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Duke Energy Corp (NYSE:DUK)

Annual Shareholders Meeting Call

May 02, 2013 10:00 AM ET

Executives

Bill Currens - IR

Jim Rogers - President and CEO

Julie Janson - EVP and CLO

Carolyn Williams

Randy Jenkins

Analysts

Justin Denhof

Caroline Hensley

Phil Radford - Greenpeace

Grant Mitsi

Phyllis Jones

Shawn Lamont

Jim Warren

Kate Melges

Louis Zeller - Blue Ridge

Kendall Hail (ph)

David Harman - Appalachian Institute

Bill Currens

Good morning, ladies and gentlemen. My name is Bill Currens, and I am the Director of Investor Relations for Duke Energy. I welcome you to the 2013 Annual Meeting of Shareholders. We are broadcasting this annual meeting by teleconference and webcast, and I also welcome everyone online and on the phone.

We always began meetings at Duke Energy with a brief safety message, because safety is our top priority and something we should never be complacent about. So please pay attention to how we exit this building safely in the unlikely event of an emergency.

The primary emergency exits from this auditorium are the doors behind the stage on your right. Exit through those doors, turn right and proceed down Stonewall Street. Those of you in the atrium area, can exit out of the front door, turn right as you go out the building, then turn right again and proceed down Stonewall Street. If anyone needs assistance, security and safety personnel will be available to help you. If we do have to evacuate, please do not reenter the building until you have been told that it's safe to do so.

As you entered the auditorium this morning, you should have received a copy of the meeting program. If you did not, please raise your hand and we will bring one to you. In order to provide for an orderly, safe and informative meeting, please take a moment to read the conduct of the meeting procedures inside the meeting program. Please be sure that all electronic devices are turned off at this time.

Now let me quickly review the items on this morning's program. In a moment, I will introduce our Chairman, President and Chief Executive Officer, Jim Rogers, who will call the meeting to order. After taking care of certain procedural matters, Jim will introduce Duke Energy's Board of Directors. We will then move to the business portion of the agenda, which includes the following items; including the election of Directors, three other management proposals and two shareholder proposals. All votes will occur before the question-and-answer portion of the meeting.

As we begin, let me inform you that today's discussion will include forward-looking information and the use of non-GAAP financial measures. You should refer to information contained in our SEC filings concerning factors that could cause future results to differ from this forward-looking information. A reconciliation non-GAAP financial measures can be found on the Investor Relations section of our website at www.duke-energy.com.

Now it is my pleasure to introduce our Chief Executive Officer, Jim Rogers.

Jim Rogers

Good job. Thank you Bill. Good morning. The meeting will please come to order. Ladies and gentlemen, welcome to the 2013 Annual Meeting of Shareholders. In accordance with Delaware general corporate law, I appoint Nancy Wright, Associate General Counsel here at Duke Energy; and Sid Rodrigue of Broadridge Investor Communication Solutions, our proxy tabulator to act as Inspectors of Election of this meeting. Nancy and Sid please stand and be recognized. Thank you.

Our Executive Vice President, Chief Legal Officer and Corporate Secretary, Julie Janson also acting as secretary of this meeting, will now report the number of shares entitled to vote and the number of shares and votes represented in person or by proxy at this meeting.

Julie Janson

Thank you, Jim. As of the close of business on March 5, 2013, Duke Energy Corporation had outstanding and entitled to vote 705,473,667 shares of common stock, each of which is entitled to one vote. They're here represented by proxy, 593,953,705 shares of the Corporation's common stock, which constitutes 84.19% of the total shares entitled to vote at this meeting. The final reports of the Inspectors of Election will include the votes, if any, of the shareholders present and voting in person.

Jim Rogers

Thank you, Julie. Legal notice of this meeting has been duly given. A quorum is present, and the meeting is now lawfully convened for the transaction of business.

First, I have the pleasure of introducing the members of your Board of Directors, all of whom are here with us today. As I introduce each of them, I'll ask them to stand and be recognized. Bill Barnet, Chairman, President and CEO of Barnet Development Corporation; Alex Bernhardt, Chairman of Bernhardt Furniture Company; Michael Browning, Chairman and President of Browning Investments; Harris DeLoach, Executive Chairman of Sonoco Products Company; Dan DiMicco, Executive Chairman of Nucor Corporation; John Forsgren, retired Vice Chairman, Executive VP and Chief Financial Officer of Northeast Utilities; Ann Gray, former President of Diversified Publishing Group of ABC and our Lead Director; Jim Hance, retired Vice Chairman and Chief Financial Officer for Bank of America; John Herron, Retired President, CEO and Chief Nuclear Officer of Entergy Nuclear; Jim Hyler, Managing Director of Investors Management Corporation; Marie McKee, President of Corning Museum of Glass; Jim Reinsch, retired Senior Vice President and partner of Bechtel Group; Jim Rhodes, President and CEO of the Institute of Nuclear Power Operators; Carlos Saladrigas, Chairman and CEO of Regis HR Group and Phil Sharp, President of Resources for the Future.

Also seated in the few rows or behind them are the members of your management team. In the interest of time, I will not introduce them individually. I hope you had a chance to meet some of them on your way in. If not, I urge you to do so after this meeting.

I want to express my personal appreciation to the directors and the management team for their support and commitment to the company and my thanks to you, our investors. I also would like to introduce Marko Ruseloo (ph) from our Corporate Security Department who is serving as Sergeant of Arms. Finally, I would like you to meet Charlie Muha and Sean Bird of Deloitte & Touche, the Company's independent public accountants.

