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2003
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2002
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2001
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2000
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1999
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It was asked if Duke was going to eliminate employee medical coverage.

That was a very reasonable question, given the way thing have been going for the last decade.

Paul Anderson said “No.”

Mr. Anderson said that the best Duke safety records were achieved in Papua New Guinea and Indonesia. “Everybody cared about everybody. That’s what we need to get to.”

As usual, Mr. Anderson is on the right track. If only there were someone who could implement his ideas without alienating the whole workforce. These safety accomplishments were achieved because “Everybody cared about everybody.” They were not achieved by threats, bean-counting, silly slogans, or fabrications.

Fast Freddie Fowler Flounders

Mr. Anderson said “We need to break down some of the silos that exist within the company.”

Again, he is on the right track. Break down a concrete silo and inside you will likely find the executive who built it!

Mr. Anderson has identified that the company has many archaic systems. It takes dozens of steps and rote memory to accomplish what should be completely automated. Employees have complained about this so much to no avail, that most no longer bother to complain. Mr. Anderson is still new enough that all the Duke inefficiencies stand out like a sore thumb to him. He sees them and wants to correct them.

One employee wants a “fat tax,” an extra insurance premium for obese employees.

Some taxpayers support a “flat tax,” but Duke is not considering a “fat tax” on health insurance.

A question was sent in about the Retirement Cash Balance Plan. For some reason, Duke always seems to dread these questions. Duke always puts out some evasive words, but never says “We wanted your pension money, so we took it!

The Question: “What do I tell my employees when they ask me why Duke Energy has $2B in cash to spend for acquisitions, but will not address what they perceive as Duke Energy not making good on benefits promises (RCBP conversion)?”

The Complete Answer: “It is important to understand that money budgeted for acquisitions is directly aimed at promoting company growth, which benefits both shareholders and employees. The company's defined benefit retirement plan was converted to a cash balance design more than seven years ago. A cash balance design provides for a steady build up of the retirement benefit over the course of an individual's employment with the company. In contrast, under the prior, final average pay design, the retirement benefit accumulated slowly until attainment of a specified age and service level, when it increased rapidly. The company continues to believe that a cash balance design better meets the needs of today's diverse and mobile workforce, and the company has no plans to change to a different design.”

Translation: “We wanted your pension money, so we took it!"

IBM had no plans to alter its cash balance plan either. Then a federal court ruled it to be illegal and age discriminatory. Not only that, but the court found that the prior pension plan was also illegal! As long as these flaky cash balance plans are never contested, corporations have a free hand to help themselves to the employees’ earned benefits.

IBM has already agreed to make a settlement on a portion of the claims. In view of this successful employee pension litigation, do you think that more cash balance plans will be challenged or less plans challenged?

Here is another thing to think about. The actuarial firm that designed the Duke Energy cash balance plan, W. M. Mercer, was also involved with the IBM plan. So far, only one shoe has dropped.

Congressman Bernard Sanders was recently successful in getting an amendment passed in the U. S. House of Representatives. It is to prevent the Bush administration from effectively nullifying the ruling against IBM’s cash balance plan.

In a speech before Congress, Rep. Sanders said “While this particular lawsuit involves IBM’s conversion to a cash balance plan, there are hundreds of other companies that have done exactly the same thing...”

He went on to specify Duke Energy as one of the companies. Sure, Duke does not want to give the pension money back. Duke does not plan on giving the money back to the employees. But, believe it or not, there are powers greater than Duke Energy!

Congress Hears of Duke’s Pension

Duke Energy Chairman and CEO Paul Anderson hosted the Open Forum August 3, 2004 in Boston. He told of the many positive financial developments within Duke, but said that many analysts are bewildered.

Analysts are always bewildered; they just seldom admit it. They make a living by playing follow the leader and drive by looking in the rearview mirror. You would be better served to call the psychic hotline for market advice.

As long as Mr. Anderson knows that he is in control and that analysts are a dime a dozen, he will be all right. So far, he has not let the analysts pull his strings, as the previous CEO did. It is not necessary to cut cartwheels for analysts. It is not necessary to make the mistake of making wild promises to analysts. How did that work out for the last CEO?

Tom O’Connor, DEGT group president, said the energy bill “had some good things in there for Duke Energy.”

The bill has a lot of pork in it for the energy executives who actually dictated the contents of the bill. Any company that cannot exist without constantly bleeding the taxpayers is not much.

A company that cannot exist without raiding the employees’ pension fund does not deserve to exist.

Dick Cheney is the worst V. P. in history. He started off by bungling the energy bill and it will haunt him until he leaves office. There is a reason the bill was never passed – it is highway robbery!

