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www.DukeEmployees.com - Duke Energy Employee Advocate Duke - Page 2Paul Anderson After One-YearEmployee Advocate - www.DukeEmployees.com - December 23, 2004Paul Nowell wrote an Associated Press article about Paul Anderson entitled: "Executive turns around Duke Energy." Few will deny that Mr. Anderson has turned Duke around. But people writing such stories are generally looking solely at dollars and cents - specifically: dollars flowing into the corporation. Looking only at Duke's ability to make money, Mr. Anderson's performance has been absolutely spectacular. If one looks at the treatment of customers and employees, it's still business-as-usual at Duke. Customers still freeze to death after Duke turns off their electrical service. The benefits that employees have earned over 20 or 30 years of work are still no where to be found. It is not that Mr. Anderson has created new problems. It is just that the problems created over the last decade have not all been corrected. Making only bottom line improvements and denying all else is not acceptable. Paul Nowell wrote: The Charlotte-based company was struggling under a load of debt, its stock price was stagnant and morale was low. Now it can be said that Duke's debt load has decreased, its stock price is recovering, and employee morale is still low. Mr. Anderson has made many improvements, but the problem of confiscated benefits has been completely ignored. The previous CEO thought that he could rise to greatness by pandering to the world and ignoring the employees. He will go down in history as the very worst CEO of Duke Energy/Duke Power. Paul Anderson has achieved success by doing the exact opposite of the former CEO. But he will be embarking on a treacherous path if he follows the lead of the same loser on employee benefits. Mr. Anderson said that the former management was obsessed with its credit rating and trying to win over Wall Street. He feels that most of Duke's legal troubles have been resolved and its reputation has been restored. He is dead wrong about Duke's reputation being restored. Duke's reputation has not improved one iota with employees. Making more money for executives does NOT help the worker with a destroyed pension. Any company that takes benefits that have already been earned need not expect to have a good reputation. What really irritates Duke is that not all employees are willing to suffer in silence. Mr. Anderson will find that trying to deny the problem will not work for him either. The Rise and Fall of Rick Priory
Woman Freezes to Death After Power CutEmployee Advocate - www.DukeEmployees.com - December 21, 2004Elizabeth Verdin, 89, froze to death after Duke Power cut off her electricity, according to the Associated Press. The Greenville woman was found dead on the floor of her heat-less home on December 13. Her power was disconnected on December 6. Greenville County Deputy Coroner Karie Cain said that an autopsy verified that he lady died from hypothermia. Sen. David Thomas sent a letter to Duke Power seeking answers. It is illegal in some northern states to turn off power in the winter. In the South, laws tend to favor corporations. Getting one's power turned off in the winter is the first step in what can literally become a death spiral. If a person is already having trouble paying the power bill, how can they possibly come up with reconnect fees and extra deposits? A lot of PR lip service is given to the share the warmth program. But in an aggressive effort to collect cold cash, there was no warmth to be shared with Ms. Verdin. ElectriCities Pulls Plug on Sick Child
Duke Faces Price ProbeEmployee Advocate - www.DukeEmployees.com - December 16, 2004It just never ends. As one group of lawsuits against Duke is settled, a new probe begins. Wednesday, the Federal Energy Regulatory Commission (FERC) ordered an investigation of Duke Power and six other power companies, according to CBS MarketWatch. The latest probe will involve exerting unfair influence on prices in regional markets. FERC devised a test to flag companies that have too much control in their wholesale power markets. Duke failed the test. Companies could be ordered to refund the overcharges. It seems like Duke just made $207.5 million in price gouging settlements. That's because it did, but that was in California. This is a brand new probe. But the seeds for this probe were planted during the California energy crisis. FERC changed its method of testing for market abuse in 2001 because of some companies gaming the market. This seems to be a perpetual cycle - a snake eating its tail. Duke's former CEO tried to make the lawsuits go away by proclaiming innocents, exercising denial, and buying full page newspaper ads. These approaches proved to be futile. Paul Anderson is pursuing the more realistic approach of making settlements. But it still seems like Duke is throwing water on an oil fire. Duke Settles Price Gouging Lawsuits
Duke Settles Price Gouging LawsuitsEmployee Advocate - www.DukeEmployees.com - December 8, 2004The Federal Energy Regulatory Commission (FERC) reported that Duke Energy is paying $207.5 million to settle a number of class-action lawsuits. The price gouging allegations cover electricity and natural gas sold in California in 2000 and 2001. The former CEO and his minions screamed that Duke was innocent. They screamed that Duke had been completely exonerated. But by now, you should know how that goes. Screaming and denials gained them nothing. The full page ads in The Wall Street Journal gained them nothing. It took $207,500,000 and other concessions to get Duke off the price gouging hook. Duke Energy holds the record for charging the highest price for electricity during the California energy crisis - $3,880.00 per megawatt hour. Duke Energy stock closed down 74 cents on Tuesday. Duke Settles Some California Charges
'The Enron of the Midwest'Employee Advocate - www.DukeEmployees.com - November 3, 2004Westar Energy was once called the Enron of the Midwest, according to the New York Times. Duke Energy was not called the Enron of the Southeast, but former CEO Rick Priory was clearly green with envy - Enron envy. It was entertaining to watch some CEO's striving to be an Enron clone when it was the darling of Wall Street. These same CEO's scrambled to distance themselves from Enron when the scandals starting making the headlines. Almost everyone associated with the Enron wannabe corporations suffered. But some of the CEO's made out like, well, bandits. David Wittig, former CEO of Westar enriched himself nicely. He made off with over $25 million in salary and other compensation in seven years. Federal prosecutors are now trying to seize Mr. Wittig's assets. In September, a Texas grand jury indicted Westar on charges of illegally funneling money to a political action committee (PAC) in 2002. Tom DeLay, House majority leader, was the creator of the PAC. Tom DeLay has been rebuked by the House ethics committee for publicly cavorting with Westar executives. The House has its standards: When accepting money for political favors, a certain amount of decorum is expected! Dr. Roy Lacoursiere, former shareholder, said "The DeLay thing is an interesting additional, just another example of how we all were getting shafted when the leaders of this company were doing Lord knows what. This is Topeka, not Houston or New York; we're only a city of about a hundred thou-plus. It all makes one kind of sick." Mr. Wittig wants even more money. He says that Westar owes him more than $40 million in compensation. Mr. Wittig has received something lately - four years of free room and board in the penitentiary for money-laundering. There are similarities between Duke Energy and Westar. The CEO's of both companies lusted after Enron. Both companies managed to avoid bankruptcy, after the Enron collapse. Both were once solid utilities with long histories. Now both are selling property and trying to get back to what they used to be. James Ludwig, vice president for public affairs at Westar, said "We're content to go back to what we were, just your basic utility company." DeLay Ethics Violation Review Extended
