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Chief Administrative Officer Chris Rolfe held the March 18 Open Forum at Belews Creek Steam Station in North Carolina. He said “Many Duke employees perform dangerous work everyday. We need to do all we can to eliminate our exposure to risks. The company’s safety record the first two months of 2008 has been terrible.”

It’s good that he recognizes the fact that many employees do dangerous work. He even admitted a terrible safety record for 2008. In another 100 years or so, the company may realize that thousands of employees cannot do dangerous work every day without anyone ever getting hurt. Attempting to improve the safety record is one thing. But proclaiming that there will never be any injuries and illness at Duke Energy is pure fantasy.

And cherry picking one group to tout for having no injuries for a certain period of time is meaningless. Out of 18,000 employees, there will always be some group that had no injuries for some period of time. At the same time, there will always be other groups with accidents. Thus, the Zero Injuries hype is a pure myth.

The only way to declare a success of the boastful Zero Injuries prediction is to cook the books. The Zero Injuries safety effort could be converted to a cash balance safety effort. With enough footnotes, disclaimers, exclusions, fuzzy math, hidden steps, and actuarial assumptions anything could be possible. Perhaps zero reported accidents could be reached if they were reduced at the same rate that pensions were reduced!

When asked about the future of retiree health care and benefits, Mr. Rolfe said “I do not see greater subsidies for retiree health care.”

That was an extremely conservative answer than no one will dispute. Employees once thought that when they retired all their benefits were locked in. Over the years, they have discovered that the written promises of benefits were only as good as Duke’s word. Houston, we have a problem.

For years the company painted the illusion of guaranteed benefits after retirement, to the point of sending annual statements playing up the benefits. Now, Duke never misses an opportunity to insert the disclaimer: “The company reserves the right to amend or terminate our plan at any time."

Duke is belatedly trying to protect itself from being burnt for misleading employees about retirement benefits. But nothing can change the fact that Duke Energy mislead employees about retirement benefits for years. Only after age discrimination charges were filed, did Duke start publicizing the disclaimer at each opportunity. After the damage was done, Duke effectively said “Oh, by the way, you are not really going to get the pension benefits that you have earned.”

A question was asked about former Cinergy employees being converted to the Duke cash balance plan and plan funding.

Mr. Rolfe said that former Cinergy employees were offered a choice between keeping their old plan or moving to the Duke plan. About 90 percent of the eligible employees moved to the Duke plan. The Cinergy pension plan is 95% funded. All of Duke’s pension plans combined would be more than 100 percent funded.

Mr. Rolfe added “The cash balance plan provides a great benefit if you work until 65. Is the Duke benefits programs better in every way – ‘No.’ For example, the cash balance plan does not subsidize early retirement at age 55. You know what? You can probably say that for hundreds of benefit programs for companies in America. You could probably say that in France, Italy, Spain and the UK. We all face the same demographic issues.”

It’s wonderful that former Cinergy employees had a choice of pension plans. Some former Cinergy employees have said that they did not lose any pension benefits by moving to the cash balance plan. Did Duke sweeten the deal to entice former Cinergy to make the switch?

In 1997, all Duke Energy employees were forced into the cash balance plan. Employees complained because of the pension reductions due to wearaway and the loss of the early retirement subsidy. The Pension Protection Act of 2006 outlawed wearaway in new cash balance plans and protected the early retirement subsidy. Since the new law did not cover Duke’s pension plan, employees were forced to sue in federal court to regain the true value of their pensions.

A new wrinkle has now appeared in the pension game. The Treasury Department is trying to retroactively legalize wearaway in certain older cash balance plans through the use of rulings.

Oppose Cash Balance Plan Legalization!

The cash balance plan may provide “a great benefit if you work until 65.” But employees were told repeatedly that they would receive these benefits at age 55. Employees were enticed to work for decades under false pretenses.

Duke Energy employees are not interested in what other companies said or did. We are not interested in what may have occurred in France, Italy, Spain and the UK. Employees know that Duke Energy reneged on delivering their deferred compensation, after they had labored for years to earn those benefits. Pointing fingers at other companies and other countries will not allow Duke to escape accountability for its greedy actions.