Consider Cheney's Secrecy

Notice was given that a “summary” of the Employee Opinion Survey will be posted in September. It may be useful or it may be useless. Summaries allow a lot of room for massaging the results. If the results lean toward the negative, it will not necessarily be an indictment of Paul Anderson. Employees have been lied to and flimflammed for a decade. The resentment will not abate overnight. If restitution is not made, expect the resentment to only intensify.

Mr. Anderson did not sire the ugly benefits baby, but it is his baby now. On some level, he would probably like to set things right. In all likelihood, he will take no action – without a stimulus to act. Why should he?

All he needs is a stimulus.

The Open Forum was held July 12, 2004 in Charlotte, North Carolina.

Duke Energy Chairman and Chief Executive Officer Paul Anderson said that he has been spreading the word about the improved financial strength of the company. There is a world of difference between the way Mr. Anderson operates and his predecessor.

Mr. Anderson did not start out by chasing the press and getting before every camera that he could. In fact, he shunned reporters. He took his time to find out what the true condition of the company was. He listen to the employees. Then he took steps to correct a decade of mismanagement.

Only after he knew things were on the right track did he grant any interviews. He spent the time and effort to correct past mistakes and now he wants to tell investors about it. He deserves to take credit for his work.

The former CEO tried to sell smoke and mirrors. He took benefits from employees, while making extravagant promises to investors. He made promises, but was not holding anything tangible. All he delivered was misery, losses, disillusionment, despair, and a hopeless future.

Being underrated is not a real problem. If you are underrated, your ratings can only go up. If you are overrated, your ratings can only go down. Because, sooner or later, people will find you out.

Mr. Anderson admitted that there were still some losing ventures around. That’s not a problem. It only gets to be a problem when one denies the existence of problems and tries to spin them away. It never works in the long run. Every blunder of the past ten years cannot be turned around in less than one year.

Mr. Anderson said that complying with the Sarbanes-Oxley law is a real pain. But he realizes that compliance will make the company better.

The only reason the Sarbanes-Oxley exists is because of unbridled corporate greed and corruption. Enron blazed the trail of extreme corporate corruption that eventually germinated Sarbanes-Oxley. There were many lemmings who followed Enron, including Duke Energy. The corporate executives’ antics begged for a law such as Sarbanes-Oxley. To corporations everywhere, the Employee Advocate says “Enjoy, enjoy!”

A question was raised about Paul Anderson's wife, Kathy, being so visible in the company. The implication was that it may look improper to outsiders and employees.

Mr. Anderson said that his MBA wife has a degree in finance. As a chartered financial analyst, she spent seven years analyzing the energy business. She has held various corporate positions. But she is not on the Duke payroll. “She is basically an unpaid consultant.” Mr. Anderson said he informed the board that he would be involving her when he first arrived.

Mr. Anderson is not a steam-rolling sort of guy. He is willing to listen to the opinions of employees on the matter – anonymously.

The Employee Advocate would like to thank Kathy Anderson for her efforts in turning the company around. Any success that Paul Anderson or Duke Energy has is a success for Kathy Anderson. This is a winning team that should never be separated. There are a lot of sharp daggers within Duke. Someone has to have Paul Anderson’s back.

To deny her any company involvement because it might not “look good” to some, would be sheer lunacy! You can do about anything you want, as long as your are right. When you are right and you know it, there is no need to be concerned about how thing look to naysayers.

In short, Duke does not have to be exactly like every other corporation. It was trying to be like other corporations that almost destroyed Duke. There is something to be said for uniqueness – when the uniqueness is the right thing to do.

Mr. Anderson said that he would not rule out increasing the dividend! The dividend is another example of how he was able fly in the face of conventional wisdom. He was able to pull it off because he was right.

Not the Zero Accidents Sham Again!

Poor Fred Fowler, COO. He manages to miss the boat at every opportunity. Employees were talking about what a good job Paul Anderson did in conveying his concerns about safety. No one questioned his sincerity about wanting a safer working environment. He could have not have made a more eloquent appeal for safety.

Mr. Fowler saw safety as a band wagon to jump on and fired up his steamroller. His ham-handed approach to safety implies “I’ll force you to be safe if it kills you!”

Mr. Fowler said “One of the things that I’m doing is to make sure that we instill safety from the top down… I formed a safety steering team…”

Notice his language. It is what I am doing. I will instill safety from the top down. I formed a safety steering team (I’ll steer you in the right direction, Buddy!).