Duke and Morro Bay Break Off NegotiationsEmployee Advocate - www.DukeEmployees.com - October 15, 2004Thursday, the Coastal Alliance on Plant Expansion (CAPE) issued a press release stating that Duke Energy and the city of Morro Bay broke off negotiations over a lease of city land to operate the Morro Bay Power Plant. The plant is a holdover from the days when Duke intended to rise to greatness by exploiting deregulation and reducing employee benefits. The scheme failed. Duke has floundered in the Morro Bay quagmire for five years, trying to get a new power plant built. The current dispute may cause the city to oppose Duke's application for a federal discharge permit to operate a new plant. Duke has been putting lipstick on this pig for five years and it still looks like a pig. City attorney Rob Schultz stated in a letter on September 21 that the city would be forced to begin eviction proceedings once the current lease expires on Nov.15, unless Duke signs the lease. He stated that Duke "has reneged on its commitments to the City" by refusing to sign the lease negotiated over the past four years. Employees have been educated on Duke's capacity for reneging. Imagine working for 30 years for specific pension and health benefits, only to find that Duke once again reneged. Someday management may realize that when Duke stabbed the employees in the back, everything started to fall apart. Attempting to amass great wealth on the misery of others does not always work out in the long run. A major point of contention between CAPE and Duke is the plan to use sea water for cooling if a new plant is built. CAPE opposes this cooling method because of the destruction of aquatic life. "Dry cooling" would recycle fresh water and kill no marine life. As usual, the crux of the dispute is money. Dry cooling would cost Duke more. In a city press release, Morro Bay City Attorney Robert Schultz stated: "Unfortunately, Duke now proposes to retain all of its options for future development of a Morro Bay Power Plant while withdrawing all of the provisions benefiting Morro Bay. What was previously agreed to by the parties is now completely off the table, according to Duke." He added: "I was astounded that the Duke representatives would make such a proposal given more than four years of negotiations that have taken place. The City is very disappointed and extremely frustrated over the actions taken by Duke at this time."
New Ways to Lose Health BenefitsEmployee Advocate - www.DukeEmployees.com - October 14, 2004Today, Ellen E. Schultz reported in The Wall Street Journal that the corporate tax bill will also give corporations more ways to cut health benefits. No one doubts that G. W. Bush will sign the bill. He has yet to veto any bill. The Lucent Retirees Organization said "It is simply unfair to allow companies who have already received the tax and other financial benefits of the pension asset transfers to renege on their commitment to maintain retiree benefits -- a commitment which was a condition of the initial transfer." Yes, it is unfair, but corporations have been getting away with cutting earned health care and pensions for years. Duke Energy cut earned pension benefits for many by converting to a cash balance plan in 1997. In 1999, Duke announced that future retirees' health care would end at age 65. Corporations get the tax breaks for offering the benefits. They get 30 or more years of labor from employees to earn the benefits. Then many corporations do not deliver on what was promised. Now Congress is providing corporations with even more ways to take benefits from employees. If the crowd in Washington is not replaced on election day, expect more of the same.
The Rise and Fall of Rick PrioryEmployee Advocate - www.DukeEmployees.com - October 12, 2004
Duke Energy seemed to be doing deregulation right, but it turned out to have its shady side as well. Can the ultimate widows-and-orphans company ever recover? By David Stires September 6, 2004 Rick Priory was on top of the world. It was early 2002, and as CEO of Duke Energy he had taken a conservative electric utility and plunged it headlong into the newly deregulated power market. During his five years as chief executive he had acquired everything from gas reserves to pipelines to power plants, turning Duke into one of the most diversified energy players around. In his eyes, he was fulfilling his long-held goal of turning Duke into a "master architect" of the "new energy economy." And now that Enron--the one company that had overshadowed Duke--had crashed, Priory could hardly contain himself. "You can only do smoke and mirrors so long," he told FORTUNE at the time. We were certainly impressed. With $60 billion in sales in 2001, Duke had just shot up to No. 14 on the FORTUNE 500 list; the company's share price had recently doubled, to a high of $47. From our perspective, Duke's impressive numbers were a strong endorsement of Priory's longtime claim that Duke was the "un-Enron"--so much so that we titled our April 2002 story just that. Well, Priory was wrong, and so were we. Duke turned out to have a lot more in common with Enron than anyone thought. By chasing after what proved to be short-term trends (sky-high electricity prices, the prospect of fully deregulated power markets), Duke got caught up in a depressingly familiar series of problems--government investigations, indictments, lawsuits, and, yes, accounting scandals. Priory built or bought dozens of new power plants just as the electricity market was collapsing, leaving Duke with tons of worthless assets and billions of dollars of debt. Duke shares have dropped to $22, the level at which they traded a decade ago, and Priory is out of a job. Now his replacement, CEO Paul Anderson, is desperately trying to reverse the damage. Anderson has cut spending, sold assets, and scaled back trading. But Wall Street hates the stock--virtually all the analysts covering it rate it sell or hold--and short-sellers are swarming. The problem, as Anderson freely admits, is that he has no idea how to fix Duke's troubled merchant-energy unit, which generates and sells power to utilities and other wholesale customers, and is projected to lose $300 million this year. Amid the debacles at Enron, Tyco, and the rest, Duke's fall from grace has largely been overlooked. It shouldn't be. For years Duke was the envy of the industry, winning awards for innovation and customer service. It was the ultimate widows-and-orphans