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DukeEmployees.com - Duke Energy Employee Advocate

Noon Rebuttal - Page 2 - 2001

"I shall continue to do what I think is right whether anybody likes it or not." - Harry S. Truman

Noon Rebuttal - June 2001

The Noon Meeting was held June 14, 2001, with Duke Energy employees in Houston, Texas.

Question: After reading the news on the proposal from Duke Energy to California to forgive some of the debt owed Duke Energy and in return, asking California to call off any investigations or legal actions against it related to overcharges, I recall a section in the Code of Business Ethics course I was required to take which seems to conflict with this proposal. Please explain how this proposal does not interfere with our Code of Business Ethics.

Answer: We offered a global settlement to the Governor of California in March in an attempt to jump-start meaningful discussions around the state's energy crisis. It is a very common business practice to offer such settlement packages when trying to reach common ground on numerous, inter-related issues. The categorization by the media of our discussions and offer as "secret" is misleading. It is standard practice to assign confidentiality to documents and conversations associated with a transaction or negotiation. We've worked tirelessly with local, state and federal officials to offer concrete, creative solutions to California's energy crisis, and we've conducted ourselves with the utmost integrity, and well within the parameters of our Code of Business Ethics.

Advocate: It is a common practice for businesses to offer a settlement package – if they feel that they will possibly lose more in a court of law. No one is going to offer a settlement on a case that they think they will win. A settlement is an attempt to save the cost of fighting a losing battle. It is one thing to offer a settlement to end a lawsuit; there is nothing illegal there. It is quite another matter to offer money to get government investigations aborted!

Do you think the offer would have been the same if Duke knew that it would be sent to the press? This was to be a back room deal that you were not supposed to ever know about. You were never supposed to know just how you lost your pension benefits, or even how much you lost either! It is a typical pattern of those who feel that they are just too big and too powerful to ever be stopped. The Code of Business Ethics is a joke, and everyone knows it!

The L. A. Times quotes below are from just one of the many articles about the dubious deal:

"‘It is unbelievable,’ said Harry Snyder of Consumers Union. ‘The attorney general ought to open an investigation into whether they have attempted to bribe the governor. It is an attempt to subvert democracy.’"

“Sen. Steve Peace (D-El Cajon), who carried 1996 legislation aimed at implementing aspects of deregulation, called Duke's suggestion a ‘smoking gun.’"

“Senate President Pro Tem John Burton (D-San Francisco) called Duke's offer bizarre. ‘Without admitting “legal liability,” they are admitting they are ripping us off,’ Burton said. ‘People do settle lawsuits. But stopping an investigation? What is it we are supposed to find?’"

Duke Energy's Offer to Davis Denounced

Question: With all the press about our great earnings and our great company, why can't we get an increase in employee benefits? Each year our benefits are taken, either in the form of reducing benefits or increased cost.

Answer: Duke Energy and its business units review compensation and benefit plans annually. This analysis examines each reward element, including base pay, incentive programs, health and insurance plans, paid time off and retirement plans. The reviews help enable us to meet our objective of providing a total rewards package that is competitive for the markets in which we compete for talent. Many employees share in the success of the company by investing in Duke Energy common stock (DUK). Such an investment at the beginning of 2000, with dividends reinvested, resulted in more than a 70 percent increase in value by year end. In addition to purchasing shares through a broker, employees can invest through the Dividend Reinvestment Plan or through the Duke Energy Common Stock Fund in the Retirement Savings Plan. And since 1997, target incentives have increased and payout opportunities are larger. These larger incentive payouts have a positive effect on both the RSP and the Retirement Cash Balance Plan. Just as employee out-of-pocket costs have increased, so have the company's contribution to employee benefit plans. Our commitment to employees and shareholders is to continue our annual reviews to ensure that our compensation and benefit plans remain cost-effective and competitive.

Advocate: Hogwash! Sell that drivel to some reporter that does not have a clue as to what has happen to the workers. Many employees suffered devastating losses due to the cash balance pension conversion. Then the company took away the retirement health coverage that we had been promised since day one. Our health coverage gets watered down more and more each year. It is very strange that a 49 billion-dollar corporation is much skimpier with benefits that when it was a four billion-dollar company in 1996 (Rick Priory’s figures). Of course, as the company takes more and more from the employees, it will grow even richer. In addition to these benefit loses, some “core” employees will be without work for extra months. While other employees will be on “standby” pay: they will draw no salary and receive no unemployment benefits!

