Duke Index

Duke   13
Duke   12
Duke   11
Duke   10
Duke     9
Duke     8
Duke     7
Duke     6
Duke     5
Duke     4
Duke     3
Duke     2
Duke     1

Duke   9
Duke   8
Duke   7
Duke   6
Duke   5
Duke   4
Duke   3
Duke   2
Duke   1

Duke 14
Duke 13
Duke 12
Duke 11
Duke 10
Duke   9
Duke   8
Duke   7
Duke   6
Duke   5
Duke   4
Duke   3
Duke   2
Duke   1

Duke   4
Duke   3
Duke   2
Duke   1

Duke   4
Duke   3
Duke   2
Duke   1


www.DukeEmployees.com - Duke Energy Employee Advocate

Duke - Page 3

"The liberty of a democracy is not safe if the people tolerate the growth of private power to the point where it becomes stronger than the democratic state itself. That in its essence is fascism - ownership of government by an individual, by a group or any controlling private power."
- President Franklin D. Roosevelt

Paul Anderson’s Tax Proposal

Employee Advocate – www.DukeEmployees.com – April 9, 2005

Duke Energy CEO Paul Anderson is proposing a universal tax on carbon dioxide, according to The Charlotte Observer. He acknowledged that the tax would mean higher bills for everyone. He also acknowledged that he wants the "carbon tax" because he doesn't want the power industry to be the only one paying for the emmissions.

Mr. Anderson is pragmatic enough to realize that such a proposal is unlikely to come about under the Bush administration.

G. W. Bush gives the energy industry everything it wants, but some in the industry realize that he is destroying the country. What good will their billions of extra dollars do them if the land is destroyed by pollution?

The Edison Electric Institute says its members prefer voluntary measures. Yes, and all criminals want voluntary prison time. It could be called the “Otis Bill,” after the town drunk of Mayberry. When Otis got “polluted,” he would come to the jail and lock himself up.

Other utility executives want to be free to pollute just as much as any other country. They want pollution standards brought down to the lowest common denominator.

Mr. Anderson said "That is akin to begrudging a modest meal to a neighbor while you are sitting down to a sumptuous feast."

Following that analogy, why do executives, who make millions of dollars, begrudge employees the pensions and health care that they have already earned?

Mr. Anderson is in favor of the Energy Bill being passed. But like so much legislation promoted by G. W. Bush, the Energy Bill is a joke. It is only another means to hand out favors to the energy industry for their campaign contributions.

Bush is trying to sell the Energy Bill as a method of reducing energy prices. But the bill is not designed to reduce prices. It is designed to increase the profits of energy corporations. There is a very good reason why the bill has never passed – it’s a disaster!

And, VP Dick Cheney continues to hide the details of which energy executives actually wrote the bill.

Click the link below to read comments from a reader about the carbon tax proposal:

Paul Anderson’s Carbon Tax Proposal

Duke’s $1.6 Billion for Asbestos Claims

Employee Advocate – www.DukeEmployees.com – April 6, 2005

The Wall Street Journal reported that Duke Energy bought “insurance” to cover $1.6 billion in asbestos claims. The information was gleaned from SEC filing by Duke.

Even the insurance, called “finite risk,” has proven to be controversial. It is not conventional insurance, but a hybrid of insurance with financing techniques that can make it more of a loan than anything else.

The Journal stated:

“The policies in question, promoted by many insurance companies in the 1990s as a more modern version of insurance, blend conventional insurance with financing techniques. In industry jargon, they are called finite-risk insurance. Regulators are concerned that some versions are, in effect, loans in disguise used to hide liabilities or losses by accounting for them as insurance. Insurance proceeds can be used to offset the type of losses covered by a policy, making them shrink on a company's financial statements, while loans must be listed less attractively as debt.”

The Securities and Exchange Commission, Justice Department and New York-state officials are investigating American International Group Inc. (AIG) and others who sold this type of insurance. The companies that bought the insurance will then be investigated for any improper application.

Last month, Maurice R. "Hank" Greenberg was forced out of his positions as AIG CEO and chairman over the intense scrutiny. AIG admitted last week that its finite risk deal with Berkshire Hathaway was not proper.

In 2003, AIG reached a $10 million settlement with the SEC over a finite risk deal with Brightpoint Inc.

A Duke Energy spokesman declined to give up any additional information about the finite risk purchase.

Duke Energy Files Form 10-K

Gaming Executive Compensation

Employee Advocate – www.DukeEmployees.com – April 4, 2005

Michael C. Jensen, a Harvard Business School professor, was an early proponent of granting stock options to CEO’s. But that was fifteen years ago, when he was a professor at the University of Rochester. In 2001, he wrote a paper debunking his own theories and blasting stock options for executives.