stock--safe, consistent, reliable. The utility's tumble shows how the lure of easy money can upend even the most conservative and well-regarded company. And it underscores the dangers of basing corporate strategies on the assumption that current trends will last forever. Astructural engineer by training and a 20-year Duke veteran, Rick Priory became CEO in 1997 at what he later called the most exciting time in the industry's history: regulatory barriers falling in the U.S., new markets opening up overseas, and energy demand projected to soar. Priory attacked Duke's sleepy culture, replacing many top executives with outsiders from banking, telecommunications, and other recently deregulated industries. In shareholder letters and conference calls with analysts, he tossed around new-economy jargon like "first-mover advantage." (Priory declined FORTUNE's request for an interview.) It's hard to overstate how big a change this was for Duke. The Charlotte company started out a century ago as a single electric-power station on the banks of South Carolina's Catawba River. By harnessing the power of the river, founder James "Buck" Duke sold electricity to a sole customer, a textile mill in nearby Rock Hill. Over the years Duke evolved to meet the region's growing appetite for power by embracing new sources for energy--coal in the 1930s, nuclear power in the 1950s, and natural gas in the 1990s. It even helped shape the landscape of the region by recruiting textile mills from the North. By the time Priory took over, electricity consumption in the U.S. had exploded as new appliances, tech goods, and the Internet swallowed more and more juice. And because of strict environmental regulations, among other factors, the industry had failed to build enough new power plants to meet the demand. As a result, prices were spiking--as much as 200% in some regions between 1997 and 2000--and capacity shortage led to periodic blackouts. Moreover, industry analysts were churning out increasingly bullish forecasts. The Energy Information Administration, a division of the Department of Energy, proclaimed that U.S. industry would have to build between 1,300 and 1,900 new power plants over the next two decades to meet long-term demand. Doing some quick math, Vice President Dick Cheney, in a speech at the annual meeting of the Associated Press in April 2001, put it this way: "That averages out to more than one new power plant per week every week for the next 20 years." For good measure, the Veep added, "It's time to get moving." Priory certainly did. During his tenure as CEO he spent billions building and acquiring dozens of new power plants all over the country. On his watch Duke rolled out more than 15,000 megawatts of generating capacity in North America, enough to power 15 million homes and more than any other company except onetime giant Calpine. Almost overnight the merchant-energy unit Priory created, Duke Energy North America (DENA), became the star of the company. In 2001 it earned more than $1 billion, or about a quarter of Duke's total profits. Despite Duke's rocketing share price, Priory was disappointed that his efforts didn't generate more enthusiasm among Wall Street analysts. The problem was Enron. It wasn't just that the Houston-based energy giant, unlike Duke, was stocked with young hotshots. The company had a far sexier business model too. Enron, as you may recall, pursued its now infamous "asset light" strategy, ditching power plants and pipelines to focus on trading. Duke, by contrast, was a hybrid. The main purpose of trading at Duke--and the reason energy trading came about in the first place--was to prevent volatile energy costs from playing havoc with the budget. Trading allowed Duke to sign long-term contracts that locked in prices for a plant's biggest expense, natural gas. But you couldn't build a company on trading, Priory used to tell analysts on the Street. "You have to be able to produce and deliver energy as well as trade it." When Enron crashed in late 2001, Priory was triumphant. "Our values are rooted in North Carolina history," Priory bragged to FORTUNE in early 2002. "We're grounded, so we didn't fall victim to short-term fads or accounting tricks." The victory dance didn't last long. Following revelations of sham trading among power companies, in May 2002 the Securities and Exchange Commission launched a widespread industry investigation. At the SEC's request, Duke reviewed its trading activities. It discovered that some traders had been conducting "roundtrip" or "wash" trades. Essentially, the traders were swapping power with counterparts at other firms merely to boost revenues. Duke eventually admitted that employees had executed 89 roundtrip trades over 32 years, totaling about $217 million in revenues. In April of this year a Houston grand jury handed down indictments against two former DENA executives and a former trader, charging them with fraudulently booking $50 million in profits from more than 400 roundtrip trades. All three pleaded not guilty to all charges; a trial is expected early next year. Duke Power, the company's regulated electric-utility business, also ran into trouble. In October 2002 an independent audit ordered by regulators in North and South Carolina found that top executives had underreported regulated profits by $123 million between 1998 and 2000. (Duke, remember, is prohibited from earning more than a certain return; if profits are too high, state regulators can cut the rates Duke may charge customers.) The regulators produced an embarrassing body of evidence--depositions, spreadsheets, e-mail--to support the charges. (Read one e-mail: "We are currently looking at reclassification entries as discussed ... to help with our 'allowed return' problem.") Duke settled the charges by paying $25 million to its customers, admitting no wrongdoing. Duke was also one of dozens of companies accused of manipulating the California energy market in 2000 and 2001. It has agreed to pay more than $210 million to settle claims that it overcharged customers in California, Oregon, and Washington. In still another matter Duke paid $28 million in 2003 to settle charges that it manipulated the natural-gas market. Duke denied any wrongdoing in all cases. Yet those seemed like minor annoyances compared with Duke's real problem: too much generating capacity. Priory's building binge couldn't have been more poorly timed. From 1999 through the end of 2003, the industry cranked out some 200,000 megawatts in North America, boosting total supply by nearly 25%. But demand slowed drastically. The stock market collapse and the 9/11 attacks sent the economy into a tailspin, while the California energy crisis and Enron's bankruptcy led many state legislatures to abandon plans for electricity deregulation. Also, a steep rise in the price of natural gas took a big bite out of profit margins. As a result, DENA saw earnings tumble 89% in 2002 and in 2003 posted a $3.3 billion loss. With his strategy in ruins, Priory stepped down in October 2003. Now it's up to Priory's successor, Paul Anderson, to write the company's next chapter. On a recent afternoon, he is speaking to a group of employees in the company's bland auditorium. It's a beautiful summer day in Charlotte, but the optional "open forum" meeting is packed with people eager to hear how