Noon Rebuttal - May 2001

The Noon Meeting was held May 14, 2001, at McGuire Nuclear Station in North Carolina. Rick Priory hosted the meeting with employees.

Opening Comments by Rick Priory:
Rick Priory: I'm delighted to be here today, particularly when McGuire is on such a high. You've done a marvelous job for Duke Energy and Duke Power!…Last year was Duke Energy's most successful year ever in nuclear.

Advocate: The last four years have been the very worst for employees. Huge pension losses, medical coverage losses, and endless games played with our holidays have taken their toll.

Rick Priory: We're hearing a lot more interest in nuclear power today: Vice President Dick Cheney recently said on MSNBC that "if you want to something about carbon dioxide emissions, then you ought to build nuclear power plants?"

Advocate: We are well aware that Dick Cheney is in one pocket and George W. Bush is in the other pocket. So, you can gloat for at least another three and one-half years.

Rick Priory: We proposed a "good faith" preliminary global settlement to help solve the California energy crisis, and we released the full text of two comprehensive documents sent to the governor's office.

Advocate: Yes, but do not take too many bows for publishing the documents. They were published only after someone sent them to the New York Times. That someone was probably sick of hearing two different stories. The public rhetoric welcomed an investigation. The private documents offered concessions to abort the investigations and lawsuits.

It may have been prophetic that the very first question asked at the annual meeting was: “what (do) they (the auditors) do to make sure that there are no bribes being given or taken.” The “B” word has been used in news articles to describe the clandestine offer to the California governor:

" ‘It is unbelievable,’ said Harry Snyder of Consumers Union. ‘The attorney general ought to open an investigation into whether they have attempted to bribe the governor. It is an attempt to subvert democracy.’ "

“Senate President Pro Tem John Burton (D-San Francisco) called Duke's offer bizarre. ‘Without admitting “legal liability,” they are admitting they are ripping us off,’ Burton said. ‘People do settle lawsuits. But stopping an investigation? What is it we are supposed to find?’ "

Duke Energy's Offer to Davis Denounced

Meeting of Duke Energy Shareholders 2001

Question: Are we at a standstill now on deregulation in North Carolina and South Carolina?

Rick Priory: Deregulation in the Carolinas, and most other states, is currently in a "state of levitation." There has been so much misinformation about what's going on in California that legislators aren't willing to take a stand on deregulation, although they appear to still be in favor of restructuring. In North Carolina, we continue to study proceeding with deregulation, with the wholesale portion being deregulated first, followed by retail, as we've been recommending all along…

Advocate: Misinformation? It is glaringly obvious to all just what a disaster electric deregulation is. The only ones that cannot see the disaster are those who stand to reap huge profits from deregulation. And it will not be the ratepayers or the employees who will profit. Deregulation has been used as an excuse to take benefits from employees for over a decade. Deregulation is such a failure that Mr. Priory has not been able to steam-roll the North Carolina legislature – yet.

Question: Have we overcome all the hurdles for the MOX fuel?

Rick Priory: We're right on track with regard to MOX fuel. The recent hearings went well as did a series of open houses. The open houses weren't really that well attended and I attribute that in large part to the fact that people trust that we run our plants safely and that we will do the right thing. MOX fuel is a safe, proven technology. This MOX fuel has been used in Europe for 30 years.

Advocate: A total of seven people attended the three Duke MOX meetings. Mr. Priory’s spin is that it is because people trust Duke to do the right thing. There has been very little publicity about MOX fuel. Even though Duke has been involved in it since 1995, many employees found out about it only recently – from outside sources. Does anyone think that Duke Energy would be the place to go for unbiased opinions about MOX fuel? Would you go to the fox for opinions about hen house security systems? Duke’s meeting may have been virtually empty, but the NRC MOX Hearing was packed. And, “this” MOX fuel has not been used in Europe for 30 years. A non-weapons grade plutonium MOX fuel has been used in Europe for 30 years. Nice try, though.

Question: Do company expectations/ethics for full-time employees differ from regular part-time employees?

