Duke Energy is an electric utility company based in Charlotte, NC. Duke Energy’s...
Duke Energy is an electric utility company based in Charlotte, NC. Duke Energy’s origins stem back to 1900 from a small hydroelectric company called the Catawba Power Company, which evolved into Duke Power and eventually into Duke Energy after a 1997 merger with PanEnergy. As of the third quarter of 2011, Duke Energy held more than $60 billion in assets, while pulling a gross operating profit of more than $5 billion in 2010.
Duke Energy was poised to become the nation’s largest utility company on January 1, 2012, as it planned to purchase Progress Energy, based in Raleigh. The new company (which will continue under the name Duke Energy) would supply more than 7 million customers. The first proposal for the merger was rejected by Federal Energy Regulatory Commission on September 20, 2011 on the grounds that the merger would have a negative impact on competition in the Southeast electricity market. In December the proposal was once again rejected by FERC, stating that the revisions of capping their profit at 10% of some wholesale power sales were inadequate. In June 2012, however, the Duke-Progress merger was conditionally approved by FERC, allowing the $26-billion deal to move ahead.
The merger also posed concerns among environmental groups, who argued that the merger between Duke and Progress would give the new Duke Energy company such a hold on the electricity market [PDF] as to minimize entry for independent renewables. The merger would also likely increase Duke Energy’s dependence on “less efficient, higher-polluting coal” plants.
Although Bill Johnson, former CEO of Progress Energy, was originally set to be become president and board director of the merged company, within hours of the first day after the merger, Johnson unexpectedly resigned, with Jim Rogers taking his place as CEO. As a result, suspicions have been raised, causing the North Carolina Utilities Commission and Attorney General to conduct separate investigations on Rogers.
Further speculation was raised when Rogers testified before the N.C. Utilities Commission, stating that Johnson's management practices were "autocratic" and weak, which fueled the CEO switch. John Mullin III, a Progress Energy director, describes the situation as “the most blatant example of corporate deceit that I have witnessed during a long career on Wall Street.”
About 67% of Duke Energy’s electricity is generated from fossil fuels, mainly coal (about 63%), while 31% of the company's generation is from nuclear power and 1.5% comes from hydro. Just over a half percent of Duke’s electricity is generated from non-hydro renewables. 63% of Progress’ electricity comes from fossil fuels, with another 34% from nuclear, and 2% from non-hydro renewables.
The overall average operation age of Duke Energy coal-fired power plants is 47 years.
Duke Energy is a member of the U.S. Climate Action Partnership, which has been criticized for including member companies that actually worked to derail meaningful climate legislation. During this time, Duke was also a member of the National Association of Manufacturers and the American Coalition for Clean Coal Electricity, each of which worked against action on climate change. In one extreme case, the ACCCE even sent out forged letters to Congress members, claiming to speak on behalf of senior citizens and other groups. Duke Energy finally left the National Association of Manufacturers in May 2009, as well as the ACCCE in September 2009. Duke Energy’s CEO, Jim Rogers, also pulled himself from the board of the staunchly anti-environmentalist U.S. Chamber of Commerce in April 2010, although he claims the switch was mandatory after serving three consecutive terms.
The American Clean Energy and Security Act (ACESA) that passed in the U.S. House in 2009, which included many favors for the coal industry, was encouraged by tens of thousands of dollars in contributions to House members from the political action committees of Duke and other utilities.
Duke Energy has spent about $28 million from 2008-2012 on federal lobbying. Duke lobbyists include the Podesta Group (see Tony Podesta), William Tyndall (one of five former EPA employees now lobbying for the company), and Brian Vanderbloemen, a former legislative assistant to Senator Richard Burr (R- NC). Burr represents Duke’s home state, and Duke is the fifth largest contributor to Burr's 2012 campaign. Duke Energy lobbyist Izzy Klein is a former political director for Congressman Ed Markey who is ranking member of the House Natural Resources Committee as well as a member of the Committee on Energy and Commerce.
The Duke Energy political action committee (PAC) spent over $3.8 million from the 2008 election cycle through the 2012 election.
Duke Energy is also loaning up to $10 million to the Democratic National Committee to help with the party’s 2012 convention. The convention will be hosted Charlotte, with Jim Rogers serving as head fundraiser for the event. The aid was criticized as an attempt at “currying favor” from Democrats.
As of October 2011, Progress Energy spent 1.4 million on lobbyists for that year—11 million between 2005 and 2010. Progress also hires the lobbying services of the Podesta Group (see Tony Podesta), and lobbyists paid with Progress Energy money include 4 former EPA employees, former Burr assistant Brian Vanderbloemen, and former Ed Markey political director Izzy Klein. The Progress Energy PAC also spent more than $200,000 for the 2012 election cycle as of December 2011, having spent more than half a million during the 2010 cycle.
Half of the coal Duke Energy burns at its power plants comes from mountain top removal operations.
Duke Energy is the third largest emitter of carbon dioxide in the United States at 112,000,000 tons per year and the number 11 emitter worldwide. According to a 2010 study by Clean Air Task Force, Duke’s coal fleet collectively causes more than $7 billion dollars worth of health impacts annually. The number totals nearly $10 billion after adding Progress’ coal fleet.