his turnaround plan is progressing. Duke's problems are legion, but Anderson, wearing a gray jacket and blue shirt unbuttoned at the collar, is characteristically upbeat. "We're a much stronger company than we were a year ago," he says, and rattles off a list of achievements, including paying down $2.2 billion of debt, shedding more than $1.5 billion of assets, and making "tremendous strides" settling regulatory and legal issues. "We've basically beat our goals for the entire year already," he says, "and it's only July." Anderson, who became CEO last November, doesn't fit the mold of a typical utility boss. Despite his reserved manner, he drives a purple PT Cruiser with orange flames to the office and likes to ride Harleys. And he has developed a reputation as a turnaround artist. He cleaned up a struggling natural-gas pipeline company, PanEnergy, which he sold to Duke in 1997, becoming Duke's president and chief operating officer. In 1998, Anderson left Duke to take over as CEO of Australian mining and steel conglomerate BHP Ltd. after slumping commodity prices and disastrous investment decisions led to record losses. He restored it to profitability before merging it to create the natural-resources giant BHP Billiton. In a recent shareholder letter, Anderson discussed the carnage in the electricity market, saying the industry resembles a "bombed-out village." But, he added, Duke is "one of the few recognizable structures remaining." He has a point. Unlike some pure-play merchant power companies such as Mirant, Duke has avoided bankruptcy, largely because of the strong cash flow from its core utility operations. Duke Power, the regulated electric utility, has more than two million customers in North and South Carolina. And with 17,500 miles of interstate pipelines (mainly the result of the PanEnergy acquisition), Duke's natural-gas unit boasts one of the largest networks in the country. Together those two businesses earned $2.7 billion last year. That income will provide much-needed support while Anderson tries to solve the problems at DENA, the merchant-energy unit. He's already sold a third of its assets, mainly in the Southeast, an area plagued by surplus generating capacity. But the business unit is still projected to lose $300 million this year. Along with overcapacity, DENA is suffering from skimpy "spark spreads," or the difference between the cost of natural gas and the price of the electricity it generates, which have made it harder to generate power profitably. And a good chunk of Duke's earnings are still at the mercy of volatile commodity costs because of "mark to market" accounting, in which companies must use current prices to estimate the fair value of long-term energy contracts that may not be settled for years. Unpredictable mark-to-market swings accounted for $90 million of DENA's $521 million first-quarter loss. How will Anderson fix DENA? That's a question he hears all the time these days--from analysts, investors, even employees. "It always comes back to DENA," he says. "Where is DENA going, and what's it doing?" While he has promised the Street that he will have DENA breaking even by 2006, he freely admits he doesn't know exactly how that will happen. "We don't have a road map that gets you from here to there," he says. Instead, he offers a telling analogy: "It's like eating an elephant. You just do it one bite at a time." So where is he now? "Way past the trunk and someplace into the middle. We're getting kind of bloated, though." Anderson has considered merging DENA with another merchant player, but as he sees it, all the likely candidates are flawed. "They're either too small, they don't have enough fuel diversity, [or] they don't have enough geographic coverage," he says. "They all have problems." He could shut DENA down. But the costs--mainly to fulfill existing contracts, among other things--would be prohibitive, and Anderson believes the unit will be worth far more if Duke can hang on to it for a few more years. Wall Street analysts say it may take until the end of the decade to work off the excess generating capacity nationwide. But Anderson believes the markets where DENA is now concentrated, California and the Northeast, will recover sooner. Anderson and his lieutenants have a lot riding on Duke's turnaround. Anderson gets paid only in stock, which he can't sell until 2007. And for Duke's top executives to receive full bonuses this year, earnings will have to hit $1.20 a share or more, but they get no extra pay if profits fall below the dividend level of $1.10 a share. (The current Wall Street earnings consensus is $1.20 a share.) The bonus plan may offer some reassurance for income investors lured by Duke's rich 5.1% yield, which Anderson has vowed to maintain. But aiming to return a whopping 92% of earnings to shareholders leaves little room for error. And even if Anderson can meet the dividend commitment, he has a long way to go before Duke is once again a suitable stock for widows and orphans.
Is Duke Power on the Block?Employee Advocate - www.DukeEmployees.com - September 29, 2004It is possible that Duke Power could cease to exist, according to the Charlotte Business Journal. Duke Energy and FPL Group discussed a possible business combination. Duke Energy owns Duke Power and FPL Group owns Florida Power & Light. When Duke bought Pan Energy, Pan Energy no longer existed. Duke Power continued to exists within, newly formed, Duke Energy. FPL is not talking about buying anything right now; it was caught up in several hurricanes. Could this have been an omen of another disastrous merger? There has been nothing but problems since the Duke/Pan Energy merger. An anonymous Duke official indicated that selling Duke Power would provide resources to buy more speculative businesses. That sounds like something that former Duke CEO Rick Priory would say. But all of his speculative ventures turned sour. At a recent conference, Paul Anderson talked at length about the gas and oil businesses, but barely mentioned Duke Power. The pieces fit together. Duke CEO Paul Anderson and COO Fred Fowler are old gas men. They know more about that side of the energy business than they do about generating electricity. With oil and gas prices soaring, it's only natural that dollar sign would start to spin in their eyes. Why should they be saddled with a regulated utility when there are untold millions to be made in oil and gas? Never mind that it was exactly this line of thinking that nearly destroyed Duke. Rick Priory had little interest in Duke Power. He fell victim to the siren call of Enron, energy trading, merchant power, and deregulation. Without the reliable profits of Duke Power, Duke Energy may not have survived. The thing about speculative bubbles is that you never know when they will burst. But they all burst at some point. At the September Open Forum, Paul Anderson gave a teasing reference to the talk of a merger. He said We will be talking to a whole bunch of people, and you will hear all kinds of rumors. In the meantime, enjoy the rumors, but nothing is imminent right now -- so don't pack your bags. When a Duke official makes a rock solid comment that cannot possibly be misinterpreted, about ten thousand interpretations will invariably materialize. Imagine the field day that will be had with the above comment!
