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www.DukeEmployees.com - Duke Energy Employee Advocate

Open Forum - Page 4

"We view pensions simply as deferred compensation for services rendered in the past."
- Robert Betts, United Auto Workers president Local 2151 – The New Standard – 4/13/06

Open Forum - November - 2007

Employee Advocate - www.DukeEmployees.com - December 3, 2007

Keith Trent, group executive and chief strategy, policy and regulatory officer, held the November 20 Open Forum at Allen Steam Station in North Carolina. He is not in favor of the Lieberman Warner Bill to cap and trade carbon emissions.

A good rule of thumb is anything that has the name of “Loser” Lieberman on it will be a disaster.

Loser Lieberman

Question Sent In: With Mr. Hauser's and Mr. Turner's comments on the Duke Pension Plans and Simply the Best initiative respectively considered, would senior management reevaluate the Cash Balance Plan for legacy Duke Employees?

Answer: No. There are currently no plans to reconsider the cash balance transition in the legacy Duke pension plan.

Advocate: That answer came as no surprise. Duke Energy schemed and exploited gray areas of the law to get its hands on our pension money. It will never voluntarily let go of it. Our only chance of chance of regaining the full pension value that we have earned is to knock Duke loose from it in federal court.

Duke Energy Cash Balance Lawsuit

Our pension benefits have diminished. Health benefits diminish more each year. Retiree benefits diminish more each year. Duke wants to be “Simply the Best.” But our benefits are on the way to becoming “Simply the Worst.”

Duke Energy Retirees Take an Insurance Hit

Question Sent In: Why did the Company send employee opinion surveys out before all the changes to employees were revealed? Did you plan on the timing? If so, good thing you sent out before we found out about the health insurance. We expected increase but WOW! It was pretty disappointing when you consider the negotiating power the company should have had with additional employee numbers.

Answer: Since 1990, Duke Energy and predecessor companies have surveyed employees every year during the summer months, and this year was no exception…

…Duke Energy successfully negotiated with the various benefits plan providers for lower premiums on fully-insured plans, and for lower administrative fees on the self-insured plans (medical and dental) for 2008 and beyond. Still, rising plan costs result in increases for both employees and the company. You can help manage health care costs by living a healthy lifestyle (by eating right, exercising regularly, etc.) and being a smart health care consumer (by seeking out quality care, getting second opinions on treatments, using generic drugs, when possible, etc.).

Advocate: The last part of the answer seems to suggest that if employees do not use health care services, then they will not cost them anything. It totally evaded the problem of employees getting less benefits as they become more valuable because of more experience. Maybe Duke will use the same line to gloss over the pension losses: “If you never retire, you will not need a pension!"

The latest round of advice for avoiding health care is reminiscent of the booklet Duke displayed in its clinics a few years ago. It encouraged saving money on health care by never going to a doctor!

Executive Health Care

Question Sent In: As stated in a companywide communication distributed in late August by three Chief Officers, Duke Energy has several profound changes, and to anticipate and prepare for these, we must be guided by one principal mission: We will be the best utility in the United States. As stated in the communication, one change that Duke Energy is facing is a major turnover in workforce of retirement eligible employees.

Chris Rolfe stated in the September 18 Open Forum that... the people who come in from college recruiting are probably going to think, look and act differently than people might expect. The world is a much different place-- more diverse, with different points of view. People come to work for different reasons than we did years ago. Mr. Rolfe also said that another strategy is looking at why those 1,000 people leave us every year. A lot of them have only been here 1-3 years. Collectively, there is something about our culture they don’t like.

Tomorrow’s challenges must be successfully addressed with a strong, sustained workforce fleet. Employees of tomorrow are being taught in school that the only way to get ahead in the workforce is by changing employers every 2-4 years. This information aligns with what Mr. Rolfe stated above regarding our present culture, tomorrow’s employees, their different culture, and their different points of view with different reasons for coming to work. I believe this is why members of the workforce leave after only being with us 1-3 years. The employees of tomorrow simply expect more from their employers.

Duke Energy cannot...prepare for a future of technological advances that will transform the industry...without enticing and sustaining an employed workforce fleet capable of addressing the technological advances of tomorrow’s industry. If Duke Energy is serious about becoming the best, then we must entice, employ, and sustain the best. We will not do that by providing simply a competitive benefits programs. We must be above the competition, and at the top of the enticement list should be benefits to maintain and sustain the best field of employees possible. As an employee of 30+ years, I submit the following:

How does Duke Energy plan to become the best utility in the United States when consideration of employees and their benefits are based on simply being competitive?

Answer: There’s no doubt that the talented, creative and dedicated employees of Duke Energy are the key to making the company “Simply the Best.” We attract high-caliber employees, and employee feedback indicates that our compensation and benefits programs are part of what attracts this highly-skilled workforce to Duke Energy. Reinforcing that is our analysis of turnover, which indicates that attrition is not attributable to compensation and benefits.

We benchmark our total rewards (base compensation, incentives, benefits programs, etc.) against those offered by companies similar in size and scope to Duke Energy. And while we strive to offer competitive base compensation, if the company performs at the maximum level, employees’ total rewards packages will pay out well above competitive levels.

While Duke Energy’s turnover is slightly less than both the utility industry as well as the general business average, we’d like to improve in the area of talent retention. With that in mind, we’re studying the drivers of turnover, using information from our annual Employee Opinion Survey, exit interview data and external studies. We’ll use this information to develop approaches to ensure that Duke Energy has the talent it needs for continued success.

Advocate: The company generates endless rhetoric, but refuses to part with an extra dime for benefits. It refuses to return the benefits already taken. As if that weren’t bad enough, Duke continues to reduce the remaining benefits that employees have. “Simply the Best” is merely another trial balloon. Duke will try to lift the balloon with the usual fuel - hot air. When it fails, Duke will move on the next Program of the Month and not miss a beat.

Open Forum - October - 2007

Employee Advocate - www.DukeEmployees.com – October 25, 2007

Jim Turner, group executive; president and chief operating officer, U.S. Franchised Electric & Gas, held the October 16 Open Forum at the Charlotte Customer Service Center. He wants employees to find ways to make Duke Energy “simply the best” utility in the United States.

That’s a reasonable request, since employees receive the top pay in the United States, benefits are the best in the United States, and there are never any layoffs.

But wait a minute!

Compensation is NOT the best in the United States. Some vendors refer to Duke Energy as the “minimum wage company,” and refuse to work at any of its plants. Duke has to take what it can get – often first timers.

Lowest Paid Troopers in the Country

Benefits are NOT the best in the United States, and they keep getting worse. Health benefits really started declining in 1996 as Duke prepared to follow Enron. Benefits continue to erode each year. There used to be no insurance premiums for employees. Now employees and retirees are hit with constantly escalating insurance premiums. Premiums go up, copays go up, and coverage declines.

Duke touted 2008 as the year benefits would be equalized across the company. But Duke always levels down. The most skimpy benefits are chosen as the standard, and everyone else is pulled down to that level. Duke never said the benefits would be “simply the best” in the United States. It said that they would be equalized across the board. If everyone in the company has bare bones benefits, then they are equalized!

Adult orthodontic coverage will be eliminated in 2008. If you need orthodontic work, get it started this year, or pay the total cost. Locally purchased drugs will go from a zero deductible to $100. And we cannot leave out the most treacherous of all benefit reductions – the cash balance plan pension conversion.

There was a time when employees could concentrate on their jobs, with a minimum of outside distractions. They did not have to worry about medical expenses. Duke provide health insurance at no charge. If one worked for 30 years, the health insurance was fully paid for life. Employees did not have to be concerned about making ends meet after retirement. After 30 years, the pension plan paid 60% of salary, averaged over the highest 5 years. There was no need to worry about running out of retirement money; the pension checks rolled in every month.

After Duke Energy tried to clone Enron, employees have plenty to be concerned about. Health insurance becomes less valuable each year and changes constantly. The “lifetime” insurance stops cold at age 65. The cash balance plan is a joke. Many retirees will run out of money shortly after retirement. Many employees no longer give Duke their full attention. They have started outside ventures, in an attempt to offset their benefits losses. Since Duke now only provides “part time” benefits, it is often treated as part time employment.

Many areas are stretched to the limit, due to downsizing. There is never enough time to everything right, so something gets dropped or glossed over. Day to day operations have often been reduced to management by fighting fires. If it has not burst into flames yet, just ignore it. This is not exactly the stuff that “simply the best” utility in the United States is made of.

Employees have won many awards for Duke Energy. The employees’ reward is always a reduction in total compensation and maybe an occasional ice cream cone.

One may try to save on automobile expenses by mixing water with the gas and oil, running slick tires, and adding no antifreeze. But do not expect the car to win any races. It will not be “simply the best” car in the United States!

This is really the Duke Energy “More for Less” program. Duke wants more and more miracles from employees for less and less in total compensation.

Maybe Duke would not have felt it necessary to hide excess profits from the Utility Commission a few years ago if it had not been reducing employee benefits so much. Money that would have normally been paid to benefit plans was pilling up as excess profits.

Duke’s Accounting Practices Troubling

That was when Duke was chasing electric deregulation. The goal was to reduce employees’ compensation to a pittance, while the executives made a killing. That greed driven venture was such a failure that Duke decided to go back to being a simple regulated utility.