To Mr. Jensen’s credit, he set himself apart from the executive crowd by admitting his mistake. The typical executive would still be twisting the facts to make himself seem always right. Sometimes the distortions made to conceal a mistake are worse than the original mistake. But only the most gullible are fooled by the attempted cover up. In the end, such smoke screen tactics only prove the executive to be dishonest to boot.

Claudia H. Deutsch interviewed Mr. Jensen for the New York Times. “An Early Advocate of Stock Options Debunks Himself” clearly explains why giving options to executives hurts everyone except the executive - “It's too easy to game the target-setting process.”

Many people have already figured this out. But it is noteworthy when a professor, who promoted the practice, is willing to admit that options for CEO’s is a disaster.

Duke Energy naturally followed the herd in showering executives with stock options. For a decade, Duke lavished stock options upon executives for trying to destroy the company. For years, almost every long-term decision was wrong, but the executives were rewarded for making them. It’s easy for executives to always win when they rig the compensation system to always pay off for them.

Mr. Jensen said that in the 70’s and 80’s, executive were rewarded for the wrong things, such as “growing the size of the company, even if they destroyed products and businesses and market value in the process.”

He soured on options because “Compensation committees wrongly looked at options as free, and awarded too many to too many people. It diluted the stock. And most stock option programs still rewarded management for building the empire, not the actual value. There was no penalty for investing in projects that did not return the cost of capital. When those projects pumped up the stock, management got a big win - but the shareholders would have still done better if the money had been paid out in dividends.”

The article was not written specifically about Duke Energy, it only sounds like it was. Duke even cut the dividend to have more money to “tinker” with.

On puffed up stock prices, Mr. Jensen said “The market starts demanding increased earnings and revenues, and the managers begin to say: ‘Holy Moley! How are we going to generate the returns?’ They look for legal loopholes in the accounting, and when those don't work, even basically honest people move around the corner to outright fraud.

“If they hold a lot of stock or options themselves, it is like pouring gasoline on a fire. They fudge the numbers and hope they can sell the stock or exercise the options before anything hits the fan.”

Numbers were fudged, outside audits were conducted, settlements were made by Duke. Former Duke CEO Rick Priory placed himself on this treadmill and even promised investors specific rates of earnings growth! It was only a matter of time before he fell on his face.

Mr. Jensen says CEO’s “should be rewarded for being honest.”

If the typical CEO were compensate solely on honesty, most would take home zero dollars per year. Many would show a negative return!

Examples were cited of CEO’s deliberately making decisions that would cost their companies money, but bring them more stock options.

Chairman and CEO Paul Anderson evidently wanted to distance himself from the compensation gaming of the past. When he replaced Mr. Priory, he elected to be compensated only in company stock. He further agreed to received the shares only after he left the company. Mr. Anderson has corrected, or is correcting, almost every mistake made by his predecessor.

Duke helped finance the decade of greed by plundering employee pensions and retiree health benefits. That is the only major area that Mr. Anderson has refused to address. He wants to restore Duke’s tarnished reputation, but these thing cannot be done halfway. Will he truly be happy if people say “Duke is not as scandalous as it used to be”?

Root Cause for Duke’s Problems

Another Duke Land Grab

Employee Advocate – www.DukeEmployees.com – April 2, 2005

Duke Power is preparing to take more land from unwilling sellers, according to the Winston-Salem Journal. Duke has started condemnation proceedings against some property owners who declined to accept the company's offers for their land. Duke wants the land to run a new transmission line.

The residents are known as the Friends of the Blanket Bottom Creek Wetlands.

Tom Brown and Brenda Smith are two that rejected the Duke offer for their land, according to their attorney, John Runkle.

In January 2004, 14 Clemmons residents filed complaints against the project with the N.C. Utilities Commission.

Tom Brown said that six residents have rejected Duke’s offer. He said "Most of them are not satisfied with the price offered."

The crux of Duke’s problems always seems to be the love of money.

A Duke spokesperson said "We can continue negotiations with the customers until it goes before a judge. That is what we want to do."

Essentially, Duke made the property owners an offer that they could not refuse:

Either sign over title deed or we’ll use the courts to take your land.

By continuing negotiations, Duke can hold the pending legal action over the customers’ heads like a hammer:

Give up your land (whack). Give up your land (whack). Give up your land (whack).

One point of contention is the involvement of a historic home. The commission ordered Duke to work with state agencies to ensure that the transmission line would not harm the Harper-Bullard home. Attorney Runkle said that Duke has not asked the State Historic Preservation Office for its evaluation of the project's effect on the historic home.

Mr. Runkle wrote: Duke "is committing itself to a large expenditure without resolving the impacts on the historical property. Such expenditures in an atmosphere of uncertainty seem to be irresponsible, and may necessitate another round of complaints."

The Clemmons group also charged that the Duke project would harm the wetlands. The utilities commission rejected that argument.