On a personal note, I would like to thank my wife Anne, who has been in every one of my 25 annual meetings and it’s a tough job dealing with me. It’s beyond the call of duty for her to be here. Over all these years she has been my toughest critic and my biggest supporter you may. Anne, stand up, and thank you.

We will now proceed with the matters to be voted on. We have declassified Board of Directors which mean that all of the directors stand for election every year at the annual meeting. The Board of Directors has duly nominated directors Barnet, Bernhardt, Browning, DeLoach, DiMicco, Forsgren, Gray, Hance, Herron, Hyler, McKee, Reinsch, Rhodes, Saladrigas, Sharp, and myself.

They have been nominated for election as directors for one year, a term that expires in 2014. These nominees as set forth beginning on page 15 proxy statement are hereby considered presented for the purpose of voting for their election as directors.

The selection of Deloitte & Touche as the Company’s independent public accountant for 2013, as set forth on page 33 of the proxy statement is also hereby presented for the purpose of ratification. A vote on an advisory basis of our named executive officers compensations, as disclosed on Page 35 of the proxy statement, is hereby presented for approval.

The amended Duke Energy Corporation executive short-term incentive plan, as set forth on page 67 in the proxy is also hereby presented for approval. Also to be presented our two proposals we have received from our shareholders; the first relating to shareholder action by written consent and the second regarding an amendment to our organizational documents to require majority voting for the election of directors.

I would like to ask Julie Janson to introduce these two proposals.

Julie Janson

Thank you, Jim. This year we received proposals from shareholders to be submitted for vote at the meeting. For the reasons outlined in the proxy statement the Board has recommended a vote against each of these shareholder proposals. In the interest of time, we will not discuss our reasons for opposition here at the meeting but they are spelled out in the proxy statement made available to all our shareholders.

However, the shareholders proponents present now will be given an opportunity to present his or her proposal and a brief supporting statement. I’d like to remind those presenting that your remark should be limited to the proposal. There will be time later in the meeting to engage in question and answer, if you are so interested.

The first shareholder proposal relates to shareholder action by written consent as set forth beginning on page 69 on the proxy statement. Here to present this proposal on behalf of the proponent John Chevedden is Carolyn Williams. Ms. Williams, would you please come forward to the microphone to present the proposal.

Carolyn Williams

Good morning, Mr. Rogers and board members. I am Carolyn Williams and I am presenting proposal five, shareholder proposal regarding shareholder action by written consent sponsored by John Chevedden of Redondo Beach, California.

Resolve the shareholder’s request that our Board of Directors under his such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon are present in the voting. This written consent includes all issues that shareholders may propose. This written consent is to be with giving shareholders the fullest power to act by written consent consistent with applicable law.

The shareholders of Wet Seal successfully used written consent to elect better qualified directors at October 2012. This proposal topic also win majority shareholder support at 13 major companies in a single year. This includes 67% support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. Please vote to protect shareholder value, proposal five, shareholder action by written consent. Thank you.

Julie Janson

The second shareholder proposal relates to an amendment to our organizational document to require majority voting for the election of directors as set for beginning on page 71 of the proxy statement. Here to present this proposal, on behalf of the proponent The United Brotherhood of Carpenters and Joiners of America, is Randy Jenkins. Mr. Jenkins, would you please come forward to the microphone to present the proposal.

Randy Jenkins

Thank you, Mr. Chairman. I am Randy Jenkins representing The United Brother of Carpenter’s Pension Fund which along with other carpenter funds holds approximately 676,000 shares of Duke Energy component stock. Our funds take a long term patient investment prospective and it is that ownership prospective that motivates efficacy for majority voting in director elections.

The majority vote standard proposal presents a simple proposition. In uncontested directory elections in which there are no opposition to the selective candidates, each nominee should be required to receive half the votes cast to be elected. It's fair and reasonable and unlike uncontested elections with a plurality vote standard, the outcome is not guaranteed. The bottom line is that shareholders have a reasonable and meaningful board accountability mechanism in majority vote elections.

The Board's adoption of a post-election director resignation policy along with the retention of plurality voting is an inadequate response to the call of majority voting. Every corporation that has adopted majority voting has also adopted a director resignation process. The post-election resignation process is not a substitute for majority voting, it is a companion post-election component of true majority vote standard.

The Board's continued opposition to the adoption of a majority vote standard contrasts with the actions taken by the nearly every peer company in the energy industry. Companies like Dominion Resources, Next Era Energy, Exelon, Enstar, Teco Energy and many others have established majority voting rights for their shareholders.

As of today 86% of the companies in the S&P 500 index have adopted majority voting and it is interesting to note that at the two companies where Chairman Rogers currently sits on the Board of Directors, Applied Materials and Cigna, shareholders have majority voting rights in director elections.

So at those two companies Mr. Rogers must receive at least half the votes cast to be elected to the board while here at Duke Energy, the plurality vote standard means that soon as Chairman Rogers casts his vote for himself, he is elected regardless of how every other shareholder votes. Once again we urge the Duke Energy Board of Directors to establish a majority vote standard along with its directory resignation policy and join the mainstream of American corporations on this important election reform. Thank you Mr. Chairman.

Julie Janson

Thank you, Mr. Jenkins. That concludes our presentation of the proposals before us at the annual meeting. If you have not previously voted your shares or if you would like to change your vote, a vote by ballot will now be taken for each of these items.

Mr. Chairman, shareholders, the polls are now open. If you would like to vote by ballot please raise your hand. The polls will close in just a few minutes. So after you've received your ballot please complete it and raise your hand again so we can collect it. Does anyone need a ballot?