Fast Freddie Fowler FloundersEmployee Advocate - www.DukeEmployees.com - September 27, 2004Paul Anderson has given several talks about improving safety at work. His comments were very well received by employees. Employees who heard the safety talks were impressed with Mr. Anderson's comments and his vision of a safer workplace. He said that the was concerned with that safety of all Duke employees. He made no distinction between full-time employees and contractors. Duke has always reported accident statistics in two categories: Duke employees and contractors or vendors. The implication was always that there is a difference between the people in the two categories. From the way Duke has reported the statistics, it was hard not to infer that it was less of an issue when contractors have accidents. To Mr. Anderson's credit, he was not comfortable with the distinction. Safety was a win/win subject. With corporations, everything always gets back to money: Worker accidents and deaths cost money. No director or stock holder is going to complain about improved safety. Money spent to improve safety is not squandered. Employees are not going to object to improved safety conditions. Unions have historically fought with corporations because of a lack of concern about dangerous working conditions. At last, an issue that employees and management could totally agree on. Enter: COO Fred Fowler, known to some former Pan Energy employees as Fast Freddie Fowler. He quickly neutralized all the goodwill that Mr. Anderson had created. Employees will never object to safer working conditions, but will always be turned off by sham programs. A promotional blitz designed only to showcase one executive is not a breakthrough. The breath of fresh air introduced by Paul Anderson was soon overpowered by the blast of hot air by Mr. Fowler. Fred Fowler came on like a storm trooper, declaring all the great things that he was going to push through. He formed a committee. Management was going to be held accountable for safety. There were going to be zero accidents on the job. There were going to be zero deaths on the job. In fact, no one was even going to get sick on the job! In one fell swoop, Mr. Fowler embraced every past failure to improve safety. He overlooked one important point: One cannot successfully threaten people to be safe. The subtle implication was that all accidents are always the employee's fault. If Mr. Fowler could only generate enough bluster, all accidents would cease. It takes a special degree of ineptness to take something that everyone wants and turn it into a point of contention. Instead of getting a clue that his approach might be all wrong, Mr Fowler dug into a hold like a badger. He cited awards for no lost time accidents as proof that people could work accident free. When is the clock stopped on these awards? When someone has an accident of course! No group will work for eternity with no accidents. When an accident occurs, the clock is merely reset. That's another thing, it seems a little more than self-serving to boast of no accidents. But bean-counters will track and trend every little thing to ensure their full employment. It's rather tacky to boast about some things. Have you ever seen a banner stating: No Meltdowns in Five Years? It seems ludicrous to be boasting of no lost-time accidents with an employee in a burn center. The boasts seem hollow with an employee in his coffin. Fred Fowler's miracle committee did not save them. And Mr. Fowler was going to do such great wonders that no one would even get sick on the job. Mr. Fowler is not much on admitting mistakes. This may be a holdover from serving in the old management regime for so long. In communications to employees, Mr. Fowler is still clinging to the zero accidents fantasy. He stated: Our safety vision is a work culture that results in zero injuries and zero work-related illnesses. If the vision is a hallucination, it might work in inducing self-deception. But a glimmer of insight may be seeping into Mr. Fowler's thinking. He asked if the vision was realistic, if it was overreaching, if it is really possible to prevent all injuries? But his questions were only rhetorical; he quickly dug back into his defensive hole. Mr. Fowler stated: Our safety principles clearly assign responsibility to every employee for fulfilling our vision. Extensive safety processes and procedures are already in place. Do you see a problem? Duke has already tried to command safety. It failed miserably. Extensive safety processes and procedures that were designed only to look good to outsiders are worse than worthless. Those who do not have a clue can never micromanage others into a safety utopia. Duke always asks the wrong people for answers and always wonders why it keeps getting the wrong answers. Mr. Fowler's justification is that accidents cannot be accepted as a normal part of doing business. The Employee Advocate really hates to break the news to Mr. Fowler, but accidents are exactly that - a cost of doing business. Accidents and deaths are a cost of living! Mr. Fowler can command the tide not to come in, but the tide will come in. If he lies on the beach to prove his conviction that the tide will not only disobey his command, the tide will also drown him. Mr. Fowler had to do a little backpedaling when he stated: We may have to concede that accidents do happen in spite of our best efforts… Great job shooting down you own theory, Mr. Fowler. Of course he did not fully concede. He said may have to concede… He had to have a weasel word to cling to. He continued his rationalization: If we work hard to achieve that vision, then injuries will happen less frequently, and they will be less serious. He just admitted that he is willing to promote a bogus goal because it sounds good. Employees know first hand how such programs work. There is the matter of pensions that were promised year after year. Statements were sent annually that spelled out exactly how much pension to expect. Why did we expect it? Because Duke kept telling us that we were going to get it. All we had to do was trust Duke. How did that work out? We did not know that the pension promise was made only because it sounded good. Zero accidents are like full pensions. Duke is again promising something that will not be delivered. The difference is that the pensions could have been delivered. The only thing standing in the way of their delivery is corporate greed. The zero accidents goal cannot be delivered, but it still sounds good. And, it only sound good if one has a complete disregard for the truth. The bitter truth is always better that a sugar-coated lie. When an executive admits that he is willing to say something only because it sounds good, what message does this send to the NRC, INPO, and state regulators? It sounded good to say that Duke did not exceed allowable profits - until the audit proved otherwise. It sounded good to say that Duke did not manipulated energy prices in California - until the fines came rolling in. Mr. Fowler went on to add: We may not see dramatic change overnight, but we should see continuous improvement. The question is: Why did he not just tell the truth up front? Why must some executives always stretch the truth? Why must everything be embellished to seem a little better that it actually is? If Mr. Fowler had simply said The goal is to improve safety, the statement would have been factual. No one would have expected more. He would not be in the position of making contortions to justify his outlandish comments. He could have attempted to salvage some of the goodwill created by Mr. Anderson. He could have said that his approach was wrong. He could have said that management only wanted to work with employees to reduce accidents. Of course, Duke could have said You have fulfilled your end of the bargain; here is your full pension. A wise man once said The best thing never happens. It is not too late for Mr. Fowler to turn it around. He will probably never be referred to as an inspirational executive. A reasonable goal would be to lose the Grinch that stole Christmas image. The Duke Energy home office is in Charlotte, North Carolina. The North Carolina motto is: "Esse Quam Videri" - "to be rather than to seem." Duke's apparent motto is To Seem Rather Than to Be. Not the Zero Accidents Sham Again!