Duke Allowed to Seize Land

Replenishing the Older Workforce?

Employee Advocate – www.DukeEmployees.com – March 30, 2005

Yesterday, The Patriot-News published “Utility aims to replenish much older work force.” If the older workforce is to be replenished, older workers will be laid off and more older workers hired. However, if the older employees were replaced with younger people, the older workforce would no longer exists.

How do utilities get by with this without violating age discrimination laws? Often by claiming any reason for layoffs, other than age. Deny, deny, deny.

The Pennsylvania utilities had big layoffs in the mid-1990’s. As those with less seniority were laid off, the workforce instantly aged. Now it is another decade older.

FirstEnergy said it is going to hire 3,000 people over the next three years. But what if older candidates apply for the jobs? Just hire the young people and deny, deny, deny.

The ill fated deregulation of electric utilities contributed to a host of problems; this is just one more. Deregulation caused utilities to get more stingy with everything. Training stopped, apprenticeship programs were discontinues, and no money was spent on hiring.

Michael Love, president of the Energy Association of Pennsylvania, said "It is an issue the country faces. In my experience, regardless of a deregulated environment or not, the pressure to keep energy costs down has led to this issue coming to the forefront."

There was a time when employees retired at age 55. Utilities, such as Duke Energy, have converted pension plans to cheap cash balance plans and have taken away retirement health benefits. Now management cannot understand why so few people are retiring.

That’s right, retirement incentives have been eliminated and management cannot understand why people are not flocking to retire.

As usual, most corporations make their own problems. Everything has a price, even greed.

Age Discrimination by Any Other Name

Bill Coley is the CEO of British Energy

Employee Advocate – www.DukeEmployees.com – March 26, 2005

The Guardian reported that Bill Coley, former president of Duke Power, is now the CEO of British Energy. Mr. Coley was rumored to be a possible successor to CEO Bill Grigg, who retired from Duke in 1997. But Rick Priory was the apple of Bill Grigg’s eye and became the CEO of Duke Energy.

It is interesting that in 2002 Rick Priory told Fortune “We're grounded, so we didn't fall victim to short-term fads or accounting tricks.”

In actuality, under Rick Priory, Duke fell victim to every fad going. Everyone suffered. Mr. Priory did not leave Duke on a white stallion; he left on a jackass. But his saddlebags were stuffed full of money.

British Energy's Mike Alexander unexpectedly quit his CEO position after only two years. That left the door open for Mr. Coley, who was already a non-executive director of the company. It is not known if Mr. Alexander jumped ship or walked the plank. But there is usually a bit more to these hasty departures than a company will admit.

Mr. Coley did not make CEO of Duke in 1997, but he is now CEO of the company that operates Britain's eight nuclear power plants. Bill Coley retired from Duke in 2003, shortly after an outside audit concluded that Duke had understated regulated profits.

Last year, British Energy experienced problems with cracking inside the cores of all eight of the company's gas cooled reactors.

Bill Coley is Retiring

Duke Understated Profits

Duke May Settle Improper Trading

Employee Advocate – www.DukeEmployees.com – March 24, 2005

Bloomberg News reported that Duke Energy will probably offer to settle improper energy trading allegations, based on a U.S. Securities and Exchange Commission (SEC) filing. In 2002, the SEC began investigating Duke for using sham transactions to manipulate the market.

Duke admitted to making at least 89 round trip trades in 2002. Michael Shelby, U.S. Attorney, said that on February 10, former Duke trader Brian Lavielle pleaded guilty to falsifying transactions in order to disguise round-trip trades.

Duke tried denying everything. Duke tried claiming to be completely exonerated. Duke tried to smooth everything over with newspaper ads. The only thing left in Duke’s bag of tricks may be to actually make a settlement.

Frankenstein's Monster Haunts Duke

Ex-Duke VP’s Face 20 Counts

More Goofball Ads

Employee Advocate – www.DukeEmployees.com – March 23, 2005

Duke Energy is once again running goofball ads. It’s not as if Duke had a warehouse full of perishables and was running ads to sell them. The ads are more of the fuzzy wuzzy, cutesy wootsy, and just plain dumb type of ads.

These ads send a message of: “We really don’t have anything to say, but we have money to spend on ads.”

The current issue of Fortune has a doozy. It is a picture of a boy holding a duck. The boy is wearing a big prize ribbon, apparently won by the duck.

The headline states: “Your mother cares about the reasons. The real world only cares about the results.”

Below the picture, Duke blows its own horn about its shareholder return, stock price, and the money it has.

The ad ends with: “We’re proud of our results, and thought you might want to know about them. Our moms are proud, too.”

So, the executives moms are proud of them for acquiring vast wealth by taking money from the pension fund, taking retirees health benefits away, round trip trading, and cooking the books. It’s not really the sort of thing to brag about.