The polls are now closed. If you have not yet returned your ballot, please raise your hand so we can collect it now.

James Rogers

I think we have collected all the ballots at this point. And a few more. I will now ask Julie Janson for the Inspectors of Election Report.

Julie Janson

Thank you Jim. Based on the proxy's received prior to the meeting; first each nominee for Director has received the approval of at least a majority of the shares voted, more than sufficient for his or her election.

Second, the ratification of Deloitte & Touche as the Company’s independent public accountant for 2013 has received the required affirmative vote of the shareholder's sufficient to ensure ratification.

Third, the approval on an advisory basis of our named Executive Officer compensation has received the required affirmative vote of shareholders sufficient for our approval.

Fourth, the approval of the amended Duke Energy Corporation executive short term incentive plan has received the required affirmative vote of shareholders sufficient for approval.

Fifth, the shareholder proposal relating to shareholder action by written consent has received the required affirmative vote of shareholders sufficient for approval.

Finally, the outcome of the vote on the shareholder proposal relating to an amendment to our organizational documents to implement majority voting in director elections is yet to be determined. The final results would be made public within the next few days after all ballets are counted.

Any shares voted at the meeting today will be tabulated and included in the final vote and filed with the minutes of the meeting.

Jim Rogers

Thank you, Julie. The final reports of the Inspectors of Election are hereby ordered to be filed with the minutes of this meeting. This concludes the formal business portion of our 2013 Annual Meeting.

Now, before taking your questions, I will give a brief report on our company. Much has happened since we met this time last year. We completed the Duke Energy - Progress Energy merger 10 months ago. As you all know it turned out to be a very complex transition. Throughout this period our Board has taken responsible, deliberate, and steady steps to ensure we meet the high standards of corporate governance.

We have remained focused on the continued strong performance of the company and on positioning Duke for a long term success. We are delivering on that objective. Our performance speaks for itself. Our employees have pulled together as one team. They have been resilient in the midst of change. They have stayed focused on our coordination, and are achieving outstanding results.

From the time we announced the planned merger in January 2011, through the end of 2012, Duke produced a total shareholder return of about 32%. To put that in perspective, that was nearly double the return of the S&P 500 in the Philadelphia Utility Index.

So far this year we have produced a total shareholder return of about 19%. Last year we delivered adjusted diluted earnings per share near the top end of our target range, which is 4% to 6%. Tomorrow we will report our earnings for the first quarter of 2013.

In 2012 we also raised our quarterly cash dividend to shareholders. 2013 marks our 87th straight year of paying quarterly cash dividends, great track record. Not many can match it in this country. Duke is moving forward as a stronger company building positive momentum.

Our new logo is symbolic of this new beginning and our first full year as a combined company. We have greater scale, diversity and flexibility. We are better prepared to lead the changes in our industry. We are well positioned to build on our long successful track record.

Today Duke is the largest publicly traded utility in the world, not just the United States. Too often big means slow and complacent. In contrast we intend to be agile and innovative. We serve a diverse mix of stakeholders, customers and communities, shareholders, employees, retirees. They and others have a stake in what we do and how we do it. We see it as a tremendous responsibility and do our very best to strike the right long term balance on these various issues that we face.

In the end we all benefit when Duke performs its core mission well. Simply put, providing affordable reliable increasingly clean electricity and safe in sustainable ways 24/7, 365 days a year. Post-merger our customers in the Carolinas are benefitting from the cost savings of operating our power plants here as one fleet, and we are creating additional efficiencies across the company. This is producing value for our customers and our investors.

It is important that we be cost effective to offset as much of the rising cost of doing business as we can. Even so, we must raise customer rates to modernize our plant system, replace aging infrastructure and meet new environmental regulations. We are also promoting the health and success of the communities we serve. This includes economic development and it includes the philanthropy of the Duke Energy foundation as well, and this is so important, as well as the volunteerism of our employees and our retirees.

Duke helps lead community initiatives such as Envision Charlotte, and this is a unique initiative compared to other cities around the country. This is an innovative effort to use energy and water more efficiently in the city's urban core.

We’re also promoting the expansion of the successful Charlotte energy hub into a regional energy cluster. This will stimulate jobs across the Carolinas. Another success story is Google’s recent announcement that it will invest an additional $600 million in its data center in Caldwell County, North Carolina.

Duke is developing a rate plan that will enable us to provide renewable energy to customers such as Google. My point is simply this. We take citizenship seriously, and independent assessments recognized that fact. For example, in 2012 Duke was named to the Dow Jones Sustainability Index for North America for the seventh consecutive year and just last month Corporate Responsibility Magazine named Duke one of the 100 best corporate citizens or the fifth consecutive year.

We were ranked 26th out of the 100 after being assessed in seven years, from the environment and climate change to employee relations and governance. Serving our stakeholders well, requires that we prepare for and shape a changing energy landscape. I call it readiness for the road ahead. This means upgrading existing power plants, retiring older, high emitting less efficient plans and building new state of the art generation to serve our customers.

In these ways we are diversifying our mix of fuels and technologies, we’re increasing our efficiency and we’re dramatically reducing our environmental impact. Since 1999, Duke and our predecessor companies have an invested about $7.5 billion to install air emission controls.

By 2015, we expect to reduce our regulated generation fleet admissions of sulfur dioxide by 90% from 2005 levels and our nitrogen oxides by about 80%. We also reduced our carbon dioxide emissions last year. More than one third of the electricity that produced in 2012 was from carbon-free sources.

