State Utilities Commission guidelines have for 30 years allowed the company to charge two months in advance, plus a reconnect fee, which ranges from $25 to $75, depending on when the reconnection is made, Savage said.
Deposits, which range from $100 to $250, can be required for a new customer who needs to establish a credit history or anytime a customer’s billing history warrants it, she said.
Marsh said the conditions pose a formidable hurdle for people struggling to subsist.
"I don’t think Duke Power is trying to be harsh," she said. "I am just wondering if the powers that be heard some of these stories, if they might come up with policies that are more flexible."
Duke Power, a business unit of Duke Energy, is one of the nation’s largest electric utilities and provides electricity to approximately 2 million customers in North Carolina and South Carolina. Duke Energy is a multinational energy company headquartered in Charlotte.
In Ontario, electrical utilities were ordered not to cut off power when people can't afford to pay their bills:
Preservation Over PipelinesWinston-Salem Journal – Editorial - December 3, 2002
(11/24/02) - Should the prospect of economic development or the preservation of the integrity of the Blue Ridge Parkway and the New River drive decision-making on a proposed natural gas pipeline just across the North Carolina border in Virginia?
Preservation has by far the stronger case.
As a package of stories in last Sunday's Journal revealed in detail, a battle is brewing on that subject between Duke Energy on one side and environmentalists and property owners on the other. Duke wants to build a $289 million pipeline extension from the Tennessee line across the Blue Ridge to Martinsville, Va., and down into North Carolina near Eden.
The company also wants to build a power plant near the Foster Falls recreation area. Another plant, near Martinsville, would be owned by Cogentrix. Both would use natural gas to generate electricity.
The 93-mile pipeline would cross the parkway and run through Jefferson National Forest and the New River Trail State Park, cutting a 50-foot-wide path that would require more than 1,320 acres.
The pipeline would tunnel beneath the New River, a state campground and some 400 other waterways.
It would require the use of eminent domain, as a number of property owners along the proposed right of way aren't happy about selling their land.
Supporters of the pipeline, including political heavyweights such as N.C. Sens. Jesse Helms and John Edwards, U.S. Rep. Richard Burr and Gov. Mike Easley, say that the pipeline will bring much needed economic development and jobs to a sparsely populated area of the country.
Opponents cite a variety of environmental concerns, the trampling of individual property rights, neighborhood safety issues and selfish corporate-profit motives as reasons not to build the pipeline.
While the specific arguments can be convincing, it is the argument from the big picture that is most compelling. That involves attitude as much as action.
Encouraged by the Bush administration, those seeking a solution to the nation's economic and energy problems are concentrating on development of fossil-fuel resources, while paying less attention to conservation and new, renewable sources of clean energy.
The pipeline extension seems too much like the plan to drill in the Arctic National Wildlife Refuge. Companies say that they can do this sort of development without environmental damage and that the amount of land disturbed is a tiny percentage of the whole.
But accidents happen all the time and everywhere, and some of them, such as the Exxon Valdez spill and the one now tarring the coast of Spain, can be classified as catastrophic. In both the refuge and southern Virginia, the risk to the public interest outweighs the reward, except perhaps in company profits.
This newspaper has fought long and hard in support of efforts to preserve and protect the pristine natural beauty of the New River. The notion that a pipeline can be run beneath the river for a distance of 1,555 feet without hazardous consequence is questionable.
Duke's own contractor says that drilling to reach the depth necessary to go under the river has a 70 percent chance of success.
The pipeline would also run beneath a campsite. A similar coexistence of a pipeline and campsite where open fires burn was the cause of an accident causing 12 deaths in New Mexico two summers ago.
While Duke says that in the case of failure, the drills will just move a few feet and try again, that area of Virginia features many underground caves and caverns, not all of them known. The geology is demonstrably fragile.
The natural gas industry claims that safety of operations is much improved, but from 1986 to date, 1,342 accidents have been reported across the country, with 59 deaths and property damage of $315.7 million. In 2002, 54 accidents, one death and $15.7 million in property damage have been reported. Data is from the federal Office of Pipeline Security.
In some cases, power companies can justify using eminent domain, claiming that the benefits to the public good supersede the individual's private property rights. But the benefit in this case is to Duke Energy, a private company that could build the pipeline on right-of-way it already owns. The cost would be higher.
This decision ought not to be about corporate profit or the power of campaign donations to influence political decision-making.