Duke is going to run two more such ads in Fortune this year. It is a shameless attempt to pump up the stock price. And perhaps, to scratch the back of Fortune for the fluff blown its way.

Duke’s Ads Fail to Brainwash Customers

More Money for Duke Executives

Employee Advocate – www.DukeEmployees.com – March 21, 2005

Duke Energy executives enjoyed salary increases in addition to large bonuses in 2004, according to a Charlotte Business Journal report on SEC filings.

Duke Energy President Fred Fowler’s total payout last year was $3.14 million.

Group Vice President Jimmy Mogg, received almost $1.8 million.

Duke Power CEO Ruth Shaw received $1.7 million in compensation.

Duke Energy CFO David Hauser received $1.6 million.

CEO Paul Anderson is paid only in stock, but he still managed to take home a few dollars. The Charlotte Observer reported that he took home $709,000 in dividend equivalent payments from stock grants and $365,296 in "other annual compensation." His restricted stock grant was initially valued at $11.3 million. There were also millions in options and phantom stock.

With all the executive pay increases and bonuses, did employees manage to break even with 1996 benefits?


The cash balance plan pension losses have not been returned. The lost health coverage at age 65 has not been restored.

You may have though that the Duke Energy address is on Church Street. But Duke’s address is really on One-Way Street. Everything flows one-way, from employees to executives.

Duke Pays a $3 Million Bonus

Duke Pays a $3 Million Bonus

Employee Advocate – www.DukeEmployees.com – March 2, 2005

The Charlotte Business Journal reported that Duke Energy passed out a few executive bonuses for 2004:

Chairman and CEO Paul Anderson received approximately $3 million in stock.

President Fred Fowler received $1.06 million in cash.

Chief Development Officer Jim Mogg received $580,183 in cash.

Chief Financial Officer David Hauser received $562,710 in cash.

Duke Power CEO Ruth Shaw received $534,254 in cash.

Age Discrimination by Any Other Name

Employee Advocate – www.DukeEmployees.com – February 25, 2005

Federal age discrimination laws cover everyone age 40 and above. So don’t expect a corporation to tell you that its not going to hire your because you are too old. Don’t expect to be told that you will be in the next layoff because you are too old. Expect to be told everything else under the sun except “You’re too old.”

Corporations are ever seeking to establish plausible denial in all hiring and terminating. “You’re overqualified” provides a lot of mileage.

How can one possible be overqualified?

It is impossible to be overqualified. Even the most educated, experienced, and able person will be ignorant in some areas. The human life span does not allow time for anyone to ever become overqualified.

“You’re overqualified” often really means “You’re too old.”

Corporations have other tactics to evade age discrimination penalties.

A Duke Energy employee asked management what the age limit was for hiring employees. He was told not to expect to see a lot of former employees hired that had been through a layoff.

But wait, former employees are the most experienced, knowledgeable people available. They do not require years of training; they can go straight to work.

The problem is that one cannot acquire long experience without becoming older. The most experienced people will be the oldest. No one has ever successfully acquired experience while becoming younger.

It was explained that if the company hired a person who would retire in a few years, it would be back in the position of being understaffed.

How can a corporation only hire only young employees and not run afoul of age discrimination laws?

All jobs filled will be entry level positions; the new employees will receive the lowest pay rate. The hope is clearly that highly skilled (older) people will not accept the pay rate of a novice and not apply for the jobs. If older people do not apply for the jobs, they cannot be turned down. Hence, no age discrimination can occur!

If an older person should apply for an entry level job, they can always be told that they are overqualified.

Frankenstein's Monster Haunts Duke

Employee Advocate – www.DukeEmployees.com – February 23, 2005

MarketWatch.com reported that the price of Duke Energy and Dynegy stocks slid after the US Supreme Court hinted that it might revive a price-fixing lawsuit brought during the California energy crisis of 2000-01.

Duke keeps trying to bury Frankenstein's Monster, but he keeps on digging himself back out of the grave. Nearly five years ago, Duke executives were trying to explain away the charges as a non issue with no merit.

For an issue with no merit, Duke seems to be having a hard time killing it! This was back when Duke thought that buying newspaper ads would make all their problems go away.

Energy traders' profits: Good business - or fraud?

Ex-Duke VP’s Face 20 Counts

Employee Advocate – www.DukeEmployees.com – February 17, 2005

Former Duke vice presidents Todd Reid and Timothy Kramer, are facing a 20-count indictment, according to the U.S. Attorney's Office in Houston and the Associate Press. Monday, a grand jury handed up the indictment which includes charges of fraud, conspiracy and circumventing internal company controls. The expanded indictment added the new charges to the existing charges of using bogus trades to doctor company books and inflate a bonus pool.

The former Duke Energy executives have pleaded innocent.