Paul Anderson’s approach contrasts with Fred Fowler’s about like sunshine does with a rain cloud. Mr. Anderson offers inspiration. Mr. Fowler builds resentment. Mr. Anderson projects confidence. Mr. Fowler projects fear. One wonders if Duke is running a game of good executive/bad executive on us!

Is it gnawing at Mr. Fowler because he was not selected as chairman and CEO? There was a reason for it and it shows more clearly each passing day!

Safety will only improve from the bottom up. Mr. Fowler cannot force anyone to be safe. If anything, his attitude will have negative repercussions. Such buffoonery brought about the ill famed “Zero Accidents by 1998” disaster.

Some people make mistakes and learn from them. Others are locked forever in denial, hopelessly trying to shore up an untenable position. So much energy is wasted. Nothing worthwhile is ever accomplished. Mr. Fowler repeated his fantasy “I do believe that you can work incident-free.”

That is baloney. Incident-free means that no one ever gets hurt, no one ever gets sick, no one ever dies. Only the rate of incidents can improve. They will never be totally suppressed. Mr. Fowler is frozen in time with the past management. Repeating an absurdity ten thousand times will never make it true. What will be next – more Wall Street Journal ads?

Mr. Fowler said “We have a lot of locations that do it.”

That is not true.

Mr. Fowler said “I was in Brazil last week, and we accepted an award – 5 million work-hours without a lost time accident. So that tells you it can be done.”

That tells nothing! Incident-free does not mean 5 million hours – it means eternity. Do not overlook the weasel words “lost time.” The implication is “We don’t care how many accidents we have, as long as they are not 'lost time' accidents." “Record-able” is another safety weasel word. If you shut one eye, look against the sun, and get your mind right, suddenly, the accident is not really “record-able.” Weasel words are another way to make a safety record look better than it really is. There are much more devious methods. When the safety department puts a safety belt on a fall victim, the corpse is suddenly OSHA compliant! When a company is run by those who care more about numbers than people, such things occur.

Millions of hours worked without a “lost time” accident is not so impressive, once you witness the extremes some corporations go to in order to pad the numbers. Safety departments have been known to drive accident victims to the job. The victims may not be able to drive. They may not be able to work. But as long as they are "on the job," no “lost time” accident has occurred! What does such actions really tell you about a corporation? Are they really concerned about the well being of the employees? Or, are they only interested in producing dog and pony shows. For some, show will win out over substance every time.

Complaints have been recently filed with Duke management concerning the disregard for safety by high-ranking executives. They talk a good game – until money is involved. Money always seems to outweigh safety. Complaints were filed about Duke’s no-win accident forms. No matter what the circumstance, it is always the employee’s fault. Even accidents caused by poor plant design are always the employee’s fault. In a sense, this is true. If the victim had not showed up for work, he would not have been injured. If some employees had not shown up for work, they would still be alive.

Resurrecting Past Failures

Paul Anderson said “We tend to hire great people and then either stifle them or drive them off…”

Duke has hire many extremely talented people over the years. Many were locked into menial jobs for years, until they eventually quit.

An employee sent in a retirement question by e-mail. He will be 53 years old and have 34 years of service, but will not be able to retire. He wants to know why he is being penalized.

The answer mentioned the Duke Energy Retirement Cash Balance Plan, as well it should have. Because the cash balance plan is the beginning of all retirement problems at Duke Energy.

This statement was put out: “If you were a participant in the Duke Power Company Retirement Plan prior to January 1, 1997, you may be eligible to retire as early as age 51 with 30 years of creditable service. If you were a participant in Nantahala Power and Light retirement plans prior to January 1, 1999, you may be eligible to retire as early as age 48 with 30 years of creditable service.”

Cash balance plans were touted as being so great for the “young, mobile” employee. But those who once could have retired at 48 or 51 will now get to work until they are 65. Almost all employees lose with cash balance plans. That is the way they were designed. The ones who do not lose are the “old, immobile” executives!

Do not put too much confidence in any on-line benefit calculators – they are only estimates and are not binding. Likewise, any verbal information from HR is unenforceable. The only one required by law to give you a prompt, truthful answer is the plan administrator. But it is totally up to you to ask the right questions. There is no obligation to volunteer information. Vague questions will garner vague answers. Stonewalling is the game that Duke plays best.

On June 10, 2004, Chairman of the board and CEO Paul Anderson hosted the Open Forum in Houston, Texas.

Mr. Anderson talked of assets sales, debt reduction, and pursuing new growth opportunities. He noted that that budget and staff cuts have strained morale. Employee morale was approaching zero, well before Mr. Anderson took over as chairman and CEO. He does not deserve to be blamed for the situation. In fact, he deserves recognition for not attempting to hide the obvious, as other have tried.

