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DukeEmployees.com - Duke Energy Employee Advocate

Noon Rebuttal - Page 3 - 2001

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

Noon Rebuttal - September 2001

The Noon Meeting was held in Charlotte, North Carolina on September 10, 2001. It was hosted by Mr. Rick Priory.

Opening Comments by Rick Priory:

Rick Priory: First, let me address the current investigations by the North Carolina Utilities Commission and the Public Service Commission of South Carolina regarding regulatory accounting matters included in Duke Power’s filing for 1998.

…During our review, we found no evidence of wrongdoing, but it does appear as if some accounting errors were made. The issues, however, had no material effect on the company’s reported earnings for 1998, nor did they affect electric rates… Our culture and practice have been – and will continue to be – to adhere to the highest standards of conduct in all aspects of our business.

Employee Advocate: Accountants are not generally given to attention seeking. The alleging employee, undoubtedly, perceived gross ethics violations to have called in the utility regulators. The commission members are usually not the type of people who will make wild accusations without substance. Yet, some very strong charges have been made from within the commission and from within Duke Energy. Stonewalling will not work on every occasion. After having his concerns ignored by the company for over two years, it appears that the employee had endured enough and sought outside help. The unprecedented investigation should prove interesting. By the last sentence of the reply, it is obvious that the standard damage control rules apply - Deny it to the grave!

Whistle-blower: Duke Misled Regulators

Rick Priory: We launched a new series of advertisements in leading national newspapers last week, to position Duke Energy as a thought leader on energy issues to policy makers and business leaders. The ads support our goal of industry leadership, and reinforce our brand as a knowledgeable, credible resource on energy issues. The series began on September 6, and will run for five consecutive weeks in The Wall Street Journal, New York Times, Washington Post, USA TODAY, L.A. Times, Houston Chronicle, and several Capitol Hill publications. (Editor’s note: Due to the tragic events on Sept. 11, our ads have been temporarily suspended.)

Employee Advocate: That is one way to deal with a press that you cannot control. Buy ad space and print you own news! We wonder if Duke will buy out The Charlotte Observer in the years to come. That should make controlling the press much easier.

I Am Not a Crook

Rick Priory: Duke Engineering & Services just finished the spent fuel dry storage project at Zaporozhye Nuclear Power Plant in southeastern Ukraine. DE&S managed the storage system’s design, construction and licensing for this first-of-a-kind project.

Employee Advocate: This meeting was held the day before the terrorist attacks in New York and Washington. Since the attack, having spent nuclear fuel sitting around everywhere does not seem like such a good idea.

See No Evil, Hear No Evil

Question: When are the results of the recent employee opinion survey going to be released?

Rick Priory: Enterprise-level executive summaries were shared with the Policy Committee during the first two weeks of August. Business unit human resources organizations are now reviewing survey results and will share insights with line management soon. You should begin hearing about the results toward the end of September, and enterprise-level results will be shared via the Employee Portal in that same time frame.

Employee Advocate: The degree and promptness of which the results are shared can depend upon just how disastrous the answers were.

Question: I’d like to know the ratio of salaried personnel to hourly personnel on Duke Energy’s payroll.

Rick Priory: Job classifications vary by business unit and group based on business needs. Therefore, the number of salaried (exempt) versus hourly (non-exempt) employees vary by business unit or group. If you have specific questions or concerns about classifications – salaried or hourly – you should speak with your department or business unit human resources representative.

Employee Advocate: Translation: “That’s for me to know and you to find out!”

Noon Rebuttal - August 2001

Rick Priory hosted the August Noon Meeting on the trading and marketing floor in Houston, August 22, 2001.

Opening Comments by Rick Priory:

Mr. Priory: We’re delivering more than we’ve committed to Wall Street, with our competitive businesses contributing 61 percent of EBIT in the first half of 2001.

Advocate: Yes, and the company has delivered less than committed to the employees. When Duke Energy no longer wants to honor long term commitments made to employees, the commitments are simply downsized.