Former Duke Energy trader Brian Lavielle was originally indited in April, along with the two former Duke vice presidents. Earlier this month, he pleaded guilty to falsifying company books through bogus trades.

Former Duke Trader Admits Guilt

Former Duke Trader Admits Guilt

Employee Advocate – www.DukeEmployees.com – February 11, 2005

A former Duke Energy trader admitted to falsifying records, according to the Associated Press. He is facing a $5 million fine and 20 years in prison.

Brian Lavielle pleaded guilty Thursday to falsifying the books through bogus trades. Two former Duke vice presidents were also indicted last year: Timothy Kramer and Todd Reid. The three were accused of showing millions of dollars in phony profits by manipulating trading volume.

What good does fake profits do anyone? The more phony profits generated, the more real cash received in trading bonuses.

Prosecutors allege that $50 million in fraudulent profits came from over 500 round-trip trades at Duke Energy North America. Round trip trading is used to swell the trading volume. Corporations like to deny it, but under the right conditions, round trip trades can actually boost revenue. The practice gives the illusion of demand that does not exist.

The trader is cooperating with the government and will not face additional charges.

U.S. Attorney Michael Shelby said "The work of this office and the federal agents involved in this and other similar cases should send a clear message to the American public. We remain committed to restoring the public's faith and confidence in the market place and remain resolute in our joint efforts to hold corporate criminals accountable for their conduct."

Mr. Shelby has his work cut out for him.

Duke Executives Indicted for Fraud

BHP Remembers Paul Anderson

Employee Advocate – www.DukeEmployees.com – February 10, 2005

As former CEO of BHP Billiton, Paul Anderson is credited with putting the company on such good financial footing, according to The Sydney Morning Herald.

After having retired from BHP some time ago, Mr. Anderson is still being recognized for his good work there. That’s the type of press that one cannot buy.

It is just not necessary to spend money tooting your own horn. If you are any good, people will notice. If you are a train wreck, buying ads to promote lies will never change the facts.

Malcolm Maiden wrote: “Former chief Paul Anderson's game plan has a lot to do with the current strength of the miner.”

Before Paul Anderson came back to Duke Energy, the company spent years running ads, asking people if they were going to believe the CEO’s propaganda or their lying eyes. How did that work out?

The Rise and Fall of Rick Priory

Duke’s Ads Fail to Brainwash Customers

Employee Advocate – www.DukeEmployees.com – February 5, 2005

Duke Power is now running ads touting reliability of service. What can possibly be gained from such ads? If a customer is getting reliable service, he will be the first to know. He does not need to pay for ads to tell him what he already knows.

If a customer is receiving poor service, the ads will only infuriate him more. He will be paying air time for ads telling him things that he knows are not true. 100% reliable electrical service will never be achieved. Even if all the power lines were underground, there would still be outages – just not as many. But most lines are not underground.

At a cost of a million dollars a mile to bury power lines, most existing lines will remain above ground. They will remain sitting ducks for every ice storm and high wind that comes along. Could Duke let this sleeping dog lie? Of course not! Now some customers are upset about reliability who were not even thinking about it before the ads.

Some areas are plagued with more than their fair share of power outages. Can you imagine how happy these people are to pay for ads that explain to them how reliable their service really is?

News@Norman newspaper (NewsatNorman.com) has started running articles about the poor reliability of Duke’s electrical service in Denver, N. C. When the newspaper called for information, Duke painted a rosy picture.

Anna J. Fortenberry wrote: “Now please realize I am not picking on or complaining about the hard-working folks who are out there in the cold trying to fix this problem. Nor am I complaining about the people in the background who are desperately trying to figure out what the problem is. The problem is this: the ‘powers-that-be’ in the Duke Power organization didn’t want to publicly admit that there was anything wrong with our electric system.”

Welcome to the Duke stonewalling system – deny, deny, deny.

Ms. Fortenberry added: “Weather problems happen everywhere. We all know that you can't control the weather. But by neglecting the system and not preparing for growth, Duke Power has put itself in this position for criticism. And ignoring the cries of its customers only compounds the problem.”

Why should Duke listen to customers when it can buy ads to tell them that they are nuts if they think that they do not have reliable electrical service. People will tend to take the Duke ads with a grain of salt. Everyone knows that Duke executives are not exactly unbiased. The same people will pay more attention to what they personally experience, what their neighbors tell them, and what the local newspapers report.

Ms. Fortenberry continues: “When spouses of Duke employees ‘come out of the closet’ so to speak and confirm there is a problem with our electrical system, you have to believe it's not just a figment of our imagination.”

It was reported that in January, thousands were without power. Schools, businesses, and the US Postal Service had to shut down. People called the much touted 1-800-POWERON, only to hear a recording. One customer referred to the recording as “All talk and no action.”

Alas, another person has discovered the Duke stonewall.