Lawsuits, layoffs, denials, bad management, outlandish promises to investors, and corporate greed were only some of the reasons for low morale. But the greatest drag on morale predates any of these. The most devastating impact on employee morale was the cash balance pension plan conversion.

Almost universally, cash balance plans are despised by employees of all companies. Executives who usher in such pension reductions are likewise despised by employees. Two years later, many employees were told that they would have zero medical coverage at age 65. Was the previous management so naïve as to think that there would be no negative repercussions?

Paul Anderson is not blamed for these company blunders, but he has inherited their fallout. Paul Anderson is not a dimwitted man; he knows all of this. He know that this door must be opened, sooner or later. No one can even blame him for not rushing to open it. His work has been outstanding, so far, but this will be his greatest challenge. Paul Anderson is at a pivot point; which way will he go?

There will be no shortage of internal corporate resistance, if he tries to rectify the past mistakes. If he takes a hard line that the employees will not get back a dime of lost benefits, that will have its own repercussions. The Employee Advocate is more generous with Mr. Anderson that some employees have been. Some still regard him as an extension of the old regime.

How he proceeds on this issue will make or break him, in the eyes of employees. The issue is simple: Any company that cannot be trusted to keep retirement and medical promises, need not expect to be believed about anything else. Any ethics policies that are promoted will only be laughed at.

Employees will ask why Duke has money to spend for acquisitions, but not for making good on benefits promises. Mr. Anderson has more credibility than any Duke Chairman/CEO, since the late Bill Lee retired. He can build upon his credibility with employees or he can throw it away.

If the benefits issue is not addressed now, when will it ever be? There will always be reasons for cutting back. Will there ever be reasons to restore what has been taken?

Someone asked about getting into Iraq's high-return market.

Mr. Anderson said that Duke does not have the skills and he did not want to development them.

Good! One should not lose one’s head chasing high returns. In Iraq losing one’s head can literally be the case. Gouging in Iraq sounds like a deal the former CEO would have jumped on. Buying interests in a country coming apart at the seams would have fit right in with his other high risk gambles.

A question was asked about the price of crude oil. Mr. Anderson said that Duke is hedged on that commodity.

Going long a commodity that a business needs is a legitimate use of derivatives. The price is locked in. That is a far cry from the speculative days, when half of Duke’s profits game from trading derivatives. The day trader is out. A seasoned businessman is in.

RISK

Questions by E-mail; Answered Anonymously:

Several questions were asked about a trader getting a $5 million dollar bonus. Basically, they wonder why it is so difficult for them to get compensated for extra services provided. The answers indicated that it will continue to be business as usual. This is more negative fallout from past poor management.

Question: While it is encouraging to read that Paul Anderson is feeling better about the company after his first six months, I thought I understood that his measure for success was how the employees at large felt. Specifically, he said something like "if the employees are not feeling better about the company six months from now I will have failed." What steps are being taken to solicit employee perceptions of the company now that Paul's six months are up?

The answer was that opinion surveys were sent to almost 12,000 employees in June. Mr. Anderson also welcomes employee e-mail.

Paul Anderson’s greatest strength is his willingness to accept feedback. But he should not feel too disappointed if the survey trashes Duke management. After a decade of poor management and benefit takeaways, employees are not going to become giddy in a mere six months. When our benefits were lost, many employees completely washed their hands of Duke management. Nothing short of restoring the benefits will ever change their minds. The previous regime tried to win employees back with newspaper ads, nifty slogans, and outright lies. The campaign of deception only made matters worse. Be forewarned that any illusions to make it appear that benefits have been restored, while they actually have not, WILL backfire!

It will be interesting to see the manner in which the results are reported to employees - if they are reported at all. Will a full report be promptly made? Or, will the results be sweep under the rug, as past management has done?

Question: Why is it that our plants are lacking the manpower and money to run them and repair them correctly? It seems that we get more and more contract help — and the quality of work is not there. We often have to re-do what others have supposedly fixed. It seems we have lost touch with our customers also. We need the support and finances to repair these plants, and the people who will do it with care. Will we ever visit that Managing for Excellence era again?

The employee received a lengthy non-answer. Duke found out the hard way that day traders do not always win. It will also find out that cheapness can be very expensive.

A question was sent questioning the wisdom of selling eight plants for less than the construction cost. The answer pointed out the tax benefits and the elimination of holding costs.