Mr. Priory: Our nuclear stations are breaking records and earning recognition. On August 7, Catawba Nuclear Station set a new station record with both plants on line for 200 consecutive days.

McGuire Nuclear Station recently received the American Nuclear Society’s "Utility Achievement Award" in recognition of outstanding performance.

Advocate: And to show its appreciation, the company continues breaking records in reducing benefits and breaking promises to employees!

Mr. Priory: It’s incumbent upon us to demonstrate our ethics and integrity everywhere we go to help strengthen our corporate brand and build Duke Energy’s reputation for integrity.

Advocate: If Duke Energy had a reputation for integrity, it would not be necessary to build one (or to attempt to fabricate one). If one conducts all matters with integrity, it becomes self-evident. No campaigns to sell one’s brand, hundreds of meetings to “sell our story,” or damage control will be necessary. Full page ads of the “I Am Not a Crook” variety will also be unnecessary.


Question: What’s the potential for a spin-off of our unregulated business from the regulated side?

Mr. Priory: Our view is that, if you have critical mass, this could work…

Advocate: And If you do not have critical mass, seven nuclear reactors are not going to work.

Question: With the EPA and some of the smaller environmental lobbies fighting for tighter restrictions on emissions, how is Duke Power in the Carolinas affected?

Mr. Priory: …Remember, we’re only debating requirements that go well beyond health based standards that have worked well for many years.

Advocate: Health based standards that have worked well for many years? The San Francisco Chronicle published these statement in April:

“Sears' antipollution resolution, introduced in November, came a month before the Environmental Protection Agency charged the company and others with numerous violations of the federal Clean Air Act. The pollution that Duke allegedly caused, the government said, was responsible for increased sickness and mortality from lung disorders among residents of the Southeastern United States.”

"‘I went to the emergency room twice last summer. I didn't know what was happening to me,’ said Nina Layton, 53, of Charlotte, N.C., where Duke is headquartered. ‘My asthma doctor said the coal-fired plants were one of the main culprits.’"

"‘It makes me cough a whole lot more, and coughing is what upsets my lungs,’ said Virginia Richardson of Winston-Salem, who lives near Duke's coal-fired Belews Creek plant, one of the company's dirtiest. Richardson, 70, has a chronic lung condition that gets worse, she said, when the plant is spewing emissions. ‘I notice smells in the area. Sometimes the air looks foggy, smoky or whatever. I come in the house,’ Richardson said. ‘It's the same stuff over and over, shortness of breath, I get tired, I get bad colds in the wintertime.’"

“Clay Ballantine, a physician at a large hospital in Asheville that serves 22 counties in western North Carolina, said that during the summer of 1999, one of the worst in local memory for pollution, he treated at least a half- dozen patients for severe respiratory problems. They later sold their second homes in the Blue Ridge Mountains and returned to their home states. A dozen other physicians on the staff treated similar numbers, he said. ‘The tourists come here thinking they'll get clean mountain air, and they end up with flareups of normally stable breathing problems they had before -- with severe asthma and emphysema,’ Ballantine said. ‘We're seeing more lung disease than when I came here four years ago,’ Ballantine added. ‘My opinion is the emissions from the coal-fired power plants are the main correctable variable.’"

“Two North Carolina cities -- Charlotte and Greensboro -- rank among the nation's worst in annual incidence of deaths, asthma attacks and hospitalizations attributable to power-plant pollution. A third city, Asheville, has the nation's sixth-highest rate of deaths related to power plant pollution, the study found.”

Oh! Perhaps you meant that the health standards have worked well for Duke Energy for many years!

Click the link below to read the article:

Nuclear Warning Watchdogs Eye Duke's Salvage Operation

Noon Rebuttal - July 2001

The Noon Meeting was held July 9, 2001, in Charlotte, North Carolina. The meeting was hosted by Rick Priory.

Opening Comments by Rick Priory:

Rick Priory: After having analyzed tremendous amounts of data from our California operations and our trading and marketing company, I can tell you without a doubt that Duke Energy has conducted its business in California with the same operational excellence and dedication to ethical integrity that we do everywhere.