But one piece of the puzzle was never put back in place. The employees’ benefits were never adjusted back to parity with the days of pre Enron envy. If fact, Duke keeps cutting total compensation (for employees, not executives). Employees have been jerked around for over a decade. In return for all the grief Duke Energy has given the employees, it feels that they should make it “simply the best” utility in the United States. Good grief!

A way to become “simply the best” utility in the United States: Start treating employees like they are “simply the best” in the United States. One does not do that by reducing total compensation for over 10 years straight and counting.

Jim Turner said that he actually reads the employee opinion survey comments. He said “You learn a lot from the write-in comments. ”

Yes, one can learn a lot from actually reading the comments. Strange as it may seem, that is why employees bothered to write them. Duke has been guilty of paying for employee surveys, and then frantically hiding the results. There has been too much effort put into spinning away any negative findings and attempting to paste smiley faces on all employees.

Here’s one that will blow you socks off: Jim Turner said “I am asking all of my direct reports to read all of the comments from their part of the organization, and then we will make a plan to address some of the consistent concerns we see being expressed.”

The Employee Advocate felt a little light headed from learning that the employees’ comments are even being read. To learn that some of the comments may even be acted upon is enough to make one swoon!

Employee Opinion Survey Transparency

The attempt to push through a rate increase was discussed. Duke Energy was not able to steam-roll the North Carolina Utilities Commission.

Attempted Rate Hike Leads to Pension Questions!

Several question were sent in about soliciting employees for donations.

Here is part of Duke’s answer: “However, employees aren’t required to participate in these events and that decision will not have a negative impact from an employment perspective. A review is currently underway to re-evaluate the company’s position on charitable giving to determine if changes should be made to the organizations for which we solicit and our policy regarding employee involvement.”

Over the years, there have been many strong arm tactics used by Duke Energy to extract donation from employees. Non contributors have been called in for one on one meetings, and asked why they did not donate anything. If goals were not met, those who contributed would be called in and pressured to donate more. Supervisors have been instructed that they WOULD donate more. Duke used to boast that it only supported one charitable agency. Nowadays, employees are peppered with a variety of solicitations. Is it any wonder that the whole subject leaves a bad taste in employees’ mouths? The Employee Advocate feels that it should be illegal for corporations to solicit money from employees for any reason. There is too much potential for abuse. Any donations should be made outside the company.

Why should those rolling in millions of dollars be able to dictate to employees how much money they will give and to whom? Many employees are already living on the ragged edge, and do not need to be bombarded with constant solicitations.

Getty Trust Head Resigns Amid Investigations

Open Forum – September - 2007

Employee Advocate - www.DukeEmployees.com - September 26, 2007

CAO Chris Rolfe held the September 18 Open Forum at Zimmer Generating Station in Ohio. He said that injuries have increased during the summer. How can this be when Duke Energy has a nifty program, touted to eliminate all injuries, sickness, and deaths?

Resurrecting Past Failures

Addressing employee attrition, Mr. Rolfe said “Another strategy is looking at why those 1,000 people leave us every year. A lot of them have only been here 1-3 years. Collectively, there is something about our culture they don’t like.”

Eureka! The man is on to something! Duke Energy is getting what it asked for in 1997. Duke converted the pension to a cash balance plan for the express purpose of benefiting the “young, mobile employee.” Duke stopped rewarding years of service. Providing benefits on the cheap encourages young workers to work for Duke only long enough to get enough experience to land a better job. They are young, and working for only 1-3 years is certainly being mobile. Duke Energy broke its covenant with the employees who built the company. It demonstrated no regard for loyal employees. Duke wanted cheap, fly-by-night workers, and baby, that’s what it got! Enjoy, enjoy, enjoy! And remember, this is what Duke Energy asked for.

An employee wanted to know why he never sees any opinion survey results. He was told that the results would be posted soon. Expect that to be Spin City.

2007 Employee Opinion Survey

Open Forum - August 2007

Employee Advocate - www.DukeEmployees.com - September 10, 2007

CFO David Hauser held the August 29 Open Forum at Oconee Nuclear Station in South Carolina.

Two worries were cited. The first one was the North Carolina Rate Review.

Duke Energy is taking a "novel" approach to making more money on electricity. This time it's just going to ask the utility commission for an increase! That will probably work out better that the last time, when Duke rolled its own rate increase.

How does an utility roll its own rate increase?

Simply make more money than the law allows, and hide the excess profits.

Duke Takes a Hit in South Carolina

The second worry mentioned was the Future of electric competition in Ohio.

The Ohio deregulation time bomb is set to detonate in 2008. That’s when the deregulated price control plans will end. These plans were hastily enacted a few years ago to give the ratepayers some relief from the skyrocketing deregulated rates. But the disastrous effects of deregulation can only be postponed. The price for this folly must eventually be paid.

The Electric Deregulation Nightmare

Mr. Hauser understands that closing and selling trading operations reduced the company’s risk. He’s not convinced that utility companies can beat established brokerages at trading energy. Remember that Mr. Hauser did not create the past energy trading problems. To the contrary, he helped Paul Anderson clean up the mess created by others.

The CFO said “We have the strongest balance sheet in the industry. We’re dealing from a position of strength.”

That is an outstanding improvement from a few years ago, but the prosperity never seems to trickle down to the employees. Duke was prospering when it chose to reduce the employees’ pensions and retirement health care benefits. That was the beginning of all of Duke’s many problems. The financial problems have been fixed, but the workers still face bleak retirement futures.

Question Sent In: I'm a represented employee with 1,040 hours of sick leave. I hear rumors that indicate changes -- where me and others could lose these hours. Is this being discussed? If so, will we be compensated?

Answer: As part of the company’s ongoing integration, a number of policy changes are under consideration for 2008, so stay tuned. Any changes related to paid-time-off affecting union employees will be negotiated and communicated prior to implementation.

Advocate: That answer certainly left the company with a lot of wiggle room! Long-term employees have been wondering when Duke would snatch back that benefit also. Taking employees’ earned sick time falls right in with cash balance plans and “health benefits restructuring.” There is no compensation; it’s all TAKE. Companies looking to strip employees of their benefits typically take all of the employees accumulated sick allowance. The earned sick allowance is then replaced by a few “all-purpose days” per year to cover all time off. The employee who has used all his sick time as soon as it was available, will get just as many “all-purpose days” as the employee with the maximum time built up. In effect, prudent employees are penalized for not using their sick time as soon as possible.

Employees who trust the company to abide by its own rules often end up with nothing these days. They are already penalized on sick time, as it is. You will never see anyone with 1,041 sick hours. After 1,040 hours, employees’ lose the time that would have been accumulated. When employees leave the company, no compensation for unused sick time is given. Sick leave, like all other benefits, is not something the company gives away for free. It must be earned by being on the job a certain percentage of the time. It is part of your deferred compensation. There are limits on how much sick time can be earned, but no limits on how much can be lost. Going to “all-purpose days” only hastens the loss. It is a cash balance plan for sick days. Employees work for years to earn specific benefits. Then the most unscrupulous companies, who have already benefited from the employees’ labor, find ways to not pay the deferred compensation.

Question Sent In: I have several friends who have retired from Duke. Over the years that they have been retired, their insurance coverage on their families has increased in price, but there has been no adjustments in their pension amounts. Is any consideration ever given to having a cost of living increase? The retirement account grows each year on interest alone.

Answer: There are currently no plans to offer a cost of living increase to retirees.

Advocate: There is no wiggle room here; the answer is a flat “NO.” Even employees that were able to retire when the company had a real pension plan, still get chiseled at every turn. With no cost of living increases, the value of their pensions diminishes each year. As the value of the pension shrinks, the “fully paid for life” health insurance costs more each year.

Again, retirees who have met all conditions to earn specific benefits, are being denied what they were promised. Duke gets their labor up-front, then shortchanges the employees as they go out the door. Bon voyage!

Open Forum - July 2007

Employee Advocate - www.DukeEmployees.com - July 31, 2007

There was no July Open Forum, but answers were posted to questions sent in.

Question Sent In: Has the money from the old Duke retirement plan and the old Duke insurance plan been used to pay the salaries, bonuses and incentives given to the executives?

Answer: No, the assets held in trust to pay benefits from the Duke Energy Retirement Cash Balance Plan (the RCBP or pension fund) cannot be used for any purpose other than to pay benefits for eligible participants. With respect to health coverage available to active and retired employees, Duke Energy continues to share these costs with participants – and where possible, offer choices that allow you to select health coverage that’s appropriate for you and your family. Company dollars budgeted for health coverage are not diverted to executive compensation.

Advocate: The question went straight to the point. No sugarcoating here! The answer is technically correct. Money was not taken out of the plan because all the money was never put into the plan! After the cash balance plan conversion, Duke went for years without putting any money into the pension plan. In the years prior to the conversion, Duke put millions of dollars into the fund annually. Duke gained hundreds of millions of dollars by keeping money that would have otherwise gone to pay employees' pensions under the old plan. This money could have been spent on anything from executives bonuses to jet aircraft. It’s the same with health insurance. For all practical purposes, money no longer contributed to the plans is equivalent to money taken out of the plans. It is money that Duke Energy promised to you, but does not want to pay.

For the employee with a shorted pension check, it does not matter if the money was taken out of the plan or just never put into the plan. It still amounts to a smaller pension.

Big Pensions for Executives; Big Losses for Employees

Duke Energy benefited from decades of labor by employees, but did not want to pay their full deferred compensation for it. Suppose an individual collected from people for years, promising some future payoff, and did not deliver. He would likely be charged with fraud and sent to prison.