Jim Turner, President and COO of U.S. Franchised Electric & Gas, held the Open Forum on Feb. 5 in Charlotte, N. C. He said that safety improved in 2007, but it’s still not good enough to put the company in the top 10% of utilities.

To his credit, he did not use the overused and pathetic “zero injuries” refrain. To predict zero injuries is to invite inevitable failure. Duke Energy has consistently failed to deliver zero injuries since it first started babbling about it in the last millennium!

Duke started out with an injury on Jan. 2 this year, and the accidents keep coming. The zero injuries sham only guarantees failure and makes liars of all who tout it.

Can the safety record be improved? Certainly, it’s possible to improve the safety record. But all accidents, illness, and deaths will never be prevented, as some executives have claimed.

Resurrecting Past Failures

A site vice president recently wrote: “It is impossible to remove all risk from operating a power plant.” He used the Radiation Protection concept of As-Low-As-Reasonably-Achievable (ALARA) as a realistic safety approach.

At least two executives have a grip on reality. Nothing built on falsehoods will ever endure. That is why so many of Duke’s nifty programs come and go with the wind.

Question: What happened to the idea of empowered employees? Why is there so much bureaucracy? Many in the Midwest feel we are taking steps backwards – whether it’s the process for scheduling a conference room or getting a human resources question answered. Is there anything being done to improve this?

Jim Turner: We’ve got more work to do in the area of reducing bureaucracy, but we have been working on attacking it. In some areas, we’re making progress. In others, we are still fighting through the bureaucracy to attack the bureaucracy...

Advocate: Bill Lee introduced the drive to empower employees around the early 1990’s. It was introduced not long after the fall of the Berlin wall. The timing could have been symbolically significant - if things had worked out.

An employee asked one of the instructors how companies faired after undertaking the employee empowerment approach. She said that companies that stayed on the path to employee empowerment continued to excel. However, the companies that reverted to their autocratic ways became worse than ever. Needles to say, Duke Energy backslid big time!

Not only has bureaucracy mushroomed, but a new effort emerged to strip employees of all possible benefits.

The “Berlin wall” between management and employees is higher than ever. The “Berlin wall” separating executive and employee compensation now reaches to the sky!

There was no December or January Open Forum, but answers to questions sent in were posted in January.

Question: (short version) What is it about Duke that investors are shying away from?

Answer: (short version) Duke Energy had a good 2007.

Advocate: Employees continually ask the executives about the price of stock. That is a lot like asking a salesman if you should make a major purchase today or wait a few months. The answer will always be the same: “BUY - BUY NOW – BUY WITH BOTH HANDS!”

Company executives are not the best place to go for objective stock advice. When employees asked CEO Ken Lay about Enron stock, he encouraged them to buy more. All the same time, he was dumping his shares!

When it became obvious to everyone that Enron was tanking, the employees were blocked from selling their shares. They could only watch the price go down to near zero. That is why so many Enron employees had their 401(k) savings wiped out.

A single stock is always the most risky investment. Shares of a single stock in the company where you are employed carries the greatest risk of all. When employees put their whole 401(k) savings in the stock of the company that they work for, they are really putting all their eggs in one basket. In the worst case scenario, all their savings will be wiped out AND they will have no income!

If a married couple work at the same company and put all their savings in the company stock, they are in a very precarious position. Both could end up with no savings and no job. When employment terminates, any 401(k) loans become instantly due.

The Enron employees did not think it could happen to them either.

Duke Pension Changes

Question: An employee asked why Duke Energy was not doing more to retain skilled nuclear employees, given the recent high demand. He pointed out that the competition is offering greater compensation than Duke.

Answer: As always, the answer included the benchmarking song and dance. Duke encouraged employees considering accepting a better offer to consider everything, including benefits.

Advocate: There was a time that worthwhile benefits were a valid reason not to accept another job offering better pay. But since the cash balance pension conversion, the benefits argument is wearing thin. Employees have been hit hard on pensions, health benefits, and retirement health benefits.