This year we’re completing a $9 billion multiyear construction program. This is part of our effort to serve 7.2 million retail electric customers in six states. We’ve brought three new plants online in North Carolina last year. Two more new plants are scheduled to begin service later this year, one is Edwardsport in Indiana, an innovative plant that will convert gold into synthetic gas that can be burned cleanly.

The other is a Sutton Plant. It’s a highly efficient plant in eastern North Carolina. It will run on natural gas and it’s bringing more gas that part of the state, a terrific boost for economic development in that region. These and other projects are enabling us to retire 3800 megawatts of older high emitting coal and oil fire generating units by the end of this year. That retirement total could increase to as much as 6800 megawatts over next few years.

Meanwhile, we’re expanding our renewable energy portfolio since 2007 we have invested more than $2.5 billion to grow our commercial wind and solar business. Last year alone we added five new wind farms and three new solar winds, almost doubling our renewable capacity. In recent years, we’ve been adding on average about475 solar panels a day, as well as one new wind turbine every two to three days.

So, we now have more than 1700 megawatts of renewal energy capacity, a total of 15 wind farms, 15 solar farms in 10 states across our country. Just last month, we acquired two solar projects in California which pushes us past the 100 megawatts milestone of solar energy capacity. Between the investments made by Duke Energy Renewables and our regulated business, our solar and wind energy resources can serve about a half million homes. Think about that 500,000 homes.

Here in North Carolina, our utilities purchased more than 180 million kilowatt hours of solar energy in 2012 alone. That’s enough to power about 15,000 homes here in North Carolina. North Carolina as a whole is making a great stride in solar energy development.

The state more than doubled its solar capacity last year. North Carolina ranks fifth in the U.S. for the amount of the solar power added in 2012 and six in cumulative solar capacity. We are also evaluating other advanced clean energy technologies.

Recently I went to the grand opening of our new battery storage system at our Notrees Wind Farm in West Texas. By the way the place is called Notrees for a very good reason. If you have been to West Texas you know, or if you've been to the Permian Basin, you know what that looks like. The project is North America’s largest battery storage system at a wind farm. It has 28,000 batteries in a building the size of a football field. It was partially funded by the Department of Energy and the project is assessing this way to address the variability of wind power.

By the way the wind really blows to West Texas and I have been told because I used to have a lot of clients when I practiced law, they were from West Texas. The only thing that stands between West Texas and the North Pole is a barbwire fence. So you can appreciate how windy it is and how cold it is in that part of the country.

We also are aggressively promoting energy efficiency. For example, since 2010 Dukes Utilities have distributed nearly 37 million CFL bulbs. That’s enough energy saved to power almost a 100,000 homes and offset the carbon output of more than 200,000 cars.

Meanwhile our overall efficiency programs in 2012 delivered a combined 1.4 billion Kilowatt-hours of energy efficiency savings. To put that in prospective, that's enough power for a roughly 115,000 homes. 754 million Kilowatt-hours was here in the Carolinas and that’s about 63,000 homes. These are just a few examples of how our company is shaping the road ahead and how we are living up to our mission of affordable, reliable, increasingly clean energy.

As for me, I will complete my tenure at Duke Energy this year. I am looking forward to reinventing myself. I've been reinvented a lot, some by others and some on my own. But the bottom line is, is I'm very grateful for the support of the many people throughout my 25 years as CEO in this industry, and I really appreciate all those who have attended all these annual meetings and all the questions that have been asked during that period of time.

It's the one thing I take from this experience, is that over these years I've learned by listening to a wide range of viewpoints. I don't always do what people tell me to do, but at the end of the day I listen, I try to understand what's behind their thinking and I do my best to incorporate it into what we do. I've always tried to anticipate what's coming and what's possible, whether it's new ways to reduce our environmental impact or better ways to serve our customers.

In closing I just want to assure you that our Board of Directors and management team are focused on the sustained success of Duke Energy and a smooth transition to the next CEO. Now I'll be delighted to take your questions. I want as many of you as possible to be able to ask your questions. So as a courtesy to others I would ask you to limit your questions; I did this last year, it didn’t work, but I'm going to enforce it this year; to limit your questions to two minutes and try to ask one that hasn't already been asked.

Also please state your name and the name of any organization you might be representing. Raise your hand if you have a question. After I call on you please go to the nearest aisle or we'll bring you a microphone, so we can keep this thing moving along and we have four people with microphones, so we can move through this quickly. And we want to get as many questions as we can in the time that we have here together.

Question-and-Answer Session

So let's get going. Who wants to raise their hand? There's one right here, please.

Justin Denhof

Good morning, my name is Justin Denhof. I'm representing the National Center for Public Policy Researcher. We are a free market think tank and a company shareholder. I appreciate the opportunity to speak with you this morning.

Mr. Rogers first of all I want to thank you, I want to thank you for standing up to radical leftists who have tried to coerce Duke into severing its relationship with the American Legislative Exchange Council. We thank you for sticking with ALEC at it continues to work in defense of liberty, prosperity and free markets.

Secondly I just want to get your opinion about North Carolina's renewable energy and energy efficiency portfolio standard. It requires utilities to use at least 12. 5% renewable energy by 2021 and thereafter and permits the passing of extra costs on to consumers.

As you have probably know, yesterday a North Carolina Standard Committee to repeal the standard and future votes are expected to be very close. A study by the John Locke foundation of Beacon Hill institute found that North Carolina consumers will pay an extra $2 billion in coming years for this law.