While Executives See Their Pensions Grow, Regular Workers See Their Benefits Shrink

Open Forum - June 2007

Employee Advocate - www.DukeEmployees.com - July 23, 2007

Tom O'Connor held the June 12 Open Forum in Plainfield. He talked about the low risk of the unregulated businesses.

There was a time when unregulated was a Duke code word for crapshoot. Duke Energy has made great strides in cleaning up its act since the executive day traders have been purged from the company. Duke Energy has renounced all its past transgressions – except one. Duke still clings for dear life to the cash balance plan. The cash balance conversion was the precursor of all of the other financially shaky and lawsuit attracting mistakes.

Question Sent In: Are there any plans in the near future for Duke Energy to provide 100 percent medical insurance coverage at no cost for folks retiring? (This was one of the selling points made to me when I was deciding between Duke and TVA back in 1973). If so, when will this begin and will it apply to folks already retired?

Answer: No. At this time there are no plans to provide retiree medical coverage free of charge to future retirees.

Advocate: Duke used the term “free of charge,” but that is not to be mistaken with “free” insurance. To earn fully paid insurance for life, an employees had to deliver 30 years of labor. There never was anything free. To earn the maximum pension benefits also took 30 years of labor.

One can readily see the problem when the rules are changes after an employee has worked 25 years. After paying almost the full price for the insurance, the employee will not receive it. And at 65, all insurance is cut off!

It’s the same deal with the pension. In some cases, Duke collected most of the pension price from the employee, but reneged on delivering its end of the bargain.

Question Sent In: When I started to work at Duke in 1973, the policy stated that you could retire with your medical benefits paid by the company at age 51 with 30 years of service. I know the costs of medical benefits has increased, but it seems to me that if a person puts in 30 or more years in with a company, they could be left on the group rate plan.

Answer: Retirees may be eligible for subsidies (for the group retiree plans) or health reimbursement accounts based on their age and/or years of service at the time of their retirement -- based on the provisions of the group retiree plans in effect at the time of retirement. We are currently in the process of integrating health and insurance benefits across the company, including retiree medical plan coverage, and will share details when they become available.

Advocate: Those were the employees who really lost out. They once would have had a lifetime pension and medical coverage at age 51. A few at an even earlier age! They went from retiring at 51, or less, to retiring at 65, with zero medical insurance.

If a person gets cleaned out in a poker game, sometimes the house will give him "walking money." That's just barely enough money to get home on. Consider the insurance benefits we once had, and what we have now. The above employee has been cleaned out and is pleading with Duke for walking money!

The early retirement subsidy was not a handout. It was also paid for by 30 years of labor. It’s easy to pay a few megabuck compensation, when thousands have been shortchanged.

Open Forum - May 2007

Employee Advocate - www.DukeEmployees.com – June 8, 2007

Duke Energy Chairman and CEO Jim Rogers held the May 15 Open Forum in Charlotte. He mentioned that there have been no fatalities this year. Things are starting off much better than in 1998. Duke Energy ran its propaganda mill full blast for years, boasting that it was going to have Zero Injuries by 1998. At the very beginning of 1998, a Duke Energy employee was killed on the job.

Employees will receive five percent extra if there are no fatalities this year. The Employee Advocate has trouble understanding the rational behind the no fatality bonus. Does senior management believe that employees will kill each other off unless they are paid extra not to? If that is the case, what will happen if there should be a fatality? Will the loss of the bonus prospect open the fatality flood-gates?

Jim Rogers said that he does not think the company has the right balance between employees and contractors.

Evidently not, because new “voluntary severance opportunities” are being offered to some employees.

Open Forum - April 2007

Employee Advocate - www.DukeEmployees.com - May 25, 2007

No April Open Forum was held at a physical location, but answers to questions sent in were posted on April 19.

An employee noted that Jim Rogers received in excess of $20 million when Cinergy merged with Duke. The question was did he stand to reap other such windfalls?

The company invited the employee to dig up the information for himself.

An employee, aged 55, with 35 years of service could not make any sense out of Duke’s retirement benefits projections. His projected lump sum payout keeps decreasing each year.

Duke suggested calling the HR Service Center.

Lots of luck. If you get through the phone mail maze, you can try to get your question answered. You can tell when you get into an area where the reps have been programmed not to give out any information. They will pretend not to understand the question, answer questions that were not asked, and promise follow-up material that never arrives.

Many employees have complained about the on-line retirement projection tools. Employees have put in identical numbers at different times, and the projections were entirely different.

The biggest joke about the cash balance plan was the phony reasons given for the conversion. Duke said that employees did not value the old plan and that the cash balance plan was easier to understand! The opposite is true. It would be difficult to find employees who value the cash balance plan, and even more difficult to find anyone who truly understands it.

Do not be depressed about not fully understanding the cash balance plan. It was designed precisely for you not to understand. There are ERISA attorneys and actuaries who cannot duplicate Duke’s pension numbers!

Open Forum - March 2007

Employee Advocate - www.DukeEmployees.com – April 11, 2007

Duke Energy CFO David Hauser held the March 22 Open Forum in Cincinnati. You may recall when Duke’s many get rich quick schemes started falling apart that some executive positions had to be “restructured.” It was during that time that Mr. Hauser was temporarily assigned the position of chief financial officer. It did not take the company long to figure out that he should have the job permanently.

David Hauser worked with then new CEO Paul Anderson to dig Duke Energy out from under the burdens caused by years of mismanagement and Enron envy. It is easy to pick out the date that Duke Energy began its downhill slide to near-disaster. It started on January 1, 1997, with the the cash balance pension plan conversion.

The company’s risky ventures were to be bankrolled with the employees’ pensions. But the employees were never to share in any returns. Even if the flaky schemes had been wildly successful, all the workers would have received would have been the same pension losses. But the shell games turned out to be anything but successful.

Most of the day trading type executives and their sympathizers have been weeded out of the company. Paul Anderson was brought back as CEO to be part of the solution to the crises. David Hauser became part of the solution as CFO. Jim Rogers has become part of the solution as the latest CEO.

One might think that with most of the bad actors out and with more stable management in, that all problems are solved. That is not the case. The original problem, the cash balance plan, is alive and well. And, it will be forced upon former Cinergy employees by and by.

As long as management continues to cling to the cash balance plan blunder, a clean break can never be made the many past failures. One can shout “Duke Energy” from the mountaintops, but “Enron” will still echo back. The cash balance plan will continue to spread like the cancer that it is, leaving destroyed lives and misery in its wake.

Open Forum - February 2007

Employee Advocate - www.DukeEmployees.com – March 15, 2007

Jim Turner, group executive and president of U.S. Franchised Electric & Gas, held the Feb. 13 Open Forum at Catawba Nuclear Station in South Carolina.

Several people had written in about what to do about bureaucracy and cumbersome processes. Employees were reminded that at the January Open Forum Jim Rogers announced a process to combat the growing bureaucratic nightmare. Send your examples of burdensome processes to the chief administrative officer. He will assign an owner to develop a more streamlined approach.

Jim Rogers offers a refreshing break from the management of Duke’s darkest days. Then, when an employee mentioned a problem at the Noon Meeting, all they ever heard were reason why nothing could be done about it. If in 1926, J. P. Featherbrain made a rule that all company mail must be written with goose quills, well, rules are rules! Nothing could possibly change. Absolutely nothing could ever change that would benefit employees. There was one exception to the no-change rule. Big time changes could be made to benefits, as long as the money went to the executives.

Maybe a few white elephants will be slaughtered in the move to simplify things. Some process owners have made their processes more and more complicated each year. They have endeavored to cloak themselves with an aura of being irreplaceable. They also hope the extra complication will prevent anyone from noticing that their process has no value.

The most complicated processes of all are the pseudo processes. You could take anyone off the street, have them read through one of these pseudo processes, and they would tell you that it would be impossible for it to work. It is that obvious that they are completely unworkable. Yet, someone cobbled these things together and sold them to someone else. As usual, one group had zero input – those stuck with trying to make the hackneyed process work!

The real fun begins when the interlopers tell outside agencies how great their pseudo processes work. When outsiders come to observer these pseudo processes in action, the interlopers sweat bullets. They hope the observers will not kick the tires too hard on the pseudo process jalopy!

Apparently the horn-blowers were all competing to outshine each other in designing the most elaborate process. It never occurred to anyone to build a simple system that actually worked. Now, Jim Rogers has inherited a plethora of Rube Goldberg machines.

Open Forum – January 2007

Employee Advocate - www.DukeEmployees.com – January 19, 2007

Duke Energy Chairman and CEO Jim Rogers held the January 15 Open Forum in Charlotte. There was no December Open Forum.

Duke Energy has washed its hands of its day-trading past. The days of chasing every speculative bubble that came along did not work out too well. The biggest gain from imitating Enron was in the number of lawsuits filed against the company.

Jim Rogers sees a low-risk business with 4 to 6 percent steady earnings and a 4 percent dividend yield.

With 85 percent of projected earnings before interest and taxes coming from utilities, we are rolling back 10 years. We are getting back to where we were before the decade of greed, before Enron envy, and before the cash balance plan. Except, we are still stuck with the cash balance plan.

The company will increase employee incentive bonuses by 5 percent if there are no fatalities in 2007. Duke Energy once proclaimed that there would be zero injuries by 1998. There was a fatality in early 1998.

In 2004, then COO Fred Fowler said all accidents, sickness, and fatalities would be eliminated. He predictably blew that one on all counts.