Answer: We're committed to conducting business with high ethical standards and to meeting both the spirit and letter of applicable laws, rules and regulations. All employees, both part-time and full-time, at all levels of the organization, are expected to honor this commitment, and to use good judgment when faced with questions having legal, moral and ethical implications. Our company's excellent reputation is built on the strength of good decisions by all employees. Our Code of Business Ethics provides guidance to employees about working honestly, morally and with integrity.

Advocate: That statement makes us feel tired all over. When someone from Duke Energy senior management can make such a statement with a straight face, it is obvious that we are dealing with a completely amoral company. They will say anything, do anything, with total disregard for the truth or common decency. For Duke, the end always justifies the means. There were zero ethical standards involved when the company broke retirement promises made for decades to thousands of employees. That was not ethics; it was GREED. Greed was the father of the deed.

Question: We received two questions concerning Duke Power's procedure for paying non-exempt employees for actual and designated holidays and overtime pay at McGuire Nuclear Station.

Evasion: Paid time off procedures vary from business unit to business unit, based on business needs. For details about McGuire's paid time off procedure, employees can reference the Duke Power Holiday Procedure located on the Employee Portal or talk with their managers or their human resources representatives. I can tell you, however, that Duke Power's pay benefits for holidays exceed what is required by Wage and Hour Laws.

Advocate: That’s great! They did not even print the questions. Then, a rhetorical non-answer was given to the hidden questions. Maybe more questions are required – a lot more questions.

Noon Rebuttal - April 2001

The Noon Meeting was hosted by Rick Priory in Charlotte North Carolina April 16, 2001.

Opening Comments:
Rick Priory: PG&E filed a Chapter 11 reorganization - in essence a bankruptcy request - earlier this month.

Advocate: Chapter 11 is administered under the bankruptcy laws, but as the name states, it is for reorganization. Total bankruptcy would be liquidation under Chapter 7. Chapters 11, 12, and 13 is for the rehabilitation of the debtor by allowing them to use future earnings to pay off creditors. Federal laws are evoked to stop creditors from threatening to sue and otherwise hounding the debtor. (Do we know anyone who would do that?)

Click the link below to read the statement made by Robert D. Glynn , PG&E Chairman:

Why PG&E Chose Bankruptcy Protection

Rick Priory: We launched a new advertising campaign recently, and introduced a new tagline… Our tagline, "We generate what's next," is shorthand for our brand, similar to Nike's "Just do it." While the words and images we use to describe Duke Energy's brand are important, it's our actions that really build Duke Energy's brand.

Advocate: Ah, someone is getting a clue. It takes more than mere words to prove anything. Words with opposite actions prove only a problem delivering the truth. Promising early retirement benefits and health coverage, and then reneging, certainly puts one in this category. Making claims of wanting a full investigation of “megawatt laundering” charges, and then attempting to make secret deals to abort these investigations is not the way to truthfully handle matters. Of course, "We generate what's next," does not imply that what’s next will be good; consider: pension losses, health coverage losses, price gouging charges, secrete deals, and MOX controversy.

Question: Do you see nuclear power as part of the intermediate solution to the power supply question?

Rick Priory: Nuclear is a major part of the intermediate solution. We need to focus on getting more out of our existing nuclear facilities and then re-licensing them…. With regard to new nuclear, I'm not sure. There's a lot more interest in nuclear than there is support for it. There are formidable barriers to building future nuclear plants. For instance, we haven't solved the waste issue. Until we can solve those types of issues, it'll be difficult to get a new nuclear plant approved.

Advocate: See, it does not hurt that much to admit an obvious problem. The entire world knows that nuclear waste is a problem. Attempting to dance around the issue would have fooled no one.

Question: How do you think the new Administration will affect resolution of nuclear issues?

Rick Priory: The Bush Administration is favorably disposed to nuclear. We've gotten the message to them that the first step to bringing back nuclear must be dealing with the waste issue, and this Administration may have the political courage to do it. Nuclear waste disposal is not a technological issue; it's purely political…

Advocate: What? We try to give you a little credit for actually admitting a problem and not trying to gloss it over. And in the very next answer, you crawfish and say that it is not really a problem! We suppose we have to take what improvement we can get. When a donkey flies, no one notices if he does not stay up that long. And, the energy industry owns George W. Bush.