Renee Hartley decided to keep calling until she reached a live human. She was put on hold time after time. Finally a customer service person told her “We are committed to customer service. We will have someone call you back with five to seven days.”

Ms. Hartley said that she could not believe the statement – “five to seven days!”

Residents began to call News@Norman to complain about Duke’s poor service. One anonymous caller said that her husband worked for Duke Power. She said “They have not upgraded service for the growth in this area. Whatever they are telling you, that is what is the truth.”

Marta Carlson said “Never have I lived anywhere where we’ve been without power like here. It is a guessing game. I worry about it when it is going to be a cold night, whether or not my greenhouse will have power to keep my plants, or will I lose may plants.”

Faye PitsiKoulis said “I am upset with the service, not the employees, but the service Duke Power gives us.”

New@Norman made a futile attempt to contact Duke Power President and CEO Ruth Shaw. The caller was shuffled around to various “I feel your pain” assistants.

After many, many calls, Dennis Scearce, Lincoln County zone manager, confirmed the real reason for all of the power outages. He said “Growth exceeded our projections…We won’t give you the ‘company line.’ We want lights staying on there.”

Petitions that demand better electric service are circulating.

Click the link below to see News@Norman’s full-page letter to Ruth Shaw:

Newspaper’s Letter to Ruth Shaw

Duke Trader Charged with Attempted Manipulation

Employee Advocate – www.DukeEmployees.com – February 2, 2005

The U. S. Commodity Futures Trading Commission (CFTC) has filed five federal civil injunctive actions against 15 former energy traders. The Tuesday CFTC press release stated that the traders worked for Duke Energy Trading and Marketing and several other energy companies. The former gas traders are charged with allegedly submitting false information such as fictitious trades, in an attempt to manipulation the market price.

The first action was filed in U. S. District Court for the Southern District of Texas, against former Duke Energy Trading and Marketing , LLC (DETM) trader Michael Whitney. The reporting time frame was 2001 and 2002, back when Duke wanted to be just like Enron.

Duke Faces Price Probe

Welcome to 2005

Employee Advocate – www.DukeEmployees.com – January 10, 2005

New Duke Energy Chairman and CEO Paul Anderson had the whole year of 2004 to show what he could do. And, he did a lot. He reversed almost every bone-headed decision made by his two predecessors. Mr. Anderson has made many good moves over the past year. His efforts are augmented by his wife and CFO David Hauser.

Mr. Anderson originally assigned David Hauser as acting CFO. It became obvious that no one else could do a better job, so he was elected as permanent CFO in 2004. The previous CEO overlooked Mr. Hauser’s ability and many years of service. He chose to import a CFO from England. The moving expenses alone cost a million dollars. The imported CFO worked out about as well as the previous CEO. They both caught the same train out.

Mr. Anderson’s wife has no formal company position and receives no salary. She does not help her husband by answering the phone and making flower arraignments. She is a MBA and could very well run her own company. If she had an inflated ego, she would never be content to remain mostly in the background, assisting her husband.

Mr. Anderson receives no cash, but he does not work for free. Duke did not need a bargain basement CEO. Another “day trader” CEO would have doomed Duke. Duke needed Mr. Anderson’s proven ability, and ended up getting two CEO’s for the price of one.

Mr. Anderson’s only failure has been in the area of employee benefits. He hopes that he can ignore the problem and it will go away. He will find that he is engaging in wishful thinking.

Mr. Anderson made a break with the past failures, caused by overpowering corporate greed. But by clinging to benefit takeaways, he did not make a clean break. So he is tainted by the poor judgement of others. By ignoring the damage to employees, he is tolerating, accepting, and endorsing the past greed and injustice.

Not all employees were overjoyed to see Mr. Anderson return. In fact, some were not happy about his return at all. Some felt that the PanEnergy buyout was partially financed by their pension money.

Reduced health benefits, reduced pensions, the PanEnergy buyout, and Rick Priory as the CEO all came about in the span of about a year. As if that were not devastating enough, Mr. Priory then eliminated retirement health benefits at age 65. Retirees will be thrown to the health insurer of last resort: Medicare. G. W. Bush is looking for ways to reduce Medicare benefits to cover the cost of tax cuts for the wealthy and to finance wars for no reason. Lots of luck.

Mr. Anderson first came to Duke through the PanEnergy buyout. He stayed a short while and left with a large sum of money. Right or wrong, some viewed him as coming to Duke just long enough to make off with a chunk of their retirement money. You can see how this is a sticking point now that he is ignoring the pension losses that employees have suffered. Some perceive that Mr. Anderson has a “I’ve got mine” attitude concerning pensions. A truer statement may be “I’ve got mine and I’ve got yours and I’m keeping it all!”

When Mr. Anderson came back to Duke, the Employee Advocate felt that he deserved a chance. Assailing him for perceived past transgressions would have served no useful purpose. In his first trip through, he only took the deal that Duke offered. Duke insisted on shoving his pockets full of money. He was just too well reared to refuse.