Resurrecting Past Failures

The new safety goal is more reasonable than past outlandish predictions. Even though Duke Energy had five fatalities in 2006, it is possible to go a year with none. It will not be easy to accomplish, since many of Duke’s thousands of employees do very dangerous work.

He may even pull it off, and employees certainly will not complain about an additional 5 percent in incentive pay. But look what the safety reward is really saying: “The company knows that you employees will go out and deliberately kill your fool selves, unless we pay you extra not to!”

Duke Energy has tried to use peer pressure to prevent accidents. If one employee gets hurt, none get a candy bar. The hurt employee is the goat (that will teach him not to have accidents). This tactic will not work too well for fatalities. The dead worker will not really care what anyone thinks about it, and will not miss the 5 percent incentive for staying alive.

Duke Energy has already tried a 5 percent management penalty if any fatalities occur during the year. Now it has come to paying employees not to get killed.

If there are no fatalities at Duke Energy in 2007, the overwhelming reason will be pure luck. Luck can never be discounted. It has been said that anyone can be good, but not everyone can be lucky.

Employees have already begun speculating on how Duke will try to get out of paying the extra 5 percent.

What if one employee dies on the job of natural causes? Will Duke say “A fatalities is a fatality, better luck next year”?

What if one employee dies on his way to work? Will Duke say “He was on his way to work, so that counts as an on the job fatality”?

What if there is a suicide at work? That would not be an accidental death; it would be most deliberate.

What if there is a homicide at work? That too would not be accidental.

What if an employee is clinically dead, but is resuscitated? Would a near death experience become a near 5 percent incentive experience?

What if a plant visitor dies on the job site? Will the visitor become an employee for incentive purposes?

Employees know from experience that when Duke Energy starts looking for loopholes, no question is too farfetched!

Do Duke Energy employees seem distrustful of senior management? Would Duke Energy senior management try to hoodwink employees? Consider that Duke Energy sent statements to employees for years telling them exactly how much retirement benefits they would receive. Then the pension plan was raided for the supposed benefit of some mythical “mobile employee.”

Having to bribe employees not to get killed is a lot like trading pollution credits; something’s just wrong with the picture.

Jim Rogers said that when needlessly complicated processes are encountered, to write the chief administrative officer and to copy him. Expect a full inbox.

Open Forum - November 2006

Employee Advocate - www.DukeEmployees.com - December 4, 2006

Duke Energy President and CEO Jim Rogers hosted the Nov. 15 Open Forum in Cincinnati. He is questioning the wisdom of continuing to follow the 15-year trend to outsourcing. This may be his defining moment.

The two things employees despise most about Duke Energy is the cash balance plan pension reduction and the loss of health care benefits. The third most hated policy is the mad rush to outsource everything.

Many workers with 20 or 30 years experience have suddenly found that they no longer have jobs with Duke Energy. Their jobs had been outsourced and they were not eligible for any separation benefits. These laid off employees were given the “opportunity” to go to work for some fly-by-night contractor for less compensation. What a slap in the face to the very people who had built the company by doing the hard, dirty, and dangerous work.

Jim Rogers has come to the conclusion that outsourcing may not be all that it is cracked up to be. He has been informed that contractor costs have risen 20 to 25 percent in only the past two years. The poor safety record of contractors is another problem. If Duke Energy continues to lose expertise, it will have no choice but to hire even more contractors.

A company without experienced employees, is at the mercy of the contractor. It will pay the going rate for contract employees or the work will not be performed. Enron was the ultimate outsourcer. All Enron owned was the business, and even that turned out to be phony! Duke Energy paid a heavy price to learn that trying to be like Enron was not such a great idea.

The companies that shipped their jobs overseas are also finding out that there was a catch to it. The price of fixing all the mistakes is often greater than the initial saving from hiring cheap foreign workers.

Duke Energy blew its cost estimate for building coal plants at Cliffside. The original estimate was $2 billion. When the actual cost of contractors was included, the estimate came to $3 billion!

Jim Rogers said "We're moving into a period where there will be a premium on skilled labor. Contractors may well try to exploit us as the demand for skilled labor becomes even greater than the supply over the next five or 10 years. I'm going to ask people in our company, 'Do we have the balance right between contractors and employees?'…Maybe in the non-core businesses, we can use contractors. But in the core businesses, we may need to change our way of thinking."

Jim Rogers has said that he cannot affect employees’ morale. But decisions such as whether to outsource or not have a profound effect on morale. Employees outsourced by Duke Energy still carry a grudge over what they consider to be unfair treatment. The former employee who lost pension benefits and was then outsourced is really not a happy camper.

Duke Energy once had a world class construction team. Duke Energy was the only company that did NOT outsource the construction of its nuclear plants. Duke Energy employees built every nuclear plant in the system and for less cost than any competitor. As Duke Energy plans to build more nuclear plants, it can no longer rely on the construction team. It no longer exists.

Jim Rogers found that Duke Energy spends $1 billion a year for corporate support. He’s thinking that this may be a little on the high side. Hint: Look at programmatic support. For every program that is truly a help, there are nine programs that are a hindrance. Programs are constantly being implemented, but none ever goes away. The owners of these empires spend much time and effort in justifying their existence.

The Bush administration’s ultimate goal is to hand everything to corporate CEO’s on a platter. Even so, Mr. Rogers recognizes that the industry may be better off with the Democrats in control of Congress.

Mr. Rogers is very much aware of the bureaucracy burden at Duke Energy and looks to find time to work on it. All employees will be eager to help slay the bureaucracy beast. Even though Mr. Rogers claims that he cannot improve morale, eliminating white elephant programs cannot help but boost morale. All he has to do is lift the programmatic support rock and watch what crawls out.

Jim Rogers said “I've gone to all our nuclear stations at least twice in the last seven months, and one of the things I've learned is that many of the people who are now running those plants were there for the construction. They have unique insight into the operation of the facilities. If we're going to build new coal and nuclear plants, we need a generation of people working at the construction site who can transition into the operations side of those facilities. That's a good model.”

Apparently Mr. Rogers is aware that no one will take better care of the plants than the people who built them. That is unless these employees are “sold” to a vendor company. When that happens, the former employees owe no allegiance to Duke Energy and all bets are off.

Mr. Rogers said “We've got to trust our people. Most of our policies are based on exceptions. If somebody does something wrong, we write 15 pages of policy about it. While 98 percent of the people do the right thing, we write the policy for the 2 percent. We need to make sure that we train our people, educate our people and assure ourselves that we have the shared values.”

Jim Rogers just exposed another big problem at Duke Energy – the belief that employees can be micro managed by writing procedures to cover ever conceivable situation. It cannot be done. Those trying to cover all bases do not know all possible scenarios. They can only beat the last incident to death. The irony is that all the “conservative” precautions only invite more problems. Documents become so cluttered with footnotes, exceptions, and “if statements” that they set employees up for even more disasters.

It turns into a big game. Management writes volumes of programs and documents to micro manage employees. Employees use these very documents to punish management by hopelessly clogging up the system with them. Employees have been burdened with these programmatic games for so long that they have become experts at using them against the company. If Duke Energy were to stop trying to manipulate the employees with a multitude of inane programs, employees would have no incentive to continue playing the paper game. Presto! Morale would be improved and everyone’s job would be easier.

The Problem With PIP’s

A case in point is the Problem Investigation Program (PIP). Duke Energy ran fine for decades without PIP’s. Now it cannot get enough of them. Employees are encouraged to write a PIP for any and all problems, great and small. PIP’s have been written because someone did not like the temperature the room thermostat was set on. PIP wars break out over nothing. One group writes a PIP on another group. That group lies in wait for an opportunity to blast the aggressor group with a counter PIP. Answering a PIP provides another opportunity to lob a grenade back at the PIP originator. Thousand of PIP’s are written each year and management screams for even more PIP’s to be written!

Then the worst thing possible happened. The Institute of Nuclear Power Operations (INPO) made a favorable comment about the use of PIP’s. That’s all it took. Management types were now really falling all over themselves to promote writing more and more PIP’s. PIP’s became Frankenstein’s monster. PIP’s did not serve employees; employees lived to serve PIP’s. Empires have been built on sorting, cataloging, and promoting PIP’s. Managers, locked in power struggles with other managers, use PIP’s as weapons. One manager will try to beat another manager into submission by blasting him with endless PIP’s. It is a wonder that any actual work ever gets done!

PIP’s were originally sold to employees as “no fault” reporting vehicles. Employees were told that PIP’s were their friends. Now PIP’s are used as justification to “write up” workers. Employees are regularly beat over the head with PIP’s. Employee evaluations are now an opportunity for supervisors to rehash any PIP’s written.

Recently, a very strange thing happened. INPO finally got wise to the PIP game. It noted that Duke Energy employees are so engrossed in writing and answering PIP’s that the actual problems seldom get solved! The actual problems became insignificant. Everyone lived solely to feed the PIP system. It was immaterial if any problems were ever solved – just keep writing more PIP’s!

Writing PIP’s may seem like a way for employees to get problems out in the open for all to see, but it does not always work that way. What about PIP’s that are not politically correct or PIP’s that step on sensitive toes? Those with sufficient clearance can whitewash them. People with more PIP system clearance than the average employee have erased original PIP’s and turned them completely around to suit their own agenda!

Employees have said that they have written PIP’s only to have them vanished from the system without leaving a trace. Is it any wonder that PIP’s are viewed as the enemy of all employees?