Duke always tries to play everything from both ends. Our benefits were decimated for the sake of company greed. Yet, the company still expects the sparse remaining benefits to keep employees from accepting better offers.

Hey, this is what Duke asked for. The cash balance plan was supposedly implemented to cater to the young mobile employee! If you are going to be mobile, you might as well go for the big bucks. Why wait around for you benefits to be reduced even more? Why work for 30 years for benefits that can be taken away with the stroke of a pen?

Question: What happens to a new retiree's Duke medical insurance at age 65? I called HR24 and was first told that Duke's insurance became secondary to Medicare and then was referred to another HR24 rep for another question. I was confirming what I had been told and they then told me that Duke's insurance went away at 65 when Medicare started. I asked for them to direct me to written information on the HR24 Web site, and they could not find any info on retiree insurance. What happens to Duke insurance at age 65 for a retiree? Also, what are the current requirements for retirement options?

Answer: The requirements for post-retirement medical coverage under the Duke Energy Medical Plan are subject to change and vary based on your legacy company, your years of service, your date of separation, etc.

For legacy Duke former employees, retiree coverage available under the plan upon Medicare entitlement also varies, depending on the year during which an employee satisfied/satisfies the applicable retirement criteria. For legacy Duke employees who were eligible to retire (under the applicable retirement criteria then in effect) before 1999 (regardless of whether they retired then or later), access to both post-retirement medical coverage and prescription drug coverage under the plan is offered at Medicare entitlement (and beyond) (this coverage is secondary to Medicare). For legacy Duke former employees who became or become eligible to retire (under the applicable retirement criteria then in effect) on or after Jan. 1, 1999, only access to prescription drug coverage is offered at Medicare entitlement (and beyond) (this coverage is secondary to Medicare). Legacy Cinergy former employees who satisfy the applicable eligibility requirements for access to retiree medical coverage under the plan generally have access to both medical and prescription coverage under the plan before and after Medicare entitlement (this coverage is secondary to Medicare).

Importantly, employees also should consider how their choices with respect to their retiree coverage may impact their ability to obtain coverage under the plan for their spouses and/or dependents. As these rules are complicated and subject to change, you may want to call the myHR Service Center at 1-888-465-1300 for more details. If you happen to receive conflicting information from a center representative, ask to speak with a supervisor.

Duke Energy reserves the right to amend, modify or terminate the coverage provided under the plan, including, but not limited to, post-retirement healthcare coverage, at any time.

Advocate: If you have any doubts as to just how shaky your benefits are, just read the above answer. Here was an employee that did not realize that he lost his retirement health insurance at age 65.

Bill Coley was the only executive to ever show any remorse over what happened to the employees’ benefits. The cash balance conversion was in 1997. Bill Coley said that the company had overdrawn the employees good will bank account and that 1998 was to be the Year of the Employee.

1998 did not turn out so hot for employees. Employees were notified that the next year, most would lose their retirement health insurance at age 65.

Bill Coley is Retiring (2003)

There was once a program touted for years called Zero Injuries by 1998. In 1998, it failed as miserably as the year of the employee!

Resurrecting Past Failures

The greatest line of all was: “If you happen to receive conflicting information from a center representative, ask to speak with a supervisor.”

It really does not matter what any HR representative tells you; none of it is binding. Only what is spelled out in writing has any chance of being enforced.

Duke Energy does not want any more benefit questions sent to the Open Forum. Duke wants you to call HR. The cover story is that this will reduce confusion.

It is true that employees who are blissfully ignorant of their reduced benefits are less confused. They will only become confused when they retire and find that the promised benefits are no longer there.

It will then be too late for the new retirees to make up what has been taken from them. But it works out great for the company!

If one employee at a time finds out how flimsy his benefits really are by calling HR, that can be managed. But if the benefits truth is published in the Open Forum for all to see, absolutely too many employees will become informed! We simply cannot have the Open Forum actually informing employees about their benefits or the lack thereof.