Duke Fined for Oil FireEmployee Advocate - www.DukeEmployees.com - September 25, 2004The Salinas Californian reported that Duke Energy and Earth Tech Inc. will pay almost $2 million in fines for a 2003 oil fire. Duke will pay $750,000 and Earth Tech will pay $1.2 million for the Moss Landing fire. Earth Tech was hired by Duke to dismantle an old oil storage tank. The Monterey County District Attorney filed a lawsuit for putting workers and firefighters at risk of exposure to hazardous materials. Deputy District Attorney Matt Bogoshian said "It's important that the big guys are held accountable just like everyone else." Chief Assistant District Attorney Terry Spitz said "Probably the most amazing thing about this fire is that there were no serious injuries." Another Duke Blow-Up in California
Duke Makes Another FERC SettlementEmployee Advocate - www.DukeEmployees.com - September 18, 2004The Wall Street Journal reported that Duke Energy has agreed to refund $549,973 to resolve questionable trading practices in 2000 and 2001. In 2001, executives were screaming that there were no trading improprieties by Duke. They were making claims that Duke had been fully exonerated. Yet in the latter part of 2004, Duke is still making settlements! Most of the executives who made those claims are no longer with Duke. Duke's $207.5 Million Price-Manipulation Settlement
Duke Gas ExplosionEmployee Advocate - www.DukeEmployees.com - August 20, 2004It was just another day at the Duke salt mine for one employee near Houston. The employee was literally working in a salt cavern when it exploded, according to the Houston Chronicle. Duke Energy's Moss Bluff natural gas underground storage cavern exploded at 4 AM Thursday . The flames leaped 150 to 200 feet into the air and the fireball could be seen for 10 miles. The lone employee managed to escapee the cavern with his life and without injury. Roads were closed and nearby residents were evacuated. Duke Energy reported that the flame continues to burn. The heat collapsed a valve structure and caused a second explosion on Friday morning. Flames shot up to 1000 feet into the air and could be seen for 20 miles. More people are being ordered to evacuate.
Duke Cuts Rates?Employee Advocate - www.DukeEmployees.com - August 17 2004Did Duke Power cut rates? Yes, sort of, according to The Charlotte Business Journal. It makes a great headline: Duke Power Cuts Rates! But the rate cut is a lot like Duke's much touted retirement plan - there is some fine print. The rate cut is only effective in South Carolina. Well, you say. That's not so bad; I live in South Carolina. And, the rate cut is only good for one customer! The fine print is always a killer. What is the rest of the fine print? The rest is written in invisible ink. South Carolina regulators sealed Duke's application from public review. What about more openness and letting the sunshine in? The shade just got pulled. The best deals can only be make by the good ole boys in the back room when everything is kept a secret. But some information always leaks out. In the July 7, S.C. Public Service Commission's (PSC) original agenda is noted: "application for approval of amended service agreement between Duke and Owens Corning in Anderson S.C." Could Owens Corning be getting a sweetheart deal from Duke? Consider this added note: both parties "request that the application and agreement be treated confidential." PSC attorney Jeffrey Nelson said that the application was filed June 22 and approved on July 7 by a 7-0 vote. The deal is said to involve trade secrets and is exempt from the state's Freedom of Information Act. One wonders if Dick Cheney had a hand in the deal. Ben Turner, of the N.C. Utilities Commission's electric division, said "Legally rates are supposed to be based on the cost of service. The problem is when you start trying to please one group, then where do you stop?" All other ratepayers will now subsidize Owens Corning. How much will the subsidy be? That's a secret. Elliott Elam, acting consumer advocate for the S.C. Department of Consumer Affairs, indicated that this is new territory. He said that he cannot recall "an explicit request for confidential treatment" by an electric utility before. Frank Knapp, executive director of the South Carolina Small Business Chamber of Commerce in Columbia, was not thrilled with the development. He said "This certainly sounds like a sweetheart deal for a big customer. I've never heard of something like this before." Owens Corning is one of the big names in asbestosis litigation. It filed for Chapter 11 bankruptcy protection in 2000. The Anderson Independent-Mail reported in May that union worker Marshall Bowman said that the company has been threatening to close the plant for the last five years. It managed to get the union to agree to no raises for three years. How is Owens Corning really doing? It had record sales of $1.4 billion in the second quarter, with a profit of $33 million. Owens Corning officials had no comment. Everything's a secret, don't you see?