Question: Will Duke take this opportunity to right the wrong of going from a pension plan to a cash balance plan?

Answer: There are no plans to re-look at transitioning Duke Energy from a final average pay plan to a cash balance plan -- either as a result of the merger with Cinergy or the spinoff of Spectra Energy.

Advocate: That was a concise question and a blunt answer. Of course Duke Energy has no interest in giving employees their pension benefits back. The only chance to recover your lost pension benefits is to join the ongoing litigation. Duke Energy has made it clear that it is not parting with a dime. Unbelievably, some employees think that if they just keep twiddling their thumbs, Duke will eventually return their pensions. The odds are greater that they will catch the Easter Bunny in the act of laying some nice Easter eggs.

Duke Energy Cash Balance Lawsuit

Open Forum - October 2006

Employee Advocate - www.DukeEmployees.com - November 6, 2006

At the October 17 Open Forum, in Charlotte, NC, Duke Energy President and CEO Jim Rogers admitted the safety record is not good. Could it be that the boastful prediction that all accidents, injuries, and fatalities would be eliminated by the Safety Steering Committee was dead wrong? Could it be that all the tacky safety enhancement programs, gimmicks, greeds, and propaganda are really worthless?

Resurrecting Past Failures

Programs that do nothing to enhance safety are only an extra burden and irritation on the backs of employees. If anything, adding unnecessary burdens and irritations will only make the job more unsafe. And goofy programs send the message that safety is really a joke at Duke Energy. Any sane person knows that all accidents, injuries, and fatalities will never be eliminated. Saturating the job with tons of safety cards to carry around and sign helps no one.

Armchair quarterbacks can never tell employees how to be safe, because they do not know how. Making unrealistic safety projections is just like promising shareholders fanciful profits; failure is guaranteed. There is no need for Jim Rogers to be shackled forever to the flaky ideas of the past. Now would be an excellent time to dump all the ineffective safety programs.

Does this mean that Duke Energy should take no interest in safety? No. It means to cut the hype and get realistic.

  1. Ask the employees what is needed to improve safety.

  2. Listen to what is said.

  3. Act on the feedback.

  4. Cut out the garbage!

Will these steps eliminate all accidents, injuries, and fatalities? Of course not and neither will anything else. But it will be a realistic approach to improving safety. And it will demonstrate to employees that safety enhancement is more than just a running joke. Fatalities have occurred on Duke Energy jobs because management refused to listen to warnings given by employees. Stop paying people to sit around dreaming up safety jingles and start listening!

Paul Anderson made an excellent start to improving safety. But he allowed the initiative to be hijacked by the drum beaters and glory seekers. If Jim Rogers does not make a break with the sorry past early on, the opportunity will be lost forever. If it becomes evident that he is only going to “stay the course,” he will eventually be tuned out by everyone. Once employees tune you out, you can never get tuned back in.

‘Earth-shattering’ Safety Changes

Jim Rogers recognized the three nuclear stations for achieving the highest rating given by the Institute of Nuclear Power Operations. What do employees get for such performance? They get cash balance pension plans and reduced retirement health coverage.

The push is now on to get former Cinergy employees to volunteer for the Duke Energy cash balance plan. Jim Rogers did the right thing by allowing Cinergy employees a choice of keeping their promised pension or getting ripped off with a cash balance plan. Now Duke Energy is trying to sucker former Cinergy employees into its cash balance plan. There may actually be some weak enough to volunteer for the cash balance plan. But when they retiree and run out of money, they will rue the day that they gave up their real pensions.

You can dismiss the propaganda that cash balance plans benefit the “young, mobile worker.” Last year, the Government Accountability Office (GAO) determined that most workers lose money with a cash balance conversion. Again, employees of almost all age groups lose money with cash balance plans.

Cash Balance Plans Equal Smaller Pensions

The GAO was on to the injustice of cash balance plans back in 2000. It persuaded the IRS to suspended approving cash balance plans.

Stop Approval of Cash Balance Pension Plans

In the latest cash balance plan action, a federal court ruled the JP Morgan Chase cash balance plan to be age discriminatory.

Chase Cash Balance Plan Ruled Age Discriminatory

Some CEO’s must have a vestige of a conscience left. Some have voluntarily given up part of their excessive pensions. It does not happen very often. Usually CEO’s grub until the very end for the very last nickel. And you had better watch the silverware when they leave!

CEO Gives Up Part of Excessive Pension

Question: I get concerned about safety. As we streamline our operations, are people too pressured to get the job done safely? Are we too stressed?

Jim Rogers: ...Is it really a case of working with fewer people, or not taking the proper time to focus on safety?...

Advocate: It may be a combination of both. At any rate, wearing silly hard hat stickers and filling out mind numbing “orange cards” is not likely to improve the situation. Here is another case of an employee bringing up a real problem, only to have it spun away.

Question: You talked about the money we're putting into hard assets. That's wonderful. What are your plans about people assets?

Jim Rogers: ...We need to have good compensation; we need to pay attention to the issues; we need to give people an opportunity to develop -- and encourage them to develop -- within the company...

Advocate: “Good compensation” is only good if one actually collects it! Some employees were lured into staying with Duke Energy for decades with the promise of certain deferred compensation. This deferred compensation was to be paid in the form of pensions and fully-paid health care for life. The cash balance conversion cut pensions drastically. Employees still get lifetime health care, provided they die at age 65. And the fully-paid part of the deal also vanished. New employees are advised to get all compensation up-front. With Duke Energy, deferred compensation often means deprived compensation.

Jim Rogers said “The cost of our service is a small part of every family's disposable income.”

That is not completely true. Energy is not a small part of every family's disposable income. For some families, the energy bill consumes a very large portion of their meager incomes. When deregulated prices quadruple, as they did in California, some families must choose between energy or food.

Power Executives Score Big Bonuses

There was a question about volunteering for a layoff. Just be sure you know what you are signing away for a few dollars in cash! You know things are not going too well when employees look at getting laid off as an opportunity!

Late 2006 Duke Energy Waiver

Jim Rogers said if workers are outsourced, “our intent is to provide employees with the maximum number of choices.”

There have been two choices in the past. Go to work for a vendor company for less compensation or go home with no severance benefits.

Question: Why were all legacy non-union Cinergy employees who participate in the Cinergy Traditional Pension Program given the option to remain in the traditional program? If they are allowed this option, why can't legacy Duke Power employees be given this option?

Jim Rogers said that voluntary pension transitions are allowed. The hitch is the transitions are into cash balance plans, not out of them! You see, when employees migrate into the cash balance plan, it’s money in Duke’s pocket. Of course the money comes from the employees’ future pension payments. If Duke Energy allowed employees to opt out of the cash balance plan, there would be very few left in it. Then all the workers going back into the promised pension plan would have to be reimbursed for the money taken from them.

When Duke raided the pension plan, it was playing for keeps. Duke will be happy to take more pension money, but has no intention of giving any back. The only hope for recovering your pension losses is through legal action.

Duke Energy Cash Balance Lawsuit

Open Forum - September 2006

Employee Advocate - www.DukeEmployees.com – October 1, 2006

At the Sept. 15 Open Forum in Charlotte, NC, CEO Jim Rogers said he is making Duke Energy a flatter company. He said that he actually reads the employee survey reports! In the past, executives always claimed that they were giving employees what they asked for. The only problem was that it was never anything that anyone asked for! Employees never asked to lose pension and health benefits.

A more streamlined organization will be an improvement. As it is, it sometimes takes years for management to make a simple decision on anything. Eliminating bureaucracy will also force out executives that only hold ceremonial positions. For too long, figurehead executives have created programs and process to fix problems that they did not have a clue about. You can imagine how successful their “solutions” were.

Retroactively Legalizing Cash Balance Plans

Employee Question Sent In: Our corporate ethics standard includes, "Duke Energy employees are required to comply with the letter and intent of all applicable laws, rules, and regulations, and to act with integrity and in a principled and ethical manner." Our ethics standard goes on to add, "Duke Energy employees must ask questions and gain clarification on the impact of applicable rules prior to acting." The U.S. Constitution, at Article I, Section 9, 3rd clause, says, "No...ex post facto law (i.e. after the fact) shall be passed." The June 2006 Open Forum contained this line regarding pension plans and lobbying: "...we continue to support legislation that would affirm the legality of cash balance plans and establish retrospective and prospective clarity on cash balance conversions." Would you please explain our ethical and legal rationale "...to support legislation that would...establish retrospective...clarity on cash balance conversions?" Supporting those who wish to change the law after the fact appears to challenge both the letter and intent of the U.S. Constitution and our ethics standard. It also appears to be a clear ethical failure to clarify applicable rules prior to acting since we now support those who want to legislate retroactively. I'd be grateful if you'd keep your response at the highest level since this question pertains to fundamental Duke ethics and the highest U.S. legal document.

Anonymous Answer: Duke Energy is committed to strong ethical standards and expects its employees to work with the same standards. The company complies with all applicable laws, including the laws relating to advocating for legislation that management deems is in the company's best interests. The “ex post facto” constitutional provision you are referring to does not apply to pension reform legislation because such legislation is not criminal law and does not have a punitive intent. Accordingly, the company's position is consistent with its standards for ethical and legal behavior.

Advocate: That was a great question. Why did Duke Energy throw money at lobbyists, to influence Congress to retroactively protect it from facing justice for taking employees’ pensions? Duke Energy blithely pointed out that pension legislation is not covered under criminal law. Duke Energy feels that pensions are fair game and that it is immune to prosecution for unethical acts. Duke Energy will split any number of legal hairs for the chance to grab hundreds of millions of dollars from employees’ pensions.