Advocate: That bad, is it? The senior management of Duke Energy has demonstrated time and again that they have absolutely zero ethical integrity. They have lied to employees and destroyed all trust. Employees were misled for decades about the pension, early retirement, and health care benefit they would receive. Why is management always trying to explain why they are always right and the rest of the world is always wrong?

Rick Priory: Shortly after we released this information to the press, the ISO confirmed that all of our actions were taken at their direction.

Advocate: Just like with the cash balance pension conversion, Duke Energy has not come completely clean. Clinging onto one ISO statement for dear life will not explain away all that has happened in California. Even the ISO has charged Duke Energy with withholding power! Here are some statements from The Associated Press: “The California Independent System Operator's market analysis director, Anjali Sheffrin, accused Duke in a March report of withholding power or pricing it out of the market 88 percent of the time between May and November 2000…

"‘The tactic of using a high price to essentially keep a plant out of the market is what Anjali in her report refers to as economic withholding’ of power, said ISO spokesman Gregg Fishman.

“Of the 88 percent of the time that Sheffrin says Duke withheld power last year, she calculated that about 12 percent was through economic withholding -- high prices -- and the balance by limiting plants' production.”

That does not sound like all actions were taken at the direction of the ISO!

Duke Energy Plant Sat Idle During Blackout

That’s not all. The Charlotte Observer ran this statement: “Despite Duke's written and oral requests that the ISO talk with The Observer about plant-production orders and Duke's offers to sell power, ISO spokeswoman Stephanie McCorkle refused to do so during a Friday afternoon interview at the agency's Sacramento headquarters. She cited ongoing investigations, other demands for the information, inadequate time and legal concerns. McCorkle said the documents provided by Duke told only "half the story" because the company didn't release prices for power it sold and offered to sell. Duke, like other generators, has refused to supply prices, citing competitive pressures. McCorkle said that without that information, accurate conclusions can't be drawn about Duke's business practices.”

Duke is looking to the ISO to save them, but the ISO says Duke is not telling all of the story!

Power Manager Backs Duke Assertion on Production

The Orange County Register provides the most damming information of all: “Duke took out a full page ad in today's Orange County Register and other newspapers that says the powering up and down was done at the order of the Independent System Operator, which manages the state's power grid. Williams acknowledged, however, that some of those orders were made by Duke itself, but couldn't say what percentage.

“ISO spokeswoman Stephanie McCorkle said its orders to power suppliers to ramp generators up and down are confidential and she could not verify Williams' explanation. However, the ISO, she said, would give Duke orders to ramp up and down no more often than every 10 minutes.

“A review of three days of logs obtained by the Register showed that on more than a dozen occasions, orders were given in two-, three- or four-minute intervals - the so-called dramatic "yo-yoing" of the generators that some legislators say indicates Duke was acting by itself.”

There you have it. Mr. Priory is using a single ISO statement as gospel to explain away all incidents of power ramping. Yet, according to and ISO spokesperson, Duke was doing some ramping on its own. What will be the Duke spin on this? Does the ISO speak the truth when it suits Duke’s purpose? Does the ISO lie like a dog when it exposes Duke’s nefarious activities? You cannot have it both ways! And there is the matter of a Duke Energy representative admitting that the company did a little ramping on its own accord, over and above what the ISO ordered. What will be the Duke spin on this conflict of statements? Does Duke Energy defend the truthfulness of its representative’s statements, except when they directly contradict the statements of the CEO?

Power Workers Supported

There is more. The Los Angles Times had this to say: “State officials suggest, for example, that the grid operator may have ramped down generation at times to avoid paying unreasonably high prices. Duke Energy has refused to release details of the prices it charged for power on the days at the heart of the ex-employees' allegations, and did so again Monday in a conference call with reporters.”

Generator Bows, Pledges to Cut Electricity Bill by $20 Million

10News, San Diego, provides insight on the withholding of information and some more quotes from the ISO. “…Duke executives have refused to reveal how the company charged the state for electricity during the three-day period in January.