There isn't much time. The Federal Energy Regulatory Commission (FERC), to no one's surprise, approved the pipeline plan with some reservations on Wednesday. In the past five years the commission has approved 1,250 out of 1,316 applications for new pipelines or expansions of existing ones.
The benefits of this proposed pipeline to the area through which it would run and to the residents of that area simply do not justify the intrusion upon some of this nation's most treasured heritage and natural beauty.
The risk of permanent damage to such heritage is real; the benefits seem short-term at best, illusory at worst.
Citizens Drive Out DukeThe Frederick News-Post – by Sean Barry - November 28, 2002
Duke Energy on Tuesday dropped its bid to build a power plant in Frederick County.
(11/27/02) - According to a notice posted on the Maryland Public Service Commission's Web site, Duke on Tuesday withdrew its application for the necessary certificate to build a power plant near Point of Rocks.
"That is accurate," Lea Gibson, a spokeswoman for the Houston-based firm, confirmed late Tuesday.
"There were significant challenges on this project," Ms. Gibson said. "It wasn't prudent to continue the project."
Asked if the pullout was due to energy market dynamics or intense local opposition, she said, "I think they were both factors."
She said she was aware of no plans by Duke to submit a new application to build a power plant in the area.
Duke first stated its intention to seek the necessary certificate in February 2001. It applied to the Public Service Commission about five months later.
Lisa Baugher, of Tuscarora, was among the leading opponents of the company's plan to build the 640-megawatt, natural gas-fired plant.
"I poured my heart and soul into this battle," she said Tuesday night. "This reinforces my belief that hard work pays off.
Said Frederick County Commissioners President David Gray: "I think it's wonderful. I'm happy and would like to thank all the citizens who struggled to make the case in regard to Duke."
Maryland's recent deregulation of the electric utility industry has led to a spate of proposals for power plants along the Potomac River.
However, Duke was the only firm to have filed a formal application for a Frederick County plant. Mirant has an application to greatly expand a plant In northern Montgomery County.
Sempra Energy, of San Diego, Calif., has stated its intention to build a power plant at the Alcoa Eastalco Works in Buckeystown. The project has not been finalized, nor submitted to the state for approval.
Texas-based Dynegy is considering a plant near Point of Rocks. Other proposals have been introduced in Virginia and West Virginia.
Gov. Parris Glendening recently ordered the applications by Duke and Mirant frozen pending creation of new guidelines for the Public Service Commission.
The guidelines, being drafted by the governor's cabinet and due to be finalized Dec. 1, make power plant approval harder when there are multiple applications for plants in one area.
But Duke's Ms. Gibson said the rules -- a draft has been published -- weren't a significant factor in the firm's decision to back out of Frederick County.
Citizen Victorious Over DukeEmployee Advocate – www.DukeEmployees.com – November 22, 2002
Just thought I would let you know that Duke Energy is moving the Compressor Station I told you about in August. They turned it off Mon. November 18, 2002, and moved the motor and the fan Tues. Hopefully, they will get the rest of the tanks Thurs. Duke is moving it 2 1/2 miles south of us; at least it won't be shaking our home. I can't tell you what a relief it is, our home is like being on the moon, after nearly 20 months of noise and vibration. After our trip to Washington DC, things really started to happen, Senator Jeff Bingaman and Staff and Congressman Joe Skeen and Staff started calling Duke Energy. I don't know what all was said but Duke told them that they were going to move it, of course we didn't believe it, but it has happened. Everyone told us they have never moved one, so I guess this is a first.
Roy and Louise Dearing
Read the first message:
An Honest HeadlineEmployee Advocate – www.DukeEmployees.com – November 20, 2002
The Atlanta Business Chronicle gave an honest headline in their Delta Air pension story: “Delta changes retirement plan to save $500 million.” Even if you only read the headline, you will know what happened; Delta wanted $500 million of the employees pension money and took it! It is just that simple.
Companies use the word “save” loosely. If someone owed a debt of $200,000, but refused to pay it, they could say that they saved $200,000. But we know that they did not save anything; they plundered $200,000!
Duke Energy was not so forthcoming with information about their cash balance plan conversion. They used every scheme imaginable to cloak, screen, and otherwise camouflage the true purpose of the pension conversion.
We are able to apply the knowledge of their deceptive tactics to other areas. As management gets into more and more trouble, they keep trying the same threadbare evasive tactics. The employees were not fooled. It appears each day that fewer and fewer people are deceived by the rhetoric, except maybe Duke senior management. They apparently are doing a terrific job of deluding themselves!