Duke Energy should rejoice because employees do NOT subscribe to the same ethical standards as its executives. The employees’ ethical standards are far, far above those of the greedy executives. If not, Duke Energy would have ceased to exist long ago.

So it is true that “the company's position is consistent with its standards for ethical and legal behavior:” Take money any way you can get it, and try to justify it later by hook or crook!

In answering another question, Duke Energy stated: “In order to be a competitive company that continues to attract and retain talented employees, we know we must offer a benefits package that is competitive as well.”

When Duke Energy offers a competitive pension plan, but decades later declines to deliver the benefits, it really comes out ahead!

Open Forum - August 2006

Employee Advocate – www.DukeEmployees.com – August 31, 2006

Duke Energy President and CEO Jim Rogers hosted the August 23 Open Forum in Charlotte, NC. He said “I’m an iron-in-the-ground type of guy. I don’t like to rely on purchase power. I think regulators don’t want us to rely on purchase power.”

That is a sound approach to running an utility. Just because one has purchased power forward, does not guarantee that it will ever be delivered. The company that owns infrastructure is in a more solid position to meet electrical demands. It was the opposite approach to running the business that brought all the Enron-like problems.

The subject of grid degradation in the Midwest and deregulation came up. Mr. Rogers is in favor of upgrading the gird with digital capability.

Grid degradation is often a byproduct of deregulation. When everyone was tripping all over themselves to buy and sell power, few thought about spending any money on the gird. Trading electricity is useless if it cannot be delivered. The grid is not as flashy as trading, but without it, no electricity flows.

Mr. Rogers is apparently under the impression that the merger is causing all the morale problems at Duke Energy. But for many employees, the merge was a non-event, and it is not the cause of low morale. Morale has been eroded by years of benefit reductions and broken promises. It will never be restored by silly slogans, happy talk, and trinkets.

As Paul Anderson did not cause these problems, Jim Rogers did not cause them. But each day that they try to ignore the issue, they become more and more tainted by it. True, it’s an inherited problem. But it is their problem nonetheless.

Mr. Rogers said “I think this company has an incredible history in supporting the people who work here. Not perfect, but no company is perfect.”

Yes, that was once true. But over the last decade or so, Duke Energy has developed an incredible history of stabbing employees in the back. When a company deliberately plots to take benefits from employees by serendipitous means, and tries to gloss everything over, such action cannot be overlooked.

Mr. Rogers said “At the end of the day, people who work hard and deliver, good things happen to them in an organization.”

That may have been somewhat true once. But now, people who have worked hard and delivered for 30 years find themselves with drastically reduced pensions and no health coverage. Jim Rogers is a clever man. But he is not clever enough to erase the real damage done to employees with a cheap pep talk.

Jim Rogers said “We need to embrace change.”

Employees will embrace change for the better. Employees will never embrace change that only stokes executive greed.

Mr. Rogers said “But the reality is we need to create an environment that trusts people and supports people. We need to do that in a way that differentiates us from every other company.”

No argument here. It’s following the path of greed and trying to be like every other company that caused the problems. Other companies were using cash balance plans to bilk employees out of their pensions. Duke Energy did not have to wallow in the gutter with the other companies. But wallow it did. Duke Energy made a quick gain at the expense of employees, but it has been paying a price for it every since. The debt to employees has not been repaid.

There are still concerns about pension funding. It is prudent for employees to be concerned about the funding, but that is only part of the pension picture. When a cash balance conversion reduces the company’s pension liability to mere pocket change, it easy to be 100% funded or overfunded. The pension may well be 100% funded, but you will still draw precious little when you retire!

Open Forum - July 2006

Employee Advocate - www.DukeEmployees.com – August 7, 2006

Jim Rogers, Duke Energy president and CEO, hosted the July 13 Open Forum at the Customer Service Center in Charlotte, North Carolina.

In the June Open Forum, CEO Jim Rogers, wanting to sell more electricity, said “I’m still praying for hot summers.”

But in the July Open Forum, he was preaching energy conservation!

When hot weather came, he pleaded with customers and employees to cut the use of electricity. Then, he announced that Duke Energy was joining an alliance of utilities, regulators, environmental and consumer groups to promote investment in energy efficiency and smart energy use.

Be careful of what you ask for!

Jim Rogers said “And sharing a vision doesn’t mean just saying, ‘Yes, I’m following.’ We need to fix things as we go and be unafraid to say, ‘Rogers, you’re nuts. You really shouldn’t do that.’ ”

That statement shows that Mr. Rogers has the self confidence to hear the truth. The person with fragile self confidence cannot accept the truth and never wants to even hear it. That is why these types invariably surround themselves with sycophants, that would never, ever dare challenge them. That is why they also self destruct so easily; no one dares tell them not to walk into the speeding freight train.

Think about it. For everyone who self-destructs from making lame brain decisions, someone, somewhere, gave them fair warning not to do it. The super egotistical person will proceed into imminent danger, rather than considering the possibility the he may be wrong.

Former CEO Rick Priory once told Business Week that when he took over, he replaced one-third of the top executives with more entrepreneurial outsiders! When a third of the executives indicated that his day-trading approach to running the business would destroy it, what did he do? He replaced them all. He just could not entertain the possibility that he might be wrong. It took the market to show Mr. Priory that he was indeed woefully wrong. And, the market takes no prisoners.

Rick Priory’s “Fun Ride”

Open Forum - June 2006

Employee Advocate - www.DukeEmployees.com - July 31, 2006

The June Open Forum was held in Charlotte, NC, on June 29. It was hosted by Jim Rogers, president and CEO of Duke Energy, and Fred Fowler, group executive and president of Duke Energy Gas.

Jim Rogers said that he was excited about the spinoff of the gas business. He said “For the power business, it puts us right back where we started – only bigger.”

But Duke Energy will not be exactly back where it started before the merger with PanEnergy. It is now carrying all the baggage from trying to be another Enron. All the failures of chasing deregulated energy, lawsuits, fines, charges of market manipulation and hiding profits are now a part of Duke Energy’s history. Employees still suffer lost pension and other lost benefits. These losses were all part of the prelude to the acquisition of PanEnergy.

Buying PanEnergy has worked out about as well as everything else during the back to back reigns of Bill Grigg and Rick Priory. Since those disasters, Paul Anderson and Jim Rogers have been trying to put the pieces back together. The one piece that continues to be overlooked is the employees' lost benefits.

Undoing the PanEnergy merger is an admission that it was a flop. Now Duke Energy lists the many benefits of not being tied to a gas company.

There are some who believe that bigger is always better. That and there would be little ways that the gas and electric operations could aid an abet each other and shut out competition. This was tried in the early 1970’s, when Duke Power decided to buy coal mines. That merger was also a momentous failure. The acquisition resulted in a fierce union battle. Striking miner, Lawrence Jones, was shot in the face by a Duke Power “hired gun.” Mr. Jones died in the hospital. The miners eventually won their contract.

Duke Energy’s Coal Mining Disaster

Then the Securities and Exchange Commission cracked down on the hanky-panky between affiliated companies. This was a direct result of the Enron fiasco. The gas business was, more than ever, a liability, rather than an asset.

An employee commented that the Cinergy merger was accompanied by talks of reducing the number of employees. Now, separating companies also brings talks of reducing the number of employees. The employee said “It sounds like we’re talking out of both sides of our mouth.”

There is a lot of that around here. Layoffs are always viewed as the response of choice to any event.

Jim Rogers said “I’m still praying for hot summers.”

Now that the heat is here, executives are pleading with customers not to use so much electricity! Yes, talking from both sides of one’s mouth covers a lot of territory.

The former Cinergy employees are still in limbo as to what will happen to their pensions in the Cinergy Traditional Program.

An employee wrote in, asking about workers’ deferred pension benefit. He asked if Duke Energy was lobbying for legislation that would affect “the security, form, and/or amount of our pensions.”

Duke Energy’s answer, in part: “Through participation in associations such as the American Benefits Council, we continue to support legislation that would affirm the legality of cash balance plans and establish retrospective and prospective clarity on cash balance conversions.”

Translation: “Affirm the legality of cash balance plans” = Make illegal plans suddenly be legal!

Translation: “Retrospective” = Retroactively legalize the cash balance plan to nullify the present lawsuit.

The American Benefits Council would be more accurately titled the American Lost Benefits Council. It works solely in the interest of large corporations. Its goal is to constantly chip away pension benefits.

American Benefits Council President Tells Truth!

The Republicans did ram a sorry pension bill through the House on Saturday. The Senate could clean it up some, or reject it.

Duke Energy said that many questions were asked about “change in control” payments made to former Cinergy executives. Duke declined to give any figures.

But anyone who can read a newspaper knows that former Cinergy executives received more than $180 million in severance packages, with about $23 million going to Jim Rogers.

180 Million Reasons to Promote a Merger

Employees wonder why, with all these millions of dollars to give to executives, workers cannot even collect their full pensions.

Open Forum - May 2006

Employee Advocate - www.DukeEmployees.com – June 26, 2006

CEO Jim Rogers held an Open Forum at Catawba Nuclear Station in South Carolina on May 17. He held another on May 18 in Indiana. At Catawba, he spoke of the need to hire new employees.