The Employee Advocate fully agrees with this and every other financial decision that Paul Anderson has made. Trying to win on every “trade” is the mark of an amateur. There comes a time to cut one’s losses. Not everyone is capable of doing this. Some will hold on to their losers right up until bankruptcy. By refusing to take a loss, they lose it all. Paul Anderson is no amateur; he knows when to fold them. This decision was similar to keeping the dividend. The conventional wisdom said to eliminate the dividend. But Mr. Anderson saw deeper reasons for keeping it. The company has never been in better financial hands. The only major problem remaining is that many employees have earned benefits that the company did not deliver on. Even though Mr. Anderson did not create the problem, ignoring it will eventually drag down his positive momentum. The ball is in Mr. Anderson’s court.

The former Noon Meeting is now the Open Forum. Chairman and Chief Executive Officer Paul Anderson hosted it on May, 2004, in Charlotte, North Carolina.

The reason given for changing the name of the meeting was because the meeting time is not restricted to noon. That was the only reason given, but there may have been a much more significant reason for the name change. The Noon Meeting was Rick Priory’s baby. It was a series of meetings, in which nothing was ever solved. It was a slot for Rick Priory to provide excuses as to why no problems could be solved, nothing could be improved, and why employees must continue to get less, while Rick Priory continued to get more and more.

The Noon Meetings were tainted with a long history of failure. Who could blame Paul Anderson for not wanting to carry that baggage. The Noon Meeting carries the stigma of Enron. It was a good idea to bury it.

Mr. Anderson said "When I was in New York last week, my meetings with analysts were much more cordial…Frankly, some of those meetings had been quite hostile six months ago."

The analysts had years of experience dealing with deceptions, endless spinning, fairy tale promises, and denial of a losing plan. No wonder they were hostile, as were investors, employees, and California customers.

Mr. Anderson mentioned the indictment of three former Duke traders. He said "I know there was a lot of talk among employees about the bonuses paid to the traders involved. In fact, I was shocked when I heard about it. We must remember that was a different era at Duke Energy — one that will not be repeated."

Well said! “Duke Day Trading” was doomed from day one. It just took a while for everyone to figure out that it was all hype and no substance. Rick Priory and a few day traders took home millions of dollars, but everyone else lost.

Duke Executives Indicted for Fraud

Mr. Anderson was asked what keeps him awake at night. He said it was the DENA mark-to-market position. This is more fallout from past wheeling and dealing.

A question was asked about outsourcing of jobs overseas. Mr. Anderson said “That should be a low priority. We're trying to help the communities here and keep a robust economy. That's inconsistent with that. Personally, I don't want to pursue it.”

Again, well said. Companies that rush to foreign outsourcing are like the companies that rushed into cash balance pension plans. A price will be paid for the greed.

The Noon Meeting was held in Houston on April 15, 2004. It was hosted by Chairman and Chief Executive Officer Paul Anderson.

An employee asked “Why doesn't Duke offer stock options to all levels of employees?”

Mr. Anderson said that he gave stock options to all the employees at BHP. He went on to say “It was the biggest mistake I ever made.”

He indicated that the options were not significant. To make them significant a cut in base pay would have been required. The miners were not interested in giving up base pay.

Can you think of anyone who would be willing to give up salary for options? Mr. Anderson’s compensation is different most CEO’s; he receives only stock and options. But many CEO’s receive millions of dollars plus very significant stock options. They do not forfeit a dime in salary to get the significant options.

Realistically, no corporation can give everyone "CEO grade" options. So, what’s the point in trying to foster the illusion? A few paltry shares of stock are not worth the trouble. Rather than obsessing about stock options, Duke employees would be better served by striving to get their benefits back to parity with 1996.

Until our benefits are equal to the 1996 level, do not be distracted by any other fluff. In 1996, employees had their full retirement benefits, including the early retirement subsidy. Employees had health coverage for life. Retirees were not at the mercy of the political contortions of Medicare.

The cash balance conversion destroy the old retirement plan in 1997. In 1999, future retirees lost health coverage at age 65.

This question was sent in by e-mail: “With the change in leadership of Duke Energy, will the current cash balance retirement plan be re-examined, with the possibility of changing it so that long-time employees could choose between the old plan and the new plan?”

These questions are always answered anonymously. The full answer was: “The company regularly monitors regulatory, legislative and judicial developments regarding employee benefits and periodically reviews its employee benefit plans, including the Duke Energy Retirement Cash Balance Plan (RCBP). There are no planned changes to the RCBP.”

