DukeEmployees.com - Duke Energy Employee Advocate
Noon Rebuttal - Page 4 - 2001
Noon Rebuttal - December 2001
The Noon Meeting was head on December 13, 2001, in Charlotte, North Carolina. It was hosted by Rick Priory.
Opening Comments by Rick Priory:
Rick Priory: It’s been an unbelievable year in the energy marketplace! Deregulation is always tumultuous – in any industry – and ours is the most recent to pursue competitive markets. Good progress has been made in a number of states. We’ve seen the most extreme version of how things can go awry in California, where we worked hard to keep the lights on – and were falsely accused of price gouging and market manipulation. We have since been completely exonerated of those charges…
Employee Advocate: Falsely charged? The Charlotte Observer investigated the matter, and reported that Duke charged $3,880.00 per megawatt hour for several days in California. This was said to be the highest price charged by any of the power producers.
The L. A. Times published the following statement, in July: “Caving to state and federal pressure, Duke Energy Corp. said Monday that it will reduce by $20 million the amount it claims it is owed for electricity sales in California.” Does one generally have to reduce charges if no price gouging took place?
The investigation was made more difficult because Duke did not freely provide the necessary data, and some of the data was found to be missing.
Even though Duke said a full investigation was welcomed, a clandestine offer was made to the governor of California to drop all investigations.
This is called being “completely exonerated”?
Here is a December 19, 2001 statement from Reuters “The CPUC is investigating a rash of unscheduled plant closings that began at the outset of California's power crisis in summer 2000 and extended to last spring but has not decided on what actions to take, a spokeswoman said.
“With demand soaring and plants shutting for emergency repairs, power prices soared tenfold over normal levels, triggering accusations of price gouging and market manipulation from California Gov. Gray Davis, the CPUC and other state officials.”
That certainly is interesting. If the California Public Utilities Commission is still investigating, and has not yet decided on what actions to take, just how can anyone be “completely exonerated”?
Employees recognize all of Duke’s tactics, because they were all used against them during the cash balance pension plan conversion. The tactics are the same:
Rick Priory: Today, the Enron situation is front-and-center in the business and financial news, as it spiraled from a $65 billion business to essentially zero… And, in spite of the turmoil in 2001, your company is turning in the best financial performance in 100 years!
Employee Advocate: It’s a little ironic that in the last five years employees have lost more than they have in the last 100 years! That is just the way things were planned from the beginning. During Duke’s unprecedented windfall, employees have faced constant cutbacks of every sort. Can you possibly imagine what would happen should Duke lose a dime?
Question: “Given the problems that Enron is currently experiencing, specifically confusing if not illegal financial deals, boards of directors involvement…what measures does Duke Energy have in place to ensure that similar activities don’t happen here?”
Rick Priory: First of all, regardless of how the situation has been presented through the media, we should give Enron the benefit of the doubt and wait for the official verdict on the situation. Having said that, how do you know that Duke Energy doesn’t have those same types of activities underway? It’s my job to explain our strategy, whether we have similar situations at Duke Energy and to give you some comfort that you won’t see the same things here…
Enron used a couple of special purpose financing vehicles, such as shared trusts and control investor concepts. A number of corporations in America use these vehicles successfully. We’ve looked at those vehicles ourselves, but couldn’t see how we could effectively implement them without brushing up against some “gray” accounting guidelines, so we elected not to use them…
Employee Advocate: We have not heard anyone from Enron claiming to be “completely exonerated.” It is good that the gray accounting guidelines were avoided. It appears that the gray accounting areas were not completely avoided or regulators from two states would not be auditing Duke’s books. In the pension plan conversion, every gray area in the book was hit!
Question: The increased expenses to employees for medical insurance and bills is beginning to take a toll on my monthly budget. Is there any discussion of an extra insurance policy to help cover uncovered costs to employees?
Rick Priory: There is no plan at this time to increase the company subsidy for medical coverage…
Employee Advocate: Just think, when you retire, after working maybe forty years, you will be cut off completely!
Noon Rebuttal - November 2001
The Duke Energy Noon Meeting was held November 29, 2001, in Denver, Colorado. Rick Priory hosted the session.
Opening Comments by Rick Priory:
Rick Priory: We elected a new member to our board of directors during the group’s last meeting. Dr. James (Jim) T. Rhodes, is a 30-year veteran of the energy business. He recently retired as the chief executive officer of the Institute if Nuclear Power Operators (INPO), and was previously CEO of Virginia Electric Power System. I am confident that Jim will add a strong depth of experience and knowledge to our board.