Question: Ron Green (president, DE&S) met with our organization on April 6, and indicated there were some changes underway for our retirement package. I'd like for you to comment on this - are these changes being contemplated within DE&S or across the board?

Ron Green: What I said during the April 6 meeting was that DE&S was in the process of evaluating costs to see what can be reduced to make us more competitive. We did look at our overall benefits structure, and recognized that our retirement benefits are some of the best in the industry. Instead of cutting any money there, however, we decided that those benefits were a sustainable, competitive advantage for us in attracting and retaining high-performing employees. We made cuts in other areas - changes in areas such as retiree life insurance, which will save us about $1.5 million a year will take effect next year.

Advocate: Oh no, reducing cost to make us more competitive; you know what that always means! Now this is hard to believe, the company has actually figured out that pension benefits are a “competitive advantage for us in attracting and retaining high-performing employees.” Yes they are. And, they were more of an advantage before they were gutted in 1997! But the employees still end up losing. The money was taken out of the retiree’s life insurance coverage. Bleeding the retirees is always an easy way out. It's sort of like snatching handbags from little old ladies. But hey, it's more millions for you-know-who. The company is making unprecedented profits and is still squeezing the employees for every dime possible! Has anyone figured out that this game cannot be won without a contract?

Question: I'm probably whipping a dead horse, but why won't the company reimburse us on parking? Many companies in uptown Charlotte pay for or subsidize parking for their employees. It would be great if someone could look into this.

Answer: Parking procedures vary across the company based on business need and availability. In the Charlotte Center City area, Corporate Services assigns company-owned and controlled parking spaces based on seniority. Some spaces have also been allocated for certain executive-level positions. Additionally, some business units have chosen to bear the additional expense of commercial spaces. We don't currently have plans to change the parking policy or add more company spaces, but will continue to review our options as business needs dictate. If you have questions about your business unit or location parking procedures, please speak with your local human resources representative.

Advocate: The employee hit that one right on the head – dead horse. But that does not mean that he should stop asking. The question should be asked 10,000 times if necessary. If the squeaking wheel does not get any grease, the silent wheel never will!

Question: In our department, for the past four years, employees are averaging annual two percent pay increases. The inflation rate has been between four percent and six percent. I know that each department works within its own budget to determine salaries, but only getting a two percent increase when the inflation rate is four percent, means we're actually losing money. Will anything be done about this? Many good employees with expert knowledge are leaving the company due to, among other things, pay. With our incentive pay not helping us toward retirement, we need help.

A: The U.S. inflation rate for 2000 was actually 3.36 percent. And while some employees leave the company each year, we work hard to retain employees who help achieve our business objectives. In fact, our voluntary turnover rate has actually decreased from 7.4 percent in 1999 to 6.4 percent in 2000, indicating that our retention efforts are successful.

We line up compensation to be competitive in the markets where we compete. We evaluate positions and benchmark them against various companies of comparable size and in the geographies in which we compete for talent. We keep our basic pay policy competitive. Then, when it comes time to make individual compensation decisions, we consider a number of factors – but primarily the individual's performance. Annual increases are intended to keep us market competitive. We give employees the opportunity to increase their compensation through incentives. And, generally speaking, our employee incentive programs are relatively high in our markets, so that if our company and our shareholders do well, we do well. I encourage you to discuss any concerns about your annual increase with your supervisor.

As far as our retirement plan is concerned, participants receive pay credits on short-term/annual incentives as well as on base pay. And the dollars in the Retirement Cash Balance Plan create a "cumulative effect" as they grow over time. Since we wanted to emphasize incentives in compensation, it was important that incentives become part of your retirement plan.

Advocate: Oh! Well. If the inflation rate was 3.36 percent and the employee’s average raise was 2 percent, they should be getting rich in no time! Or, is that bankrupt in no time? And speaking of 2 percent; that is all the incentive that Mr. Priory received last year. Whoops! We mean 200 percent! (See the proxy link below.) Whatever percentage of employees leave the company will usually be the very best. This is as it should be. As the pay and benefits drift toward mediocrity, so will the talent of the employees. Yes, the employees need help; they need a contract.

Duke Energy Files Preliminary Proxy Statement

Noon Rebuttal - Page 1 - 2001