There are other ways that Duke could make restitution to the shortchanged employees. Providing workers with the true value of their earned benefits would resolve the matter. Cash balance plans were designed to rip-off the employees’ retirement benefits; everyone knows this. The actuaries know it, the federal courts know it, and Congress knows it.

Cash balance plans take money from employees from the day they were hired. The retirement plan was a deferred benefit. A deferred benefit is synonymous with deferred salary. Employees earned the de facto salary, but were deprived of it.

The same is true with retirement health coverage. Employees were led to believe that for each year worked, benefits were being accumulated in both plans. The much touted pension benefits were severely curtailed and the health coverage completely eliminated at age 65.

Employees can receive their earned compensation anytime they want it. They have always had the power, but apparently did not know how to use it. It is as simple as letting congressmen and senators know that they will be out on the street if this injustice is not corrected. Give them notice and then keep your word.

Do not stop with Congress. Any administration that always puts corporate interests over the citizens' interests should be purged from Washington. Do not be distracted by trivial issues and slogans. Forget what party grampa always voted for. This time vote your pocketbook, and the next time, and the next time. If you are not registered to vote, now is the time to get registered.

Employees are being wiped out financially, with the blessings of Washington. You earn it, but the executives get it. As long as employees allow it, the takeaways will continue. You can take that to the bank. The way things are going, it may be the only thing that you have left to take to the bank!

Fixing Cash Balance Age Discrimination?

The Noon Meeting was held on March 11, 2004, in Charlotte, North Carolina. It was hosted by Chairman and Chief Executive Officer Paul Anderson.

Mr. Anderson stressed safety in the workplace. As usual, there is no comparison between his approach to safety and the way it has been handled in the past. The former CEO never failed to mention safety in his opening remarks. But they were always tacked onto the end. They seemed to be glossed over, in an effort to get on with more important matters.

This time safety was address at length and at the beginning of the meeting. Employees who attended the meeting in person said that Mr. Anderson gave an impassioned appeal for workplace safety. Mr. Anderson came across as someone who is genuinely concerned about preventing accidents. He said "We will bring safety to the table at the board of directors' meetings, and will have safety topics at the Executive and Operating Committee meetings."

It was mentioned that David Hauser has been named as chief financial officer. Mr. Hauser is in a similar situation as Mr. Anderson; he is in a role that has not been handled very well in the past. Both men have implemented vast improvements. Hot air has been replaced with clear thinking and straight talk.

Someone asked “What might Duke Energy look like five years from now?” For the past CEO this would have been a safe, easy-ball question. It would have provided an opening for pontification and speculation. The company would be making windfall profits trading energy, derivatives, and controlling the supply of electricity worldwide.

Mr. Anderson gave a truthful answer “I don't know.” He added more to the answer, but was not foolish enough to try to predict the future. No one knows what tomorrow will bring. Babbling on about what will happen five years from now would have been an exercise in pure conjecture. Once again, Mr. Anderson did not take the bait.

Someone wanted to know if more management positions would be eliminated.

Mr. Anderson said “I don't have the exact answer to that. We eliminated the chief administrative officer's job. We combined risk and finance together. We combined DENA and DEI together. Below that, I don't see a lot happening right now. Jim Mogg and I have been talking about that. What we really need is everybody's input. The last thing the organization needs for me to do is sit in my office and look at org charts and say, ‘Don't need that one, don't need that one.’ Everyone will feel a lot of pain because I won't know what I'm doing. So we really need people's input as to how we can simplify the organization. It's an initiative that Jim's working on and I think you will see more in this area. We've done a fair amount but there is a lot more to do.”

He made it clear that he could not spout out the number of management positions that may be eliminated. He also made it clear that it would be a disaster for him to arbitrarily pick a certain number of heads to roll. He is wise enough to seek input before making rash moves.

Mr. Anderson does not give political type answers that promote a certain agenda but provide little information. He has enough self confidence to say “I don’t know.” That is often the best answer. It is always preferable to wild speculation and wishful thinking.

A question was sent in by e-mail about the difficulty of finding employee opinion survey results.

This answer was provided anonymously: “The decision was made after the merger of Duke Power and Pan Energy to make the results of the Employee Opinion Survey accessible only to managers through the Portal's Manager's Center.”

“The overall Survey summaries are posted on the Portal for all employees to view. The results of the 2003 Employee Opinion Survey were posted to the Portal on October 16, 2003. If an individual wants to see their unit's results, their manager can share the report from the Manager's Center.”

For years the Employee Opinion Survey has been little more than a shell game. First the company is able to “manage” the results by choosing the questions asked. Never expect any really tough questions to be asked. The questions asked are carefully selected to promote an agenda the company is trying to sell. Employees may have zero interest in the current pet project. But if enough questions are asked about it, the results will erroneously reflect an interest in the project.