These unnecessary costs are unfortunately regressive, they hit the poor hardest. An analysis by my organization found that North Carolina households with annual incomes of $30,000 or less already spend as much as one third of their after tax income on power bills. Yet Duke in its subsidy or progress are seeking rate increases of 14.2% and 11.7% respectively.

With an unemployment rate of 9.4%, North Carolina can ill afford to discourage businesses from relocating here. But that's what the renewable energy mandate is doing. As the Heartland Institute pointed out in the Charlotte Observer, renewable energy can and should have a chance to develop but it shouldn’t be done on the backs of people, especially the poorest and the most vulnerable among us.

So, will you agree with us that North Carolina's renewable energy portfolio standard should be repealed and if not why? Thank you.

Jim Rogers

Thank you very much for your question. I will start off by simply saying there are 29 states, plus the District of Columbia to have renewable portfolio standards in their state and they vary from state to state. And Congress is considering over renewable portfolio standard for the country.

The bottom-line is that is in the statue we have in this state, there is an economic cap. So if the prices are too high for renewables, we are not required to meet those standards. The most important thing is the cost of solars comes down pretty dramatically. The holy grail was to have it a $1 a watt. Today it's at $0.60 and we see visibility to $0.40. 50% of the costs of installing solar on the roof top with insulation. We see the installed cost coming down. So the costs are coming in line.

Now North Carolina is not a state for wind. I believe you all heard me say this. The only place you could put wind in North Carolina is on the ridge lines and that’s kind of a house in the mountains, that's not going to happen. And on the coast, some have suggested and I have said this before, to maybe we ought to put a wind farm around Raleigh, because there is a lot of talking going around in our state capital.

But my belief is, simply as this, that we have a renewable portfolio standard in place, it has an economic check on it. So it didn't put too great a burden. The important we have to fix is the state is the net metering tariff, because the net metering tariff more than this renewable portfolio standards shifts the loss revenue cost to the low in fixed income people in the state and 43 states have metering tariffs that do that, and that’s a bad outcome. So we have to fix that. I agree with that. Thank you so much.

Caroline Hensley

My name is Caroline Hensley. I'm a proud wolf packer, and I am from Hendersonville North Carolina. I grew up next to the Asheville coal plant, and actually when I was younger my parents told me that air coming out of it was actually cleaning the air. And since that I have dedicated the last four years of my life to environmental justice and hoping that children won’t have to grow up looking at that.

So what I am here today to talk to you about is, in your recent Sustainability Report you actually contradict something that you said today, and on page 23, I quote, it says our current forecast indicates an upward trend in CO2 emissions in the years ahead. And you said you are reducing your environmental impact.

So I am a little bit confused about how those two statements co-exist in the same place and the fact that scientists agree, we have only a few years to drastically reduce our emissions, which are already in the pipeline to continue coming out. And I’ve just am wondering how you can look me in the eye and tell me my generation, which is so little represented here today; you’re doing the long term balance in our best interests? How is that possible? Your plans to grow profits by building more dirty dangerous nuclear and coal plants? How do you justify that?

Jim Rogers

That’s a good question and I appreciate you asking it. Let me kind of explain to you this way. Let’s take nuclear first. 70% of the carbon free electricity in this country comes from nuclear. If you’re serious about climate, you need to be serious about supporting nuclear. That’s the first thing.

The second thing is, yes, we are number two in the country in terms of our carbon emissions, but in terms of carbon intensity we are 14th in the country. That’s because of the solar that we own and operate, that’s because of the hydro that we own and operate and that’s because of the nuclear. So while we emit a lot of CO2, our carbon intensity is low relative to other in the country.

The other important point I would make is this. In the United States, we think that we are on track to achieve President Obama’s objective of reduction of 17% of the 2005 level by 2020, and we see ourselves on track to achieve that. So that’s where we think we are in terms of moving forward. A lot of it has to do with this simple fact and the environmental community has really supported natural gas because it’s a cleaner burning fuel, still a fossil fuel, but they used to support a lot when it was $12 and they did not think we were running out of it. Now it is $4 and we have a hell of a lot of it.

And so as a consequence, switching to gas really reduces the emissions and that is why you see in the United States today, with the same carbon emissions as we had as 1992 and on a per capita basis the same as had in the 60s. So as a country we have made progress. It is due to technology, it is due to renewables but it is also due to shale gas, which has been probably the most transformative thing to happen in our country in the decade.

And the last point, and you make a legitimate point, carbon needs to be addressed but we also have to get China engaged. We have to get India engaged. And when you look at the emissions that are coming from those countries, not only are they emitting a lot of CO2 but if you have seen the pictures of Beijing you know you can't see your hand in front of yourself because of the other emissions. 85% of our coal plants that we have today really have the ability to reduce socks and nocks and mark rate and so we have made significant reductions on that. So thank you for your question.

Unidentified Analyst

My name is Kurt Lord (ph). I do not represent anybody but myself. I am a stockholder. And my question is with all these new efficiencies you are getting, how come you keep raising the rates?

Jim Rogers

It is a very good question. It is a good question because let me tell you what we have done. We have spent $9 billion building new plants to serve our customers and maintain reliability. We have historically used old plants that were high emitting but they were fully depreciated plants. And so when we replaced those plants and brought the new ones on, by definition that drives our prices up.

But it makes us cleaner and you know clean energy is not necessarily cheap energy, and so the consequence of cleaning up by building new plants has driven prices up. Our increases in prices are all driven by the $9 billion in investment, investments that we have made to modernize our fleet. Put it in some context. By 2050 every power plant in this country is going to be retired or replaced, except hydro and in unless they extend the lives of nuclear plants to 80 years.