But Duke Energy is paying a price for its many transgressions against current and past employees. Some big recruiting efforts have netted zero applicants. Some efforts gained applicants, but none who could pass the employment tests. Some new hires have quit almost immediately, while in training. Others flunked out of training. Some went through all the training, and then quit.

Duke Energy trashed its original retirement program, which rewarded company loyalty. Catering to the “young, mobile employee” was the excuse Duke Energy gave for forcing all employees into its cash balance pension plan. Now Duke is reaping the “benefits” of hiring the young, mobile employees; they roll in and roll right on out. Why should they stay with a company noted for mugging employees and taking their benefits?

One on-line attempt to hire entry level nuclear employees failed completely. There were only a few applicant, and they all failed the employment tests.

It’s not too hard to understand why applicants were not breaking down the doors to get the jobs; Duke Energy had a long list of demands. Applicants meeting education requirements had to pass a written test, background investigation, and drug screening. They were also required to be willing to work at night, on weekends, on holidays, in extreme cold, in extreme heat, high off the ground, in tight areas, in radioactive fields, at other locations, in a respirator, and in noisy areas. Couple these demands with the uncertainty of never knowing when Duke Energy will find another way to make written benefits disappear, and it is apparent why there were only a few takers. Only the most desperate of the unemployed were attracted, and they all flunked the tests.

It’s not surprising that a number of questions about outsourcing were asked in Indiana.

Mr. Rogers said "We need to keep great strategic excellence within the company. If you do a complete outsourcing, you become totally dependent on who you outsource to. If you keep a strong core, you become the integrator - instead of letting someone else take that role. I want to keep the IQ within the company."

He also said that he stopped an outsourcing effort at Cinergy.

He evidently understands that when you own nothing, you are just a middleman, much like Enron. Trying to clone Enron did not work out for Duke Energy.

It was mentioned that the Supreme Court is going to hear the Duke Energy New Source Review case. This is a very convoluted issue, involving pollution lawsuits, political contributions by lobbyists, congressional hearings, and the Environmental Protection Agency’s new desire to aid corporations at all cost. Follow the link below for more:

EPA Sued for Allowing Utilities to Pollute

Catawba Forum

Mr. Rogers said that it would be difficult for him to see a scenario where we move back to the commodity trading business. Shortly before the merger, he expressed interest in keeping Cinergy’s trading operations. Evidently, the Duke Energy board saw things differently. The CEO with the day traders mentality is history. It is high time to end the crap shooting ventures spawned by him.


Mr. Rogers said “I want to have policies that are not built on exceptions - every time something happens that shouldn't happen, put a new rule in - but built on trusting people to do the right thing because they share our values. My view is to go back to ground zero and say, ‘Do we trust people or not?’ If we trust people and they share our values, they will do the right thing when push comes to shove. I think that we have to have that mindset. At the end of the day, we need to build policies that are built on trusting people, not on exceptions.”

If he can bring this about, a huge millstone will be removed from the employees' necks! Duke Energy’s procedures are built on exceptions. To do the simplest thing, one must wade through page after page of remote possibilities. Endless phone calls must be made and signatures collected to take every minor action.

Question: We continue to hear that employees are our most valued assets. But our hidden benefits are getting just a little bit more hidden. I understand costs are going up. But what are your views on employees being our most important asset?

Jim Rogers: Medical costs have gone up as the average age extends out. Our challenge is to find ways to control those costs over a period of time. It doesn't mean you don't care about employees because you're trying to be cost-effective. But I hear your point. We have to honor people as we think through what the balance ought to be as we deal with different issues, including rising medical costs.

Advocate: Employees used to get an annual statement called “Your Hidden Paycheck.” It explained just how much pension benefits you would accrue if you stayed with Duke Energy. The cash balance pension conversion made all of those statements bogus. Those promised benefits are more than just hidden; they are non existent!

Indiana Forum

Question: I'll be retiring in 5-6 years. I'd like to find out when details of our retirement plan will be completely finished.

Jim Rogers: Duke went to a cash balance plan in 1997, and they converted everybody. At Cinergy, we took a different approach. We said, "If you're in the pension plan, you can stay in the pension plan. Or you have the option to go to cash balance." You had a choice. For all new employees coming into the company, they would enter the cash balance plan. I believe that will be the logic going forward.

Advocate: If Duke Energy had that much foresight, it would not have been sued for the 401 (k) plan. It would not have been sued for the pension plan. And, the Employee Advocate would not even exist. Excessive executive greed has caused all of Duke Energy’s problems. Its denial of culpability only causes the problems to fester and grow.

Question: What you're saying is that if we elected to stay in the traditional pension plan, it looks like we would stay in that as we retire. Or will there be changes?

Jim Rogers: There might be changes. But the goal here is to make sure we maintain the value that you have in the plan going forward. We don't want anything to erode that value. We've still got work to do. But under the current merger agreement, nothing changes for three years and that gives us time to work through it.

Advocate: That was exactly the problem with the Duke Energy pension conversion; employees lost pension value! There are ways that this could have been prevented, but Duke chose the path of greed.

A question was asked about Duke’s pension plan being fully funded and Cinergy’s being underfunded. But it is much easier to fund a plan after its value has been reduced. The cash balance conversion reduced pension liabilities by hundreds of millions of dollars. This happened by reducing employees’ future pensions by hundreds of millions of dollars. Cinergy did not force everyone into the cheaper cash balance plan. It is much easier to fund a cheap plan than a decent pension plan. Cinergy executives were head and shoulders above Duke Energy’s executives.

Mr. Rogers indicated a bias toward regulated businesses and prefers not to have layoffs. Everything he has said is a break from Duke’s disastrous past. He has not made a gaff yet.

Cincinnati Open Forum - April 2006

Employee Advocate - www.DukeEmployees.com - May 5, 2006

CEO Jim Rogers was not able to attend the Cincinnati Open Forum. Questions were answered by Lisa Gregory, HR benefits manager, and Sandra Meyer, president of Duke Energy Ohio and Kentucky.

Question: A couple years ago, Cinergy employees were given the opportunity to make a decision to stay in either a traditional pension plan or move to a cash balance plan. Now there are communications that that traditional plan may be going away. Are we going to be receiving any official communications soon about how that's going to impact those who remained in the traditional plan?

Lisa Gregory: We don't have all the details yet. But I can tell you what we are working on for later this year -- an opportunity for former Cinergy employees to opt into Duke Energy's cash balance and 401K plans. There will be more information coming out on how exactly that would work, and what their benefits would look like under the new plan.

Advocate: Opportunity? That’s like giving you an “opportunity” to hit yourself in the head with a hammer! If you are dumb enough to do it, blame no one but yourself. Very few employees wanted Duke Energy’s cash balance plan. Everyone that’s in it now was forced into it. If the plan were any good, it would not have been necessary to force people into it. Employees have been protesting, filing age discrimination charges, and filing lawsuits every since the conversion. Opt into it at your own peirl!

Question: Some time ago, we were given the opportunity to choose the retirement medical plan. Are there plans to continue that?

Lisa Gregory: We have not done a lot of work in terms of post-retirement healthcare and what the overall design is going to look like. Duke legacy employees also have a subsidized post-retirement benefit, depending on their age and years of service when they retire. All I can say is there is more to come on that.

Advocate: Duke Energy employees once did not get a mere subsidized post-retirement benefit. With sufficient years of service, they received FULLY PAID healthcare benefits that they could not outlive. This healthcare benefit was watered down to a subsidy. And, the subsidy continues to shrink. Now, at age 65, the fully paid, lifetime coverage vanishes completely. And, don’t let the word “subsidy” fool you. The so-called subsidy was earned by years of labor. The problem is that retired employees are getting less than they earned.

Tossing around the term “legacy” also implies something for nothing. Duke Energy’s benefits were never free. They were and are deferred compensation. Employees were paid less at the time and promised retirement benefits later. When the Baby Boomers' retirement bill came due, Duke Energy defaulted.

Question: I can tell that truth and honestly are important in you life. And we know how important it is in the business world. Can you talk a little bit about that?

Sandra Meyer It's vital. Truth and honesty are what earns and keeps your reputation -- for both individuals and companies. It's fundamental and it's an expectation of working here. If you cannot live up to those values -- and the values on the Charter -- you do not belong here. That's my message.

Advocate: Be careful! Do you want an empty boardroom? Read the Charter and then look at the endless games played with the benefits that you have earned. You will clearly see the Charter is merely window dressing.

The old switcheroo did not go unnoticed. A question alluding to shady business practices by executives was twisted around to become an admonishment to employees. Some things never change.

Houston Open Forum - April 2006

Employee Advocate - www.DukeEmployees.com - May 1, 2006

New CEO Jim Rogers also held an Open Forum in Houston on April 11. He gets points for skipping the opening remarks and going straight to employee questions. Opening remarks are generally an attempt to control the nature of the questions and run out the clock. Executives know that the more time they waste with happy talk, the less time left to answer hard questions. Employees do not care about the corporate spin; they want to ask questions about what concerns them.

There has been endless talk about shareholder priorities. An employee wanted to know about “employee priorities.”

Mr. Rogers said, in part: “Making sure you're supportive of the employees of a company is the first step in being a great steward for the shareholders.”

There have been Duke Energy CEO’s that could not grasp this concept. Their idea of the first step was to raid employees' benefits.