Duke's $207.5 Million Price-Manipulation SettlementEmployee Advocate - www.DukeEmployees.com - July 14, 2004Former Duke Energy Chairman and CEO Rick Priory repeatedly said that Duke did not manipulate energy prices in California. He repeatedly said the Duke had been fully exonerated. He repeatedly vowed a vigorous defense. The vigorous defense must be over. Tuesday, Duke announced that it will pay up. $207.5 million in cash and credits should cover it. The settlement will resolve many lawsuits against Duke. Duke settled some charges last year for economic withholding, withholding physical power, unfair trading practices, double selling, and gaming the markets. Duke Settles Some California Charges Last year, The U.S. Commodity Futures Trading Commission fined Duke Energy Trading and Marketing LLC $28 million for attempting to manipulate energy markets. Exxon Mobil Blames Duke Energy The Federal Energy Regulatory Commission ordered Duke to refund $10 million in overcharges in 2001. Ex-Duke Workers Say Repairs Curbed to Manipulate Output
2004 Employee Opinion SurveyEmployee Advocate - www.DukeEmployees.com - June 9, 2004Duke Energy is conducting another employee opinion survey. If you are sent one, be sure to fill it out. Expect to find a lot of questions of little value to employees. Expect to find questions that have a limited range of answers. For example, one questioned asked how many hours were devoted to community service. One has to choose a number of hours or select No Answer. There was no answer choice for ZERO, and don't intend to! This ensures no politically incorrect answers, with no corporate propaganda value. Limiting answer choices is one of the many ways of skewing the survey results. The easiest way to manipulate the survey results is by not asking any questions on touchy subjects. You will never find this question on a survey: Do you feel the cash balance pension conversion was fair and ethical? The final way to manipulate the survey outcome is to bury any embarrassing results. All previous survey results are buried or obliterated. The only time the company cannot try to put words in your mouth is in the three write-in spaces. You must submit all of the previous screens to reach this screen. You can write in anything you want, but of course the comments will not be tabulated. Only the sanitized, predigested, highly massaged answers can be tabulated. And, if these have no propaganda value; lots of luck in finding the results! Here are some comments that were sent in: Senior Leadership and Management Things have improved 100% since Paul Anderson has arrived, but the old management is alive and well. The old management is so rooted in failure that I don't know if any improvement is possible. Will Mr. Anderson be able to whip the present management into shape? Or, will the current management wear him down and corrupt him? Each day the benefits scandal is ignored, the more likely the old crony management will prevail. Values and Integrity The integrity of Duke Energy has improved vastly under Paul Anderson. But this increased integrity does not apply to employee benefits. Deception, stonewalling, and possible fraud have been used to separate employees from their benefits. All this happened prior to the arrival of Paul Anderson. Mr. Anderson cannot correct everything overnight, but zero attempt has been made to address this issue. Employees have lost retirement benefits that were already earned. The cash balance plan was implemented solely to take the employees' earned retirement money. The pitiful excuses provided by the company fooled no one. Employees lost retirement health care that had already been earned. No compensation was given in return for taking away retirement health care at age 65. Those already retired keep losing earned benefits through increased health care premiums. The premiums used to be zero. Now they escalate year by year. Life Tracks and Other Benefits Our benefits are much worse than they were in 1996. The loss of benefits started with reducing health care coverage for active employees. In 1997, employees lost retirement benefits, due to the cash balance plan pension conversion. Some employees have received no new retirement contributions since 1996! The cash balance plan is a sham. In 1999, active employees lost future retirement health care. When these employees turn 65, they will lose all their earned and promised health coverage. Even the retired employees do not have their benefits locked in. They seldom receive a cost of living adjustment. Their fully paid health coverage costs them more each year. Life Tracks is a joke. The whole program was implemented with one goal in mind: squeeze employee benefits. Even smaller benefits, such as, travel pay between plants has been reduced. Layoffs have left the company with fewer employees. Now the company wants these fewer employees to do more work, travel more, and all for less pay. 2003 Duke Employee Opinion Survey
Resurrecting Past FailuresEmployee Advocate - www.DukeEmployees.com - May 27, 2004Paul Anderson did an excellent job of stressing safety to employees. He was straightforward and believable. His underlings were asleep on the safety issue, until Mr. Anderson mentioned it. Then the inevitable happened; all executives suddenly developed a keen interest in safety. That would have been acceptable, if that would have been as far as it went. But it was only a matter of time until absurd, outlandish processes starting popping up all over. Presented for your guffaws: the Safety Steering Team. It was organized by President and Chief Operating Officer Fred Fowler and communicated by Duke Energy. A steering team, in practice, steers employees away from spending any significant money on safety. It steers toward maximum publicity and propaganda value. Such teams often steer into fantasy land. Mr. Fowler stated "This means our actions must be consistent with what we say and believe -- that injuries, workplace illnesses and fatalities are preventable and unacceptable in all our operations… Baloney! Some suit, heavy on buzz words and with a light grip on reality, is always trying to sell this conard to the masses. The starry-eyed myth that all accidents are preventable still gets a lot of play from the gullible. All accidents are not preventable. You can take that to the bank. Some executives are like politicians. When they get wound up, making exuberant promises, anything can come out of their mouths. Mr. Fowler also implied that fatalities, and even illnesses are preventable! Man, get a clue! All accidents are not preventable. All illnesses are not preventable. All deaths are not preventable. Anyone who says that he believes they are is extremely gullible or a liar. There is no middle ground. If the Safety Steering Team can prevent all accidents, illnesses, and deaths at work, surely they can do it off the job also. Whoopee! No more injuries, no more sickness. Everyone is going to live forever, thanks to Fred Fowler and the Safety