Employee Advocate: How interesting. Duke depends on INPO for favorable ratings of its nuclear plants. Now, the former INPO CEO is a Duke board member.
Question: What opportunities do you see with the Westcoast acquisition? They have a significant field services component, as does Conoco. What opportunities for transactions do you see?
Rick Priory: Both of those entities have considerable assets. Since the Phillips/Conoco announcement is so new, it’s hard to tell what opportunities might be there. In the case of Westcoast, we’ll be moving its assets into different areas of Duke Energy – the pipeline transportation systems into Gas Transmission, marketing and trading along with some power projects into DENA, etc…
Employee Advocate: The employees of Westcoast also have some concerns. They are concerned about the safety of their pensions! They have pensions now, and they want to keep them. They are aware of Duke’s reputation for reneging on pension promises. If Duke will devastate the pensions of employees who built the company, Westcoast employees can only wonder what will become of their promised pensions. Their concerns are well founded. When employees of another company are apprehensive because they fear being taken over by Duke Energy, that speaks volumes!
Question: Has what’s happened with Enron changed Duke Energy’s approach to trading and marketing? Are we doing anything to distinguish ourselves from Enron in the marketplace?
Rick Priory: The short answer to your first question is no. Our strategy and approach to business have always been very different from Enron’s…
Employee Advocate: What really got Enron into trouble had nothing to do with strategy or approach. The root cause of their problems was a lack of ethics. They were not truthful. They thought that they could accomplish anything through buying “friends” in high places. Enron built an impressive tower – out of playing cards.
Question: Can diversity be added to Duke Energy’s core values? DEFS’ core values?
Answer: …Our culture statement emphasizes our desire to seek the best from "all people," and our operating principles for leaders state that, "We grow people by building their personal, business and management mastery and by creating opportunities for experience and contribution across the enterprise." Both of these statements have diversity "wired" into them. "Diversity" is not mentioned as a separate category in our culture statement, but, like "honesty," it’s a fundamental expectation, embedded in how we do business.
Employee Advocate: We learn something new every day. Now, we find out that honesty is a fundamental expectation! We would have never guessed! Is it honest to lead employees on for their entire working lives with retirement promises that were only lies? Just how honest is it to promise employees lifetime health coverage for decades, and take it away at the last minute?
Calling back the Enron question, if Duke fails, it will not be because of something as mundane strategy. It will be due to a lack of honesty, ethics, and integrity. If Duke cannot be honest with its employees, who else can possibly trust them?
Question: When are the results of the last Employee Opinion Survey going to be made public – on both a company-wide and departmental basis?
Answer: Enterprise level results of the survey were posted to the Employee Portal on October 25, and managers and supervisors have been able to access business unit specific data since then through the Employee Portal. Results were also presented to the Human Resource Committee on August 1 for consideration in 2002 planning and, shortly after that, to the Policy Committee and other Senior Leaders across the company. Business unit human resources consultants have studied the results and are communicating findings to line management so that results can be factored into business unit and department planning. Since results vary from business unit to business unit, you should talk with your manager or with your business unit human resources representative if you have questions about the results for your area.
Employee Advocate: Favorable results will always be trumpeted from the mountaintops. Less than favorable results will be buried. If you are having trouble finding the results, what does that tell you?
Question: Do you anticipate any changes or improvements associated with the Retirement Cash Balance Plan?
Answer: There are no changes currently planned for the RCBP, however, as has been previously communicated, the company reserves the right to amend or terminate the RCBP at any time.
Employee Advocate: Yes, after promising employees specific retirement benefits for twenty-five years, Duke revealed that employees would not get what was promised. And, at any time, Duke could say: “Oops we did it again – lied, that is.”
Question: The increased expenses to employees for medical insurance and medical bills is beginning to take a toll on my monthly budget. Is there any discussion of extra insurance policy to help cover the uncovered cost to employees? We keep paying more and getting less coverage. How far can it go?
Answer: No additional insurance option will be provided to employees for 2002. We will, however, continue to benchmark our benefits program to ensure its competitiveness. And, if changes are appropriate, we'll make those when needed.
Employee Advocate: That is another area that employees have seen their benefits devastated. How far can it go? The total losses can go on until you are financially wiped out. You could easily be retired and outlive your pitiful cash balance retirement amount. And, with zero retirement health coverage, you would be at the mercy of the government. That is not exactly what the company promised you for years.