Say Duke is promoting “National Flatland Awareness.” The survey may contain a dozen questions about flatland awareness:

• The company fully supports National Flatland Awareness.

• I understand my role regarding National Flatland Awareness.

• The company encourages me to support National Flatland Awareness.

• The company has provided ample information concerning National Flatland Awareness.

You will never find a really appropriate answer choice, such as: “I have absolutely zero interest in National Flatland Awareness and am not impressed by the incessant propaganda about it.”

The results are managed by the questions asked, the answer choices, and the way the results are reported, IF they are even reported. By the time the numbers are spun, massaged, and packaged, they may be of little value. One wonders why the company continues with this charade. Pertinent questions are avoided.; no improvement ever takes place; and the results are often disguised. Just what is the purpose?

You will notice that questions about the cash balance pension conversion and the lost retirement health care are never included.

Here is a suggested question and answer choices:

Your pension and health care benefits were ravaged because:

A. That is the best way to enhance employee loyalty.

B. The executives need the money more than you do.

C. Other companies were getting by with it.

D. The company has zero ethics or integrity.

E. The company is run by a bunch of lying thieves.

President and Chief Operating Officer Fred Fowler hosted the Noon Meeting, in Charlotte, North Carolina, on February 9, 2004.

Et Tu Fowler?

There is no doubt that Mr. Fowler wanted to give an uplifting and inspiring speech to employees. He woefully missed the mark. He sounded exactly like the past senior management who caused all of today’s problems. Mr. Fowler did not speak from a position of strength and confidence. He spoke from a position of weakness and fear – fear of Wall Street.

The former management was destroyed by the twin demons of greed and fear – fear of Wall Street. Every action by the company was to appease Wall Street. Every move was calculated to cater to Wall Street whims. Promises were made to Wall Street. The books were tweaked to curry favor with Wall Street. It was so sickening!

We now have a chairman and CEO who is not intimidated by Wall Street types, but all of his underlings are not on board. Mr. Fowler said “Employees should look at 2004 as a ‘Prove It’ year for the company.”

Only the fearful feel that they must prove something. The strong and confident never have to prove anything to anybody.

Mr. Fowler said "We've got to prove to Wall Street, regulators, customers and employees that Duke Energy is back on the right track. I don't want anyone to think that write-offs and a laundry list of special items can magically cure everything at Duke Energy. That's a start — the real proof is in the results. And that's what we've got to deliver."

Hogwash!

This pitiful whining means that Mr. Fowler feels the need to prove to himself that the course is true. He lacks confidence; he is running scared. The sharks will smell his fear a mile away. If he will just hide in Paul Anderson’s back pocket until his fear subsides, everything will be okay. The last thing needed is someone else bowing and scraping to the Wall Street weenies.

Paul Anderson has already taken steps to correct ninety percent of the problems caused by his predecessor. There is nothing to prove. There is nothing to deliver. All Mr. Fowler has to do is strive not to choke on his own fear.

There is always the chance of an unforeseen fundamental occurrence wrecking any plan. But a weak plan will be wrecked even sooner. Every move made by Paul Anderson has been the right move. Mr. Fowler should recognize this and get out of his fear based mode of thinking.

Mr. Fowler lamented that only 10 percent of analysts recommend buying Duke Energy stock. So? If Mr. Fowler is going to get into a tizzy, worrying about what analysts think, he needs a prescription for tranquilizers!

Mr. Fowler was a cheering section for the past CEO, as he drove the company into the ground. Now that the new CEO is fixing problems, Mr. Fowler waxes uncertain. What’s so bad is that Mr. Fowler and Mr. Anderson worked together for years at Pan Energy. Who would have ever thought that Mr. Anderson would get more support from the Employee Advocate than from his old pal from Pan Energy?

Someone asked about the greatest untapped opportunity.

Mr. Fowler said “I think the most untapped opportunity for us is re-calibrating, getting over what we've been through and getting re-focused…”

Mr. Fowler is way behind many employees. Many are right where they have always been. They knew the past CEO had a phony scheme and that it would implode. Only those who were foolish enough to believe him need to get “re-calibrated.” Of course, the very same people will fall for the next scam that comes along. They never seem to learn.

A question was asked about utilities that have not been hurt recently.

Mr. Fowler said “The people who really took the hit on the utility side were the people who had a large unregulated merchant position — which we had.”

Mr. Fowler started telling the truth, but quickly cut it off. Duke’s problems stemmed from chasing energy deregulation, envying Enron, worshiping Wall Street, and sacrificing the employees in the name of greed.