Selling the ‘Fix’Reuters – by Jake Keaveny - November 15, 2002
NEW YORK, Nov 14 (Reuters) - David Hauser, treasurer of Duke Energy Corp. hopped on the company's Hawker 800 jet one day in late September, spent a night in Manhattan, then flew back to corporate headquarters in North Carolina -- with $1 billion he had raised to repay debts.
In the whirlwind world of capital markets, deals have gotten quicker and time-frames shorter. The last time Duke needed to raise money, company executives spent three days in a half dozen European and U.S. cities talking to investors, in what Hauser thought then was a speedy process.
But on Sept. 25, Duke Chairman Rick Priory, Chief Financial Officer Robert Brace and Hauser got it done in a single day by working telephones from two conference rooms of investment bank Morgan Stanley's Times Square office.
Companies and their investment bankers say volatile market swings have made speed and secrecy an increasingly important part of selling stocks and bonds. The hope is to limit exposure to hazards like a sudden downturn in prices, unforeseen negative research reports and the threat of war with Iraq.
"The world is tumultuous right now," said Hauser, a 29-year Duke veteran who has helped raise $8 billion since becoming treasurer in 1998. "We didn't want to be out there with the world changing in ways that could have nothing to do with us or our stock sale."
For companies like Duke, adapting to capital markets is a pressing issue. With market valuations depressed, scores of companies are under pressure to sell stock to help repay debts and strengthen their balance sheets.
The problem is, investors are skittish from suffering heavy losses and have been reluctant to buy. Even with the market's recent rebound, only $2.8 billion of stock from already public companies -- so-called secondary offerings -- was sold in October. With the exception of August, it was the worst month since late 1998, according to industry tracker Dealogic.
So far in November, $2.7 billion has been raised from secondary stock sales.
SELLING THE 'FIX'
The weak market has meant that mainly blue-chip companies like Duke have a chance to convince investors to buy. But even companies with well-known stories risk failure when intraday stock prices can easily fall 2 percent or more.
"You don't see many companies out there for a week anymore," said Larry Weiseneck, Lehman Brothers' head of equity capital markets in the United States. "They still want to talk to the market, but have to settle for shorter periods."
An "accelerated execution" is an alternative to an overnight stock sale, where underwriting banks buy the stock directly and then resell it to investors the next day.
Overnight deals bloomed in popularity over the last two years, but can now be prohibitively expensive. To assume the risk in this market, banks may charge a discount of between 5 percent and 10 percent of the deal's value.
Also, growing concerns about accounting and corporate governance issues means its more important to speak to investors, even for an abbreviated time. The hope is to sell the idea that the stock sale will help strengthen its balance sheet -- known on Wall Street as selling the "fix."
The downside, of course, is that face time with investors is very limited. Among other things, that means that newer companies that haven't developed a repertoire with big fund managers have little chance to raise money…
Subpoena Sinks Duke Energy StockThe Charlotte Observer – by Stan Choe – November 13, 2002
(11/12/02) - Duke Energy Corp.'s stock dropped almost 8 percent Monday, the first trading day after the company received a California grand jury investigation's subpoena.
Four other subpoenaed energy companies also saw their shares plunge Monday. The subpoenas, from the U.S. Attorney in San Francisco, ask about the companies' roles in California's energy market.
State regulators have accused energy companies of withholding power to boost profits during the state's 2000-01 energy crisis, which Duke denies.
Duke's attorneys are reviewing the subpoena, and the Charlotte-based company said it will cooperate. Its shares fell $1.55, or 7.8 percent, to close at $18.41.
Monday was a tough day for U.S. stocks, with the Dow Jones industrial average falling 2.1 percent.
Investors also hammered AES Corp., Mirant Corp., Reliant Resources Inc. and Williams Cos. Inc., which received subpoenas. AES' stock fell 45 cents to $1.54, losing almost a quarter its value.
Analysts wondered why the market reacted so strongly to the subpoena. Many have grown used to the slew of investigations.
After a recent rebound, energy companies' shares had room to fall, said Jeffrey Gildersleeve, a securities analyst at Argus Research Co.
"People are just looking for a reason to back out of the short-term bounce," he said.
Other investigations include a California state Senate committee's examination of the state's energy crisis.
The Securities and Exchange Commission is looking into so-called "round-trip" trades, in which companies buy and sell power simultaneously at the same price.
The practice can make demand appear greater, which can drive up prices.
Duke said in August it found 89 instances of such trades in the past three and a half years.
The Commodity Futures Trading Commission and the U.S. attorney's office in Houston have also served Duke with subpoenas.