Question: I would like to resubmit my question about retirement. Why can someone come into our company at the age of 50 or 55 and leave with more money in their retirement with 10 years of service than I can with 32 years of service at 55 years old? I have asked the human resources people at Oconee this question since the change has been made to our retirement plan.
Answer: Generally, for both the Retirement Cash Balance Plan and the prior retirement plans, the benefit provided is impacted by at least three factors: the participant’s age, eligible service and eligible pay. Service alone does not determine the size of the benefit. We encourage you again to review specific questions with your human resources representative.
Employee Advocate: Duke made money on the pension conversion. That is the bottom line. And, the bottom line is all that the company cares about!
Question: What do you project in the short-term for Duke Energy stock prices?
Answer: That one’s easy. I don’t project Duke Energy’s stock price. The company gives guidance to the market as to our estimated growth in EPS (10 to 15 percent per year on a compound annual basis of a $2.10 base in 2000.) We also publicly state our EBIT targets, but, again, we do not project stock price. There are too many variables in the marketplace that are outside of our control to make such a projection meaningful.
Employee Advocate: That’s one for the record book, a straight answer from Duke Energy!
Question: The company gave each employee a new T-shirt in 1997 when we merged with PanEnergy. It is time for a new shirt. How about it?
Answer: The T-shirts distributed following the formation of Duke Energy were a one-time gift intended to help commemorate a major milestone for our company…
Employee Advocate: No comment.
Noon Rebuttal - October 2001
The Duke Energy Noon Meeting was held October 15, 2001. Rick Priory hosted the session.
Opening Comments by Rick Priory:
Rick Priory: We’re now being encouraged by our political leaders and others who are experienced in dealing with disasters to move forward with our lives.
Employee Advocate: Have you ever heard of anyone moving “backward” with their life? This gem comes from “political leaders and others.” Do you know of anyone who is in a state of suspended animation, waiting on a green light from political leaders? Political leaders are often total buffoons. There true purpose in life is to provide material for stand up comics. Lower on the evolutionary scale, comes corporate leaders. Many are arrogant parasites. Many are consumed with delusions of their self-importance. Some feel that employees are hiding under desks, awaiting a sign from these all-knowing “leaders.” “You can come out now, Munchkins; everything’s OK.”
Rick Priory: In what was truly a "secret deal," Southern California Edison and the California Public Utilities Commission recently announced that they have reached a settlement on pending litigation…
Employee Advocate: Translation: “Hey, don’t look at us. Over there is someone doing something much worse!”
Rick Priory: Our annual benefits enrollment begins today and runs through November 2…
Employee Advocate: Expect to pay more for less benefits.
Question: We’ve heard a lot on the news about the security at nuclear facilities. Can you tell us about your position on some of the things we’ve heard about, such as installing anti-aircraft weapons? I’m also interested in the security of this building (Energy Center) and its lower level parking. I’ve seen a security guard there in the mornings, but wonder whether that could really prevent someone from entering.
Rick Priory: A security guard alone probably couldn’t prevent someone from entering, but they can certainly serve as a deterrent. We’re doing everything we know how to do to deter potential threats. When I travel in Latin America, I’m typically surrounded with security. It’s the show of force that prevents incidents from occurring. If anyone is up to no good, they’re more likely to strike where there’s less resistance. Similar thinking is behind the increased security presence around our facilities. A guard is stationed in the parking area, and employees have to key in with their company ID badges. If unauthorized people enter the area, they’re held, questioned, and vehicles might be searched. That level of security seems appropriate at this point.
With regard to the nuclear plants, they’re some of the most impenetrable structures in the world, built to rigorous design criteria. There are, of course, risks involved with our plants during uncertain times such as these – the same is true with a number of other industries and structures in our country. These risks can’t be completely eliminated until we eradicate the threat of terrorism. I can tell you that we’re operating our nuclear plants under a heightened state of alert, but I can’t share details of our security procedures.
Employee Advocate: Mr. Priory answered this question more truthfully than his underlings have. He did not foolishly say that nuclear plants were impenetrable. He said that they were “some of the most impenetrable structures in the world.” He did not foolishly say that the security force could “handle any emergency.” He only mentioned a “heightened state of alert.” And, he admitted that terrorism risks cannot be completely eliminated.
There were also employee questions and concerns about the “Cash Balance Pension Plan.” It is sufficient to say that Duke has not “sold” this monstrosity to the employees, even after almost five years!