So you’re going to see a steady rise in prices as we modernize this generating fleet that we built to provide universal access to the people of this country. So, that’s what’s driving this increase. That's why we have put money into helping customers use electricity in a more productive way. That's why we have encouraged CFLs, we encouraged LEDs because we know the price is going up and so we won’t help you manage your bill going forward.

The tough thing to explain to customers and I’m glad you asked this, is that before when you looked up that lights when it was cheaper, you said, okay good lights, fine, throw the switch, lights come on. And they do, 99.9*% of the time. But the reality is we’ve cleaned up by building new plants but you can't see in difference in the light, but there is a big difference in the air and in the efficiency of our plants. And I’ll stay over here, go right here.

Phil Radford - Greenpeace

Phil Radford from Greenpeace. I’d like to start by just congratulating you on a very impressive, long and must have very, very difficult in rewarding career. So, I’ll start there. One thing you mentioned was the expense of clean energy versus older sources of energy. So a couple of questions. There is a study done by company called Ventix that showed that Duke can save about $108 billion for rate payers and by investing far more in efficiency and clean energy in all of your territory.

So the first question is it’s great you’re increasing you clean energy but how do you catch up to Texas, which is 13% wind or Iowa 20% wind and how does Duke really lead instead of growing slowly but behind. It’s question number one.

Question number two is just about costs and risks for your current fleet. So, we’re hearing from Bloomberg that there are concerns about investments up to a billion dollars or fix damns for nuclear facilities and other risks. So, when you looking forward about billions of dollars of investments, how are you thinking about investing in those versus investing in efficiency and renewables?

Jim Rogers

Too good questions. Let me first address the wind. Because if were Texas, where the wind really blows we’ll be building wind here. But the wind doesn’t blow here, except on the ridge lines as I said early down the course and so investing in wind here is not a good investment. If you study wind maps they'd really show you the flow of air. It doesn’t make sense about wind here, it’s just not economic. So, maybe we should buy a utility in Texas or Oklahoma or Kansas where the wind really blows and then we’ve more. And in fact most of our wind farms sell to utilities in those reasons. So we have to go where the wind blows.

On the solar, I talked about it in my prepared remarks. I was surprised to find that North Carolina is the fifth largest state in the country in the installation of solar. So we’re come in a leading place. We’re not number one but we’re in a leading position with respect to that.

With respect to the billion dollar expenditures, the reality as wind the most capital intensive industry in the country and what we try to do as we reinvest and take our nuclear clear because you’re thinking about Oconee plant and how do you deal with the dam in that situation.

Our new clear fleet because of the investments we make in it, over the last several years, our cheapest electricity, our nuclear fleet is it provides electricity at a lower price than any other nuclear fleet in United States. So cost is really important to our consumers. So our ability to invest that money, maintain that fleet is important but one of our big challenges, take Oconee is in 2031, 2032 we’re going to have to start retiring those units and the question is what will we replace them with. So that’s the challenge that comes. So thank you very much for being here.

We’ll move to the other side. Orange tie. I'll pick an orange tie. It's kind of bright.

Grant Mitsi

My name is Grant Mitsi and I'm with the statewide group, Clear Water for North Carolina and I wanted to mention something about natural gas. So Duke Energy just reported that you’ve increased natural gas use by 25% in 2012, probably because of hydraulic fracturing and shale gas exploration methods.

There is few things we’d like to bring up about that couple been, first I want to note that a number of peer-reviewed scientist journals have noted problems with shale gas exploration. As far as water goes there is impact for water quality and quantity and then there is also what do you do with flow back water, in open ponds, they can impede back in the ground water.

Center for Sustainable Shales has also noted well if there is a problem with that what we can do deep water injection Geological Society of America, Journal of Geology has linked that to seismic activity. And then also talk about natural gas and client change. We’re talking about reducing CO2 emission but we seem to forget that one of the main components of natural gas was methane. Methane is 21 times the greenhouse gas as carbon dioxide.

Furthermore, so the EPA just came out and said that well methane projections and everything may actually be lower for industry than we think but even with that calculation, climate impact is still greater than coal. So, it does burn cleaner and that there is no sulphates or extra particulates but the climate impact is much greater. Beyond that with that EPA, they are also not the only ones monitoring. National Oceanic and Atmospheric Association has noted massive methane leaks out west.

So with all of that I mean it’s kind of our estimation that doubling down on natural gas was probably not the best idea to move forward when we were talking about sustainable energy practices and all that there's the health risk to the environment and the biosphere too great, and there is a number of peer reviewed reports that support that claim.

So talking about efficiency and conservation programs, the long term IRPs of Duke progress energy, there is an efficiency standards and everything but there is a doubling down on natural gas especially nuclear and even with the retirement coal plants.

So I guess the question is that, is there a possibility for Duke to relook at their long term IRPs and make an honest effort at really doubling down on efficiency programs, which will increase jobs especially pass the shell gas boom and also conservation program which reduces emissions and will also reduce rates for right pairs.

Jim Rogers

That’s very good question, very good comment here on the gas issue and the shale gas issue and I appreciate that question. I think we look at shale gas which has 50% carbon footprint to coal, we view it is a bridge fuel. And in fact most of the environmental community embraced gas as a bridge fuel as we move to heavy dependents in our country of about 50% dependent on generating electricity from coal to using gas and nuclear to kind of bridge as new technologies evolve in the future.