Mr. Anderson had his hands full when he returned to Duke. The last thing he needed was employees upbraiding him for the mistakes of others. If everyone had been against him, he would have been in a no win situation. If no one supported his efforts, why should he even try? He has a financial incentive to see the stock price appreciate. He is paid only in stock and delivery is deferred. But there is no reason that he cannot have both: financial rewards and recognition for doing a good job.

It is entirely possible that he did not like the smell of things when he first came to Duke. The official story was that he wanted to run his own company. But there may be a bit more to the story.

If he had been really impressed with how Rick Priory ran Duke, would he have not wanted to stay and learn from him? On the other hand, if he saw a train wreck coming, would he not have wanted to jump ship as soon as possible? Think about it. Mr. Anderson left Duke soon enough to not be implicated in any of the subsequent scandals. He came back with knowledge of the business and clean hands. That made him a perfect candidate to fill Duke’s top positions.

Cash Balance Problem Denial

Duke will try to give the impression that it is unaware of any employee dissension over lost benefits. It is all part of the Duke stonewalling tactic, honed to perfection by a century of avid use. But it is a deception. Duke is very well aware of the benefit problems that it created. No benefits are ever lost by accident. There is always much plotting, scheming, and planning on how to take the most benefits from employees, without causing too much of an uproar.

A Duke official had a meeting with employees to find out what was on their minds. You know where this is headed. It did not take long for the subject of Duke’s cash balance plan to come up. Everyone was furious over the loss of pension benefits that had already been earned. Attempts to deflect the anger were futile. The official finally said that he would take the concerns to HR.

The official said that it happens every time. He said that in each meeting with employees the subject of the cash balance plan always comes up. He said that employees have made it clear that they hate it. He said that he always dutifully reports the concerns to HR – and never hears a word back!

Mr. Anderson did the right thing by first correcting the financial disasters created by his predecessor. If the company never makes any money, all benefits will vanish. The problem is that when the company was making staggering profits, benefits were still vanishing.

If the company makes money, executives get millions in bonuses and employees lose benefits. If the company loses money, executives get millions in bonuses and employees lose benefits. That is not exactly a morale building formula.

Fixing all the problems except benefits is not good enough. When benefits reach parity with the beginning of 1996, management will be approaching having a clean slate. Until that time, management will struggle daily under the baggage created by its own greed.

Paul Anderson After One-Year

Mr. Anderson started to regress into the old management denial pattern of blaming the press for everything. That will never fly; he should know better. It did not work before and it will not work now. Paul Anderson will be held accountable for the fate of Duke Energy, not the press.

Mr. Anderson blasted The Charlotte Business Journal in the November Open Forum. Then The Journal wrote a fluffy article about him. Then it published an extremely fluffy article about Duke Power President and CEO Ruth Shaw.

The Journal also published an article by Duke Energy COO Fred Fowler. That was an extremely interesting article indeed! Mr. Fowler took the opportunity to lecture others about the very things that he is guilty of!

In 2004, Mr. Fowler boasted that he was going to eliminate on the job accidents, fatalities and even sickness! But there were accidents, there were illnesses, and there were four fatalities in 2004. Why do executives continue to set themselves up for guaranteed failure? It costs nothing to keep one’s mouth closed. But some insist on always having their foot in it.

His comments in The Journal contradicted his previous statements. There is one story for employees and a different story for the public. It’s almost like the Enron days!

Fred Fowler Lectures Others

An 89-year-old woman froze to death after Duke Power cut off her electricity. How about a plan to prevent customer fatalities?

Woman Freezes to Death After Power Cut

An amazing thing happened at the 2004 Shareholder Meeting. A shareholder’s proposal that all directors be elected each year passed, with 63 percent of the vote! Another amazing thing happened. Mr. Anderson said “We will abide by the will of the shareholders.”

Questions were asked about the Duke’s plans to use a nuclear fuel mixture that includes plutonium (MOX fuel) and about nuclear terrorism. The meeting was immediately adjourned, without asking for any more questions. It only lasted for one-hour.

Nuclear terrorism and the use of fuel containing weapons grade plutonium seems to be a sore spot with Duke. So if you attend the next meeting: Don’t Ask Questions About MOX Fuel and Nuclear Terrorism! Again: Be Sure Not to Ruffle any Feathers by Asking About MOX Fuel and Nuclear Terrorism!

2004 Duke Energy Meeting of Shareholders

As Duke settled California price gouging lawsuits, the Federal Energy Regulatory Commission opened a new probe of exerting unfair influence on prices in regional markets.

Duke Faces Price Probe

In 2004, some admitted that they were wrong. Fortune admitted that it was wrong to believe Rick Priory’s song and dance.