Despite Rogers’ claims of needing to address climate change, Duke Energy is in the middle of re-constructing two coal-fired power plants in the U.S. (Cliffside and Edwardsport), one of which has become subject to substantial protests.
Duke Energy also faced accusations of double-speak by Greenpeace in December 2011, after the non-profit (and managing organization of this site) highlighted Duke’s conflicting behavior regarding the EPA’s
Mercury and Air Toxics Standards or “Mercury Rule”. Although Duke CEO Jim Rogers had already indicated that Duke’s fleet was prepared to comply with the regulation, Duke was apparently a member of the Electric Reliability Coordinating Council (ERCC), a utility industry group that had actively worked “to delay and weaken much-needed federal mercury protections.”
As of 2009, Duke Energy owned ten of the EPA’s 44 “high hazard potential” coal impoundment ponds, toxic dams full of watered-down byproducts from burning coal. In North Carolina, 13 coal ash ponds owned by Duke and Progress were found to be leaking neurotoxins and carcinogens into the surrounding groundwater. Levels of arsenic, lead, cadmium and chromium were sometimes found to be more than 380 times greater than state-approved limits.
As of 2009, Duke Energy had three plants operating within a 3-mile proximity of 12,000 people or more, none of which had scrubbers installed to reduce pollution. The per capita income in all three areas was less than $16,000, and one of the plants, the R. Gallagher Generating Station, is noted for being in a community where 60% of the population is composed of people of color. This same plant was also fined $1.75 million by the EPA for violating the Clear Air Act.
Duke is a utility member of the American Coal Ash Association, a trade group whose stated mission is "to advance the management and use of coal combustion products in ways that are environmentally responsible, technically sound, commercially competitive, and supportive of a sustainable global community."
Edwardsport Station Controversy:
Duke Energy is currently reconstructing Edwardsport plant in Knox Country, Indiana, into a new coal gasification plant. The region already has more than 4 times the amount of power capacity as is needed, with “one of the highest concentrations of coal-fired generators in the world."
In 2010, the project director for Edwardsport confidentially wrote to Duke complaining of “significant risks” [PDF] the utility had taken on the plant’s construction process. In another communication, Duke executive Richard Hayiland wrote, “we need an exorcist on this job.”
Originally budgeted for between $1.3 and 1.6 billion, the cost for Edwardsport swelled to $2.98 billion by October 2011. Duke Energy was blasted earlier that year by the Indiana Office of Utility Consumer Counselor as the company attempted to push $530 million in Edwardsport costs onto customers. An OUCC director testified that “Duke has not demonstrated any budgetary constraints on this project” and that the “escalating costs have been borne solely by ratepayers, with the benefits going to the [Duke] shareholders.”
As of the posting of this profile, the Indiana Utility Regulatory Commission (IURC) was in the midst of deciding “whether Duke committed fraud, concealment or gross mismanagement” regarding the plant’s massive cost overruns. Jim Rogers himself testified before the IURC, saying “Yes, [the plant is] expensive. But it will be the cleanest plant in Indiana.” Meanwhile, Duke Energy paid a consultancy more than $3 million dollars to testify on the issue.
In April 2012, Duke settled on Edwardsport's cost overruns with its largest customers and the Indiana Office of Utility Consumer Counselor. Duke would take on $700 million, while customers would see a rate hike of 14.5% over two years. By that point the plant's expected costs had reached $3.3 billion, with plans to begin service that fall. The Indiana Utility Consumer Counselor argued that it was time to move on from the issue. In October 2012, Duke revealed that Edwardsport was expected to cost over $3.5 billion and might not begin operation until as late as mid-2013.
The Edwardsport project has also stirred controversy regarding Duke’s relationship with the Indiana Utility Regulatory Commission. Reports by The Indianapolis Star revealed that in early 2010 Duke CEO Jim Rogers and Vice President James Turner held private meetings with IURC chair David Hardy and Indiana Governor Mitch Daniels to warn of some of the new costs associated with the construction of Edwardsport.
While Duke Energy argued that the meetings were merely a “courtesy heads-up,” other correspondence between Turner and Hardy and between Turner and Rogers raised concerns that Duke may have violated the law by attempting to influence the course of IURC decisions on Edwardsport. During the course of email correspondence between Hardy and Turner, Turner offered to host Hardy and his wife on Turner’s private boat, and even hinted that Hardy could find employment at Duke should he rule favorably toward the company. According to the Indianapolis Star, Turner also communicated to Rogers that “he intended to give plenty of attention to the Edwardsport plant and try to shift costs away from the utility.”
Support for the American Legislative Exchange Council:
Duke Energy is a member of the American Legislative Exchange Council (ALEC) and part of ALEC's Energy, Environment and Agriculture task force. Through ALEC, Duke works with state legislators to distribute anti-environmental model bills across the country that delay policy solutions to climate change, block clean energy, prevent EPA from regulating coal pollution, fasttrack coal mining projects and other dirty energy initiatives. ALEC's 2013 energy agenda is centered around repealing state-level Renewable Energy Standards with its model bill, the "Electricity Freedom Act." Despite continued support for ALEC, Duke Energy explicitly claims to have helped create RES laws in both North Carolina and Ohio, and claims to oppose ALEC's RES repeal model bill.