Mr. Fowler was asked about investing in coal-fired plants. He answered the question by touting building more nuclear plants.

Nuclear has two problems that are not going away – the terrorism threat and the waste disposal problem. Yucca Mountain is a joke. It would have collapsed under its own weight if not for lobbying dollars keeping it on life support. Anyone who tells you that these problems have been solved is lying to you.

EPA Ignored the Law on Nuclear Dump

Chairman and CEO Paul Anderson hosted the Noon Meeting in Charlotte, North Carolina, on January 12, 2004. These comments will be call the "Noon Concurrence." The man is doing everything right; there is nothing to rebut. Manufacturing straw issues, solely for the sake of argument, would serve no useful purpose. Any CEO can get good press by donating money or spending lavishly for advertisements. Those on the receiving end will always have good things to say about him. The CEO (or politician) who earns praise from the Employee Advocate has achieved something that money cannot buy.

Mr. Anderson covered his steps to reduce debt, sell merchant plants, end speculative derivatives trading, and sell all assets in some countries. These were all good moves, as was taking the loss in 2003. The loss was there; it had to be taken some time.

Conference Call with Paul Anderson

On maintaining the dividend, Mr. Anderson said "We're not looking to reward the day traders, the hedge funds and the people who have taken a short position against the stock. We're going to reward the people who have held DUK shares for years — the employees, the retirees, the people with stock in their 401K programs."

That statement sums up the difference between Paul Anderson and the former chairman and CEO. All the mistakes over the past seven years were made in an attempt to curry favor with day traders and speculators. Everything was phony. Duke peddled a phony pension plan, phony health care, phony earnings, phony ethics policy, phony business plan, and made phony promises to investors. A sham cannot run indefinitely. It will always collapse under its own weight.

The past policies were based on greed and deception; failure was inevitable. Spin doctoring and sound bites will not save a rotten business anymore than they will save a rotten political administration.

One only has to look at the model for Duke’s past escapades; it was Enron!

Mr. Anderson wants to eliminate layers of management and simplify the organization. He is taking the actions to solve problems that employees have complained about for decades. How is Mr. Anderson able to address problems that no one else ever could? He is the first CEO to ever listen to the employees.

The former CEO never missed an opportunity to grandstand. He never met a media event that he didn’t like. He pumped out the same propaganda to financial analysts, reporters, industry groups, and anywhere else he could get his foot in the door. In a really desperate attempt to repeal the laws of economics, moronic ads were placed in the Wall Street Journal. In the end, all the rhetoric changed nothing. Refusing to see the truth does not make it go away.

In contrast to the past media circus, Mr. Anderson did not cater to reporters and analysts. He spent his time doing his homework. He was exchanging e-mail with employees even before his present position became official. When he took his present role, he knew what the problems were. He was able to hit the ground running.

The past CEO wasted a lot of energy denying problems and trying to prove that he was right and everyone else was wrong. Mr. Anderson is not carrying the baggage of culpability. He caused none of the problems; he is only fixing them.

A question was asked about credit rating agencies. Mr. Anderson said that he is going to meet with the agencies. There is a big difference between then and now. It is one thing to meet with agencies and analysts and answer their questions. It is a different matter to spend the bulk of one’s energy courting, catering, promising, and spinning analysts. In short, if your business is sound and you know it, it is immaterial what analysts think. Their influence is very short term. If the business is sound, the analysts will eventually take notice of it. The traveling media road show of the past should have been a warning flag to all.

In answering a question about executive management, Mr. Anderson said that the team is smaller than it was and may get even smaller. Finance and risk functions have been consolidated. That is prudent now that derivative trading no longer accounts for fifty percent of revenues!

RISK

It was also mentioned that a Duke aircraft is up for sale. Mr. Anderson said that he knew the aircraft issue was a sore point with a number of employees. How did he know this? He asked. He asked, he listened, and he followed through.

This question was e-mailed: “Why is the price of Duke stock the most important thing?” The answer was that the sole focus in not on the day-to-day movement of stock price. This is true now, but it was not true over the past seven years. The former CEO was obsessed with the price of stock. He went as far as to give employees “goals” for the price of stock! This was when he was singing the praises of Enron. He wanted Duke to be more like Enron so the price to earnings ratio of stock would be more like Enron’s.

He did not want a blue chip stock. He wanted a growth stock. The price of such stocks are easier to "talk up." The game for many CEO’s is simple. Pump up the stock price, exercise the options, and repeat.

Duke Sharpens the Ax