Steering Team! But what about overpopulation? If no one ever dies, the world will fill up very fast. Will Social Security still send checks when 99 percent of the population is over 65? Management is just like politics. Watch the executives long enough, and you will see them recycling the very same programs that have failed in the past. They failed the first time because they were unrealistic. Then along comes some newbie, to try them once again. Yes, Duke has tried the no accidents program before. It failed, and failed miserably, just as it will fail this time. The rate of accidents can be reduced; accidents can never be eliminated. Ditto for illnesses and deaths. With much fanfare, Duke introduced Zero Injuries by 1998. Duke introduced this program several years before 1998, to allow ramp up time for the glorious achievement. Managers and sycophantic types were absolutely orgasmic about Zero Injuries by 1998! Some people had a line at the bottom of all their e-mail: Zero Injuries by 1998 - I Believe! The ranks of management were testifying how they truly believed that there would be zero injuries in the Duke system by 1998. Reported accidents went down drastically. Employees, who were threatened daily not to have accidents, never seemed to get around to reporting them. The only accidents that were reported were broken bones and loss of blood, that could not very well be concealed. Thinly veiled threats by management ensured the complicity of many employees in the zero accidents lie. A doctor told the Employee Advocate that a Duke employee came in for a visit, during the big no accidents push. The doctor said that the employee's whole side was black, from falling on a pipe at work. He said that the employee laughed and said that he was not going to report the accident to management! Such episodes are reminiscent of the construction phase of Duke's plants. Employees would be sitting around the job with arms and legs in casts. They were not able to work, but Duke wanted them to come in each day anyway. As long as they showed up for work each day, technically, they would not be counted as having a lost time accident. It was a backdoor method of racking up million man-hour awards for no lost time accidents. The awards were a joke, just as Zero Accidents by 1998 was a joke. Unrealistic claims by the Safety Steering Team is only the latest version of the joke. The biggest jokester of all has arrived, proclaiming to prevent accidents, illnesses, and deaths. Back to Zero Accidents in 1998. Do you think that 20,000 employees worked for a solid year with no accidents? Everyone does not attend meetings all day. Some work with kilovolts of electricity, on water tanks, operating heavy equipment, and a myriad of other dangerous jobs. So, how did Zero Accidents in 1998 work out? A Duke employee was killed on the job, just a few day into 1998! Duke dropped that program like a hot potato, and never mentioned it again. Only now is management, oblivious to history, trying to repackage this pig. Zero Accidents by 1998 - I Don't Believe! Millions of man-hours worked with no lost time accidents - I Don't Believe! The cash balance plan advantage - I Don't Believe! The Duke Energy Ethics Policy - I Don't Believe! The Safety Steering Team will prevent all accidents, illnesses, and fatalities - I Don't Believe!
A Silly Slogan DiesEmployee Advocate - www.DukeEmployees.com - May 19, 2004One of Duke Energy's silly slogans just bit the dust, according to company communications. Changing things for no good reason only muddies the water. But all changes, since the arrival of Paul Anderson, have been for the better. The dead slogan is "we generate what's next." As if that one was not lame enough, Duke had dozens more that constantly scrolled on screensavers. They provided constant distraction and irritation. More vestiges of the Rick Priory regime are being eradicated. Mr. Priory announced the goofy tagline and advertising campaign in 2001. What was actually generated was nothing to brag about. Things were generated: lawsuits, mistrust, loathing, disrespect, and a shady reputation. Noon Rebuttal - April 2001 - Tagline Comments Not only is a dumb slogan going away, but it is not going to be replaced by another one, just as dumb. It is not going to be replaced at all! What about all of the mindless advertising? Duke has stopped that also! Paul Anderson has made many major changes that will benefit everyone. Now the smaller, irritating blunders are being eliminated.
Millions to BurnEmployee Advocate - www.DukeEmployees.com - May 13, 2004The Charlotte Observer published a reader's question on Wednesday: If Duke has an extra $2 million lying around for the Arts & Science Council, shouldn't it be refunded to the customers who obviously are overpaying for electricity? People struggling to paying their power bills, wonder where all the extra millions are coming from. Employees, who saw retirement health benefits and pensions disappear, wonder just where all those millions of dollars went. This money was not charity. It was deferred salary. Many employees earned it, but will never collect it. But when executives are terminated, there never seems to be any shortage of money to shower on them.
Duke Executives Indicted for FraudEmployee Advocate - www.DukeEmployees.com - April 22, 2004Two former Duke Energy executives have been indicted on 18-counts, according to the Associated Press. A Duke Energy North America trader was also charged. The charges include: racketeering conspiracy, wire and mail fraud, money laundering and falsifying corporate books. $50 million in fraudulent profits were alleged to have been generated from over 400 improper trades. Former vice presidents Timothy Kramer, 40, and Todd Reid, 41, and former energy trader Brian Lavielle, 33 were arrested on Wednesday. All pleaded not guilty, and were released on $100,000 bond, each. The trio allegedly employed bogus trades to produce phantom profits that gained them bigger bonuses. In 2001, Reid took in $5 million in cash and stock bonuses, Kramer received $4 million, and Lavielle pocketed $340,000.
Dirt Cheap SettlementEmployee Advocate - www.DukeEmployees.com - April 20, 2004Duke Energy may get out of the electricity manipulation charge dirt cheap. Reuters reported that a Federal Energy Regulatory Commission (FERC) judge approved a $550,000 settlement plan. Duke may still not be completely off the hook. FERC Judge Carmen Cintron said that if Duke is found guilty of other deceptive trading practices, an additional $1.5 million may be required. The electricity manipulation charge is part of the fallout from the 2000-01 California energy crisis. You remember, back when Duke was going to bring the world to its knees by milking deregulation, trading energy, and emulating Enron. If approved by FERC commissioners, this will be another deal where Duke pays the money, but does not have to admit any rule-breaking. Duke Settles Some California Charges
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