“According to 10News, Duke set a California record at one point in January when it sought $3,880 per megawatt-hour for power. That compares to a price of about $30 per megawatt-hour for power sold in the first half of 2000. ‘The ISO frequently orders plants to ramp down because the plant is charging high prices,’ ISO spokesperson Stephanie McCorkle told the San Diego Union-Tribune. ‘Output will certainly fluctuate if the price is so astronomical we can't afford it.’

“Lt. Gov. Cruz Bustamante accused the company of trying to explain away its price gouging by releasing the ISO memo Sunday. ‘Duke should stop trying to manipulate the media the way it has California's energy market,’ he said.”

So, an ISO spokesperson states that Duke was asked to reduce power because of the astronomical price!

Duke Challenges Price Gouging Accusations

The Charlotte Observer provides more information: “While the memo says Duke's logs are accurate, ISO spokesman Gregg Fishman said Saturday morning: ‘Those facts are all correct, but they may not add up to a complete picture of what happened during those three days.’

“Despite Duke's written and oral requests that the ISO talk with The Observer about plant-production orders and Duke's offers to sell power, ISO spokeswoman Stephanie McCorkle refused to do so during a Friday afternoon interview at the agency's Sacramento headquarters.”

“She cited ongoing investigations, other demands for the information, inadequate time and legal concerns. McCorkle said the documents provided by Duke told only "half the story" because the company didn't release prices for power it sold and offered to sell. Duke, like other generators, has refused to supply prices, citing competitive pressures. McCorkle said that without that information, accurate conclusions can't be drawn about Duke's business practices.”

Here we go with the old “Catch 22” again. Duke claims that it welcomes a full investigation. Then withholds as much evidence as possible!

Power Manager Backs Duke Assertion on Production

The Los Angeles Times published this statement: “The chairman of a Senate committee probing suspected price gouging during the California energy crisis charged Monday that Duke Energy is refusing to allow him to make public information key to his investigation.”

Duke Energy Refusing to Make Key Data Public

We have no insider knowledge of what transpired in California. We only know what has appeared in the press. That is all we need to know to realize that the full truth is yet to be told. This episode does parallel nicely with the cash balance plan snow job. Just look at the similarities! We are still waiting for the full truth to come out about the pension conversion. All the trouble that Duke Energy has managed to get into during the last five years can be summed up in three words: Greed, Greed, Greed!

Rick Priory: All of this supporting data will be useful as we re-build our credibility.

Advocate: So, Duke realizes that it has lost credibility with the public. Credibility is going to be re-built using data. That will be a good trick, since Duke likes to keep all data secret. Maybe they will just reveal what seems to support their position an keep everything else a secret. Duke is still refusing to make the data public that was begrudgingly turned over to investigators, only after a contempt of court threat.

Maybe after Duke re-builds it credibility with the public, it will begin to re-build its credibility with the employees.

Rick Priory: Our job now is to share the facts, which will provide the context around why things were done as they were.

Advocate: If the company was not so miserly with the facts up front, then so much explaining would not be necessary. But if one has much to hide, they are not going to be too open with the facts.

Rick Priory: We’ll have get the facts out, tell our story over and over, and re-earn our credibility through our performance.

Advocate: That is Duke’s standard method of operation. Just keep repeating the same story over and over, no matter how unbelievable it is. Duke feels the public and employees are so stupid that they will believe anything with enough repetition.

Rick Priory: I hope you’ve seen our "truth" ad, which is running in newspapers in California, the Carolinas, Houston and other major markets.

Advocate: “Truth” ad, is it? Any company that must resort to running ads that basically state: “I am not a crook,” is running scared. When the chickens come home to roost and they are big, mean, and ugly, perhaps one cannot help being defensive. And the chickens are coming from many different directions.

Rick Priory: We have been responsive and forthcoming to investigative requests.

Advocate: Is stonewalling until threatened with contempt of court being “responsive and forthcoming”? The San Francisco Chronicle published these comments: “A state Senate committee investigating allegations of electricity price gouging may vote today to hold five power generators in contempt for not complying with its subpoenas, according to the chairman.”