The Rise and Fall of Rick Priory

In 2004, Duke was fined almost $2 million for a 2003 oil fire in California.

Duke Fined for Oil Fire

A Duke gas explosion occurred in Texas.

Duke Gas Explosion

Duke made a settlement with FERC for $549,973 to resolve questionable trading practices.

Duke Makes Another FERC Settlement

Duke coughed up $207.5 million in price-manipulations settlements.

Duke’s $207.5 Million Price-Manipulation Settlement

Another employee opinion survey was held in 2004. But don’t expect to see any raw data. It is easier to spin the results if the raw data is hidden.

2004 Employee Opinion Survey

One outstanding accomplishment was the elimination of the goofy slogan: "We generate what's next."

A Silly Slogan Dies

The cover story was that former CEO Rick Priory retired. But The Charlotte Observer reported that he was technically fired. Don’t shed any tears for Mr. Priory. His contract provided for a involuntary departure severance package of $4.83 million. Executives get contracts and guaranteed millions. Employees get phony promises and get told that contracts are bad.

Priory's Deal

New Executive Vice-President of Nuclear Generation Brew Barron was under the gun in 2004. Mike Tuckman, retired from the position at the top of his game. There were plenty of opportunities for failure, but Mr. Barron pulled off a good run. His approach to safety is to acknowledge when workers are doing things right. It is a small thing, but much better than boastful comments and foolish programs that are doomed to failure.

Happy New Year!

Welcome to 2004

Fred Fowler Lectures Others

Employee Advocate – www.DukeEmployees.com – December 31, 2004

The Charlotte Business Journal published an article by Duke Energy COO Fred Fowler this month entitled: “Lead by Example in Creating a Safe Work Environment.” What is so strange is that only last month Chairman and CEO Paul Anderson trashed The Journal in his “November Open Forum” comments. Oh well, any port in a storm.

Mr. Fowler admitted: “This has not been a good year for safety at Duke Energy. Four people died while working at Duke Energy facilities across the nation. It has been our biggest disappointment of 2004.”

This was also a very strange statement for him to make. It was a far cry from his arrogant and boastful safety comments made earlier this year. Mr. Fowler boasted that he had formed a Safety Steering Team that would drive zero accidents on the job, zero deaths on the job, and even zero sickness on the job at Duke Energy.

The Employee Advocate has heard the wind blow before.

Mr. Fowler’s new song and dance is that management will lead the way to safety by following their own safety rules. The man is growing, but it is a painfully slow process. He felt compelled to publicly announce that management is going to follow safety rules, as if it were a revelation. Does that mean the he originally had no intention of following any safety rules himself?

Granted, his original safety approach was an attempt to force employees to be safe by issuing decrees and bluster. He fell on his face on that one.

Mr. Fowler came up with another brainstorm: “it's worth asking employees about any safety concerns they may have. The answers might surprise us.”

Virgin ground was broken when he wrote: “Admit Mistakes, And Learn From Them.”

Understand, Mr. Fowler was lecturing the management of other companies. Duke Energy senior management is not big on admitting any mistake. When bad management almost drove Duke to the brink of disaster, the media was blamed for everything! Duke Energy management never admits a mistake even after making a settlement. Management will begrudgingly pay millions of dollars in settlements, but will never admit any wrongdoing. Lots of luck getting this crowd to admit even the smallest of mistakes.

Mr. Fowler stated: “Creating a 100 percent safe working environment is a worthy goal. But mishaps will happen. As a business leader, don't be afraid to admit mistakes.”

This directly contradicts what he said earlier this year! He was adamant that his Safety Steering Team would prevent all accidents, deaths, and sickness. Rather than admitting that his foot was in his mouth, he later tried to defend his comments. He said “I was in Brazil last week, and we accepted an award – 5 million work-hours without a lost time accident. So that tells you it can be done.”

An arbitrary period of time, selected after the fact, proves nothing. See how many dead workers this award brings back to life.

Mr. Fowler never admitted that he was wrong to employees. He grasped at straws to try to prove himself right. He now lectures other about the very things that he is guilty of, while denying any guilt!

Evidently Mr. Fowler’s mindset is still with the previous, failed Duke management. Former Duke CEO Rick Priory tried the very same tactic. In 2002, he lectured other CEO’s at The Economic Club of New York not to make the very mistakes that he was making. Of course he never actually admitted making any mistakes.

Mr. Priory made comments such as: "Business must set about the work - and many have - of clearing up our own corporate backyards. That requires brutal, self-critical honesty. We've got to prune out excesses, deception and any practice that threatens the moral roots of the organization."

This whole episode is so absurd that sounds like a Dilbert® strip. But sadly, it is 100 percent true.

Fast Freddie Fowler Flounders

Not the Zero Accidents Sham Again!

Resurrecting Past Failures

Rick Priory Blows Smoke

Duke - Page 2