Shale gas, just a kind of, I used to run the largest gas pipeline network in the country and so what I would say about gas is this, most of the shale gas is a mile to 2 mile below the surface, it's much lower than their aquifers for water. So if you get the casing right, damage to our water supplies not affected if the drill is done appropriately.

The second thing is, is that there are technologies being developed to be able to do it, to capture the water first and then there is technologies being developed to actually fracture the geology without using water with kind of a heat pipe technology. So I think what you are seeing is an evolution in technologies that allow us to use this 100 year supply for our country.

And why is that a good thing? The good thing is, this creating jobs, Dow Chemical is a huge facility and hiring several thousand people. The steel industry is expanding in the United States. The fertilizer industry is expanding and all the customers across the country where utility was dependent on natural gas have gotten a great economic benefit from this and it's broken the old sort of way of thinking.

The old way of thinking is, if it's cleaner, it must be more expensive. But what's happened is now by using shale gas, it's cheaper and cleaner when it displaces coal. Now so I think, it has to play a role and the last point on this is simply this.

The transport sector got in sector because they were solely dependent on oil, gasoline. In our sector we can produce electricity from coal, from nuclear, from natural gas from renewables and energy efficiency, because the most environmentally benign plant we build is the one we don't build, and that's why we invest a lot into energy efficiency.

So the strength of our industry is the diversity of fuels that generate electricity and we need to keep them all in the mix, because we don't know what technologies will come to allow them, in other words I guarantee you five years if somebody told me shale gas is going to come, it'll have a 100 year supply at the prices, this time of year ago it was a $1.87 mmbtu, if they would told me that I'd say no way.

So I think there might be new technologies to allow us to use fossil fuels in a more environmentally responsible manner. At the same time we're developing new technologies, watching solar panel costs decline. So we’re very conscious of that and the methane by the way, they're developing systems to capture the methane when they drill the wells. So I think that they will figure this out and will do it in an environmentally responsible way and the other thing I would say, it was the independence, independent oil and gas producers who developed this, but the majors have bought much of it and they will do this in a safe responsible way because they're going to be here for over a 100 years and they're going to do it right. Ma'am. Right here.

Phyllis Jones

My name is Phyllis Jones and I live in Charlotte. I graduated from Harlan's University and I have a Master Degree in Liberal Studies. I've taught school and worked for nonprofits for many years. I'm now retired and live on a fixed income in an apartment. I am here today to ask Duke Energy to help people like me by weatherizing apartments. Residential live in total electric apartments have terribly high utility bills.

Weatherized apartments will greatly reduce the energy used as your rate hikes increase, and at the same time decrease the need for more expensive power plants. Duke Energy can make excellent profit use in weatherization and other efficiency programs. Just imagine the jobs Duke Energy can generate to help our economic grow.

I would urge you to adopt this solution that will serve both our community and Duke Energy. Now that we live in the 21st century, weatherization and other efficiency programs would be the answer for Dukes customers' needs. After all customers pay for the building of this huge expensive power plants that contaminate our air, water so on.

Our voices mean something and eventually we will be heard. Mr. Rogers, I am determined to educate my community about Duke's 20 year plan. The stock market maybe bouncing back but my community is still suffering with no relief in sight.

I ask you to listen to me not just tolerate me. Duke's plan to keep building more power plants, when they could make money by adoptive massive efficiency programs is a moral injustice. The plan threatens the ability of senior citizens to just survive. Do you really want to be responsible for 70 year olds having to skip meals or skip my monthly prescriptions just to pay high energy bills?

I wonder, how is my Duke Energy bill any different from a tax, since I am given no choice but to buy my electricity from Duke. Like the Government, Duke should be held accountable for spending our money wisely. Is this in any different from taxation without representation? My question is do you intend to impose the huge costs of many new power plants on seniors like me when we would benefit so much more from massive energy efficient programs? Thank you.

Jim Rogers

I want to thank you for being here and I would want to thank you for your statement and I would just simply add that we have invested in weatherization, we've in fixed income and low income to help people meet their bills in that area. We get that. We know it important. But we also know it's important to keep the lights on for everybody because our society is dependent on power. Without power, you can't turn the lights on, you can't turn on the television, you can't run your computer, you can't run your internet and our businesses can't operate.

So our challenge is to try to keep the costs slow and we are about 20% lower in the national average which is no comfort when the prices are going up. But to keep our prices low, but to keep the lights on. So I am going to pay attention to what you said and I am going to check on our on our programs. And I think we are already doing a lot in that area, but maybe we should do more, you’re telling me, and we will. Thank you. I am going to go right over there.

Shawn Lamont

Mr. Chairman, my name is Shawn Lamont. I'm a Charlotte native. My family has been here for generations and been Duke stock holders for generations. My question is more of a business model. It does pound a little bit off what I have already heard here today. Duke, in their Annual Report stated that we are now safer because we are regulated, the majority of the companies are regulated, utility.

I would urge the board and I would like to know what the board is doing in the way of planning for the day when we are not. Historically, as an economist and a former legislator I’ve never seen a company get to this size with this social footprint and maintain a regulated status. That’s almost always the beginning of the end of that evolutionary process.

What I have heard here today, you’ve got Alec here, they’re free market oriented, you’ve got other people that are viewing the Duke monopoly as a tax. I think that’s going to happen and continue. And I’d very much like my children, to own Duke’s stock and have Duke still here, and I was an investor back when the telecommunications industry got deregulated.

And I would like to know what the board is going to do about proactively driving the ship and dealing with the inevitability of deregulation and coming up with a plan and a proposal on our own as a company so that we can drive the bus, rather than being thrown under it.