“If a legislative committee issues a contempt ruling, it then goes to the full Senate for action, said Legislative Counsel Bion Gregory. It is not clear what the Senate might do, but sending someone to jail is a possibility…”

“Dunn's committee requested documents from Duke, Dynegy, Williams, Mirant and Enron. An initial document request sent on April 5 was ignored, Dunn said. The subpoenas were issued June 11.”

Five Generators Threatened with Contempt

The following statement appeared in The Los Angles Time: “The chairman of a Senate committee probing suspected price gouging during the California energy crisis charged Monday that Duke Energy is refusing to allow him to make public information key to his investigation.”

As you can see, the games are endless. “I am not a Crook (but you will just have to take my word for it).”

Rick Priory: Two other market participants were cited for contempt for not releasing their documents.

Advocate: Duke Energy was slated to be charged, but they caved in at the last minute. When one is grasping at straws they will boast about anything.


Question: If we could go back in time – two or three years ago when we started thinking about investing in California – and if we knew then what we know today, would we change our investment or strategy around California?

Rick Priory: What a luxury it would have been to know then what we know today! The answer to this really gets to return on investment – and it doesn’t have to be economic return. Any damage to our reputation is lost value to our shareholders, and we’ve been damaged by the California issues. So personally, I’d have to say I wouldn’t make the same investment today. Of course, we had no crystal ball when we made those investments. We’re there, and our job now is to steer our investment in California into something that is value-creating for the state and for our shareholders.

Advocate: And if Duke had know of the repercussions to come from the cash balance pension conversion, cancellation of retirement health coverage, and reneging on early retirement benefits, would that have charged ahead anyway? Rest assured, the company has already reaped damages from their transgressions against the employees. And the obese lady has not broken forth in song yet!

Question: What do you think was the motivation for the ISO to be so reluctant to explain the situation in California?

Rick Priory: I have no idea why an "independent body" faced with the evidence they had wouldn’t immediately step forward and release that information to the public.

Advocate: Keep in mind that the ISO statement did not explain away everything in the California energy debacle. The ISO also made some devastating remarks against Duke Energy. Perhaps the ISO knew, full well, that Duke would try to twist their statement into a panacea for all of their California problems.

Question: Do you consider California to be a good learning lesson for us for being a global player because many other markets such as Asia and Brazil are politically influenced?

Rick Priory: Absolutely. These are all deregulating markets, and there are a number of common issues… The experience we’re gaining in California will no doubt be called upon as we deal with issues in Australia, Brazil, New York or where-ever else we may go as a company.

Advocate: Mr. Priory indicated at the year 2000 Shareholder’s Meeting, that he favored deregulation in foreign countries, because the U. S. Government would "tie his hands." Yes, those pesky laws can get in one’s way. Why, some of them were actually written to prevent large corporations from oppressing the employees!

Meeting of Duke Energy Shareholders 2000

Question: What is the age/year of service combination at Duke Energy that will allow a person leaving the company to have continued medical benefits guaranteed by the company?

Answer: Typically, under current rules, retirement at age 55 with 10 years of retiree coverage eligibility service results in eligibility for retiree coverage under the Duke Energy Medical Plan. However, reaching the age and service requirements today does not guarantee eligibility for coverage when employment terminates some time in the future or that retiree coverage will continue without change. For example, required retiree contributions, deductibles, etc., are periodically changed. Current changes affect not only future retirees, but also those who previously retired. The company has retained the right to make changes to retiree, as well as employee coverages to respond to changing business demands, governmental programs and rules, employee/retiree needs, and developments in healthcare and in the healthcare industry. If you have additional questions, please call the Retirement Benefits Center.

Advocate: You can plainly see that all of your benefit promises are written in disappearing ink. The loopholes are unbelievable! What the company says your benefits are today, can easily change into nothing tomorrow. Only employees with contracts have guaranteed (legally enforceable) benefits.

Noon Rebuttal - Page 2 - 2001