Mr. Rogers was asked to elaborate about bigger not always being better. He said “There are some advantages of being bigger. But often times big companies become arrogant. They think they're smarter than everybody else. I came from a midsized company. I knew I had to be smarter, tougher, more relentless and create more value. Big companies can be that way, too. My hope is that when we end up the second largest gas and electric company, we don't walk around and say, ‘We're No. 1 in assets. We're No. 1 in this or that.’ I want to say, ‘We're No. 1 in shareholder value. We're No. 1 in the way we treat our employees. We know how to create an environment where people are competitive, do a good job and deliver what they promise.’ I'm not confused about being bigger. I just want to be better.”

Intentionally or unintentionally, he again nailed the most arrogant CEO in Duke Energy’s history right between the eyes.

When asked about nuclear construction, Mr. Rogers said he was “cautiously optimistic.” Unlike all other Duke Energy executives, he did not deny the problems facing nuclear power. He said “They haven't solved the spent fuel issue, among others… All you have to have is another Chernobyl and, all of a sudden, people's attitude about nuclear changes fairly dramatically.”

The main reason there is a push for more nuclear power is because G. W. Bush is throwing taxpayer money at corporations to pursue it. A head headlong rush to scoop up this free money could cost some corporations everything. If a new nuclear plant is constructed, do not hang the “Mission Accomplished” banner up too soon!

In answering one question, Mr. Rogers said “I don't need checkers for checkers for checkers… My sense is we have too much process. It creates a lot of inefficiency. My hope is to streamline the process on how the senior team works together under the theory that less is more. I can always add to it if it's not working. The leaders of this company have got to say, 'Okay, let's hold each other accountable. Let's be clear about accountability. Let's try to eliminate some of the process.' I'm going to work hard to improve the process and eliminate some of the checkers on the checkers on the checkers.”

He is preaching to the choir. All employees know that useless programs kill productivity by at least 50 percent. When management implements a new program, it’s their baby and they will defend it to the death. They will skew numbers and alter results to make the program look successful. How many time has an executive said “This is a totally useless program and we are going to eliminate it”? Employees who get positions maintaining these programs suddenly also have a vested interest in promoting the programs.

Question: “Cinergy was one of the top 100 places to work for working mothers for almost 10 years, and you've said you were committed to see Duke on that list. Do you feel that the combined company is ready to be on that list?”

Mr. Rogers: “I'm committed to Duke being a great place for working mothers. I'm proud of our past awards. One of the reasons we were always on the list was because we employed many best practices. We had job share. We worked with women when they took extended maternity leave. We had paternity leave, too. We have lots of examples of things that we tried to do through the years. One thing that got us started is when we made the decision to build a childcare facility next to our headquarters in Indiana. My job is to create an environment that allows you to be successful. I'm committed to getting back on that list.”

Employee Advocate: He’s on a roll. Let him continue.

Question: “What attracted you to Duke, and why do you want to run the company?”

Mr. Rogers: “I look at it along this line. The merger creates near-term value in terms of merger savings, and it positions the company well for the future. Duke also has always had a reputation of being a premier company for as long as I can remember. So I'm proud to join with a company that has such a great reputation. Texas Eastern, Algonquin and Westcoast have great reputations in the gas business. My goal is to build on that. My hope is to create an ever greater company that is well-positioned for the future and shares my values about honoring employees. I'm proud to be here.”

Employee Advocate: More correctly, Duke Energy once had a sterling reputation. Machiavellian executives threw it away, starting with the cash balance pension conversion. Until this matter is justly settled, Duke Energy will always be less than it once was. The worst offenders are gone, but not all. The house has not been completely disinfected. A fresh start can begin only when the house has been thoroughly cleaned.

Mr. Rogers also gets points for not mouthing anything about the fantasy of zero injuries. His ability cannot be denied, just as the ability of Chairman Paul Anderson cannot be denied. It’s all a question of whether this ability will be used for employees or against employees. If Mr. Rogers does the things he has talked about, he will have no problems. The Employee Advocate will not question his sincerity. If future actions conflict with what he has said, all bets are off.

Charlotte Open Forum - April 2006

Employee Advocate - www.DukeEmployees.com – April 11, 2006

Brand new Duke Energy President and CEO Jim Rogers hosted the Open Forum in Charlotte, on April 4. He comes to Duke Energy with a clean slate. The major conflicts between employees and management were created prior to his arrival. They were created prior to the arrival of Paul Anderson also. The Employee Advocate welcomes Jim Rogers and all former Cinergy employees to Duke Energy.

Mr. Rogers says that “we must always look for different and better ways of running our business.”

Don’t blame the employees for Duke’s cumbersome processes; we don’t like them either! But after decades of wrestling with Duke’s iron hand, most employees have given up on improving anything. Duke Energy refuses to alter its rigid bureaucracy, no matter how inefficient it is.

The conard is often told that “employees are resistant to change.” That has never been the case. Employees are resistant to stupid change. Change for the sake of chance, that only bogs down the system even more, should be resisted. Change that violates everything the company has previously said and the laws of the land should also be resisted.

Hint: Taking benefits from employees to fatten the executives even more, will not be regarded as a constructive change.

Mr. Rogers wants the company to fulfill its post merger promises. Former CEO Rick Priory wanted the company to keep its promises to investors. It seems that no one ever gives a thought to keeping the promises made to employees over the last three decades!

“Employee satisfaction” was mentioned as an item on Mr. Rogers' merger scorecard. That’s fine, as long as he understands that employees who have been hoodwinked out of significant benefits will not be pacified by jingles and silly slogans. The employee issues will never be “talked away.” We’ve had too much happy talk already; it time for restitution. With no restitution, employees and management will forever be at an impasse.

An employee asked “How do we make a superior return in a rate-regulated business like ours?”

Among other things, Mr. Rogers mentioned “credibility and have good relationships.” He said that credibility and good relationships will gain Duke Energy the "benefit of the doubt."

In the dark days of Duke Energy, the answer was simple: “Just hide the profits from the regulators!” And, Duke Energy did just that. It never admitted it, but it paid millions of dollars in settlements in two states!

Duke Power Company Audit

The questions below were sent in by employees and answered anonymously:

Employee: "I find it highly skeptical that 2005 EPS results came in just 1 cent short of the incentive plan maximum payout limit of $1.80. When these results are taken in the context of

  • Duke's previous accounting scandal

  • How the company treated employees when Duke transitioned to a Cash Balance Retirement Plan

  • How Duke recently reconciled benefit differences between Cinergy and Duke employees by taking the lesser benefit in almost every case,

"It is difficult to believe that the results just happened to fall 1 cent short of maximum payout. I don't care if Alan Greenspan himself certified the EPS results, I just can't help but believe that, once again, Duke manipulated another business process to the detriment of employees. How do you expect employees to trust the company on this issue based on past history?"

The answer included the efforts of Paul Anderson “to be open and transparent with employees and other stakeholders.” The earnings per share (EPS) results were said to have been audited internally, audited by Deloitte and Touche, and the Compensation Committee of Duke Energy’s Board of Directors certified the EPS results.

Deloitte & Touche Settling with the SEC

The interesting thing about this question is that it was also sent here, for tracking purposes. That way, it could be reported if Duke Energy “lost” the question or watered it down. The Employee Advocate is happy to report that the question was posted by Duke Energy verbatim! Jim Rogers won a truckload of points for having the guts to post it.

And, hats off to the employee for asking the question!

The question neatly sums up the lack of trust between employees and senior management. Workers have been burned too many times to trust Duke Energy management again.

It is true that Paul Anderson has corrected most of the ethical problems created by previous CEO’s. One point mentioned is current: The taking of benefits from former Cinergy employees to bring them down to the level of Duke Energy employees. That’s the part that never changes: The never ending erosion of benefits.

The question shows that Duke Energy is sorely lacking in credibility and good relationships with employees. When the amount of incentive pay received hinged on only one cent of earnings, many employees were not willing to give Duke Energy the "benefit of the doubt."

Desperate former executives have tried to blame Duke Energy’s problems on everything under the sun, including persecution by the media. Duke Energy is viewed as being deficient in credibility, not because of media persecution, but due to its own actions. The unwillingness to face mistakes only adds to the perception of low credibility.

Jim Rogers often speaks of “earning the right.” Duke Energy has not earned the right to receive the benefit of the doubt.

The granddaddy of all sticking points is the cash balance pension conversion. That matter is now being address by the federal court system.

Pension Lawsuit Filed Against Duke Energy!

Employee: The U.S. Senate and Congress are working on major changes to the benefit pension plans. If it passes, will it have any effect on how an employee's vested cash balance is calculated?

Answer: There are major differences between the pension bill passed by the House and that passed by the Senate – which have yet to be resolved. At this point it is impossible to predict how the final legislation will look and what impact such legislation may have on a cash balance account.

Advocate: No argument with the answer. No one ever knows what will happen in a court of law or in Congress!

The Employee Advocate will add that the Senate version is the one that has provisions to protect employees victimized by cash balance conversions. The House version was pushed through by Rep. John Boehner (BAY-ner), who is owned body and soul by corporations. Boehner has spoken many time about how great cash balance plans are. But just the same, Boehner and cohorts do not want a cash balance plan for themselves!

John Boehner is Death to Pensions

It's a lot like the not-in-my-back-yard syndrome for nuclear waste dumps. Someone is always trying to tell others how great cash balance plans are – but they never want one! The more Boehner preaches about the saving graces of cash balance plans, the more money the corporations donate to him.

Employees are advised to contact their Washington representatives and ask them not to retroactively legalize cash balance plans. Ask them to protect employees’ pensions from the ravages of cash balance conversions. Do it now, while it’s on your mind.

Open Forum - Page 3