Jim Rogers

Thank you. That is good advice. You know we operate in six states. One of the states has deregulated generation, so we had an experience with deregulated generation. And what we are finding in the deregulated markets, the returns are really low and they are not modernizing their fleet, and they are getting ready to kind of go into a death spiral.

So what we found in 19 states of generation in this country, the remainder of them regulated the way we are in North Carolina and South Carolina and Florida and Indiana and Kentucky, basically we are vertically integrated and regulated and there you see more modernization, you see more investments in energy efficiency. So I think the move toward deregulating our business is going to come back to us and we are going to be in a strong position.

The reason we have combined these five companies just to give you a great stat, if you go back 20 years ago and you looked at these five companies, we operate our business today with 40% fewer people than we did then and on a per employee basis we produce 130% more electricity per employee than we did 20 years ago. Now part of the story is we combine these companies but the other part of the story is technology and this is happening in businesses all across our country becoming more efficient and greater productivity gains.

But I take your point. We have one state that is deregulated. So we are staying in touch with how that is evolving, not putting all our eggs in one basket. We are operating in South America with growth and demand as 5% to 6%, compared to less than a percent in the United States where the middle class it is expanding there not contracting as in the United States.

So we are keeping now in different ways and different places to make investments and actually our investments in renewables is part of an effort to kind of ride that wave and learn how to make money selling wind and selling solar to other utilities across the country. But keeping our eye on the future is really important and to make sure we have the right business model and I will say that our management team just came out of a strategy retreat and guess what, we have brought a guy in from the telecom industry to tell us how that happened and who won and who lost and what did you have to do to win, when they went through that transition.

And this expert, Verizon (ph) did it better than anybody else. So it is good road map for us. So we are paying attention to that possibility and we are looking around the corner. So we will be ready when the world changes. Yes sir yes.

Unidentified Analyst

Last year I asked you a question about your plans for offshore wind. You basically said it was too costly and I think you reiterated that in your remarks earlier today and I would like to dig into that a little bit deeper and find out what do you know that apparently Europe and Asia and all the other states up and down our coast don’t know, because they are moving forward.

As you know, I’m sure but perhaps the Board of Directors do not know, Europe and Asia are already enjoying affordable, reliable and clean offshore wind energy generation on a grand scale basis. You are proud to say that you got 17 megawatts of renewable energy in production now and as I understand your integrated resource plan for 2032, you’re planning to have 457 megawatts of wind power from all sources available.

Let's compare that to what’s already been brought online in Europe since 1991. Yes, their first turbines went in production 20 years ago. More than 1,500 turbines are installed in 56 farms in 10 countries. 10 countries think differently than you do, generating more than 4,300 megawatts of power. Compare that your 17 megawatts from all sources.

Jim Rogers

1,700 megawatts.

Unidentified Analyst

Okay, 1,700 megawatts, much better, 1,700 megawatts, got that correct, sorry. Okay.

Jim Rogers

I want to get full credit for whatever I've done.

Unidentified Analyst

Let's start again. More than 1,500 turbines were installed in 56 farms in 10 countries is generating more than 4,300 megawatts now. That’s an astonishing 10 times what you show in your 2032 forecast from both onshore and offshore wind capacity.

In fact Great Britain alone already has 1,586 megawatts in production offshore or almost four times your 20 year plan. And there are 13 additional wind farms in Europe, currently under construction, doubling the capacity with an additional almost 4,000 megawatts. China already has 300 megawatts installed and they want to dominate the manufacturing market. And let's not forgets the tens of thousands of jobs in construction and operation of those wind farms.

I’m sure you already know that North Carolina has the greatest potential for offshore wind power along the eastern seaboard. It’s been studied in great depth by the universities, the scientists and the businesses. We have sustained winds like Texas, we have shallow water for affordable construction, we have the market for the energy, we have uncontested fly lays and fisheries and shipping and when all of those are studied and limited to just those areas that, no one will argue with that, there is enough land last for massive generation of power. So please don’t just tell us again that offshore wind is more expensive now.

Uncontested right now offshore wind surely is more expensive than dirty coal, toxic nuclear and carbon based natural gas, but tell us when you think it will be appropriate here in North Carolina and what Duke Energy will do, what you said at the podium is to provide leadership for the industry, to make it happen sooner and tell us why you were conspicuously absent from the Bureau of Energy And Ocean Management's solicitation of interest recently for three sites off our coast expressing the federal government's interest and other were there.

If you don’t develop that other company will to the detriment of Duke and its shareholders. So when will you establish an aggressive plan. It’s totally absent on your 2013 plan. 20 years no mention, no really mention. When will you launch a pilot program to prove what you think you know right versus what all of the other states, Virginia, New Jersey, Massachusetts, Rhode Island even Maine are going to put turbines on the water to make sure they’re right about it . Right or wrong, they’re going to learn. When will you market it and promote offshore wind to educate the rate payers and the legislatures and when will you promote and support meaningful regulation and rate structures to make it happen here?

Jim Rogers

Thank you for that series of questions and let me start by saying that we went to offshore North Carolina and we were trying to develop an offshore wind project, working with state senate and others and at the end of the day everybody said no because it cost too much, that’s the first thing. So we have experimented and tried to develop a pilot offshore to test it.

The second thing is you tell me to go look at the countries in Europe. I have been to those countries and I have been to Germany. Germany is probably the leader of all the countries in Europe in terms of the wind and solar, and as a consequence of the subsidy that they have provided, the rates in Germany are about $0.30 a kilowatt hour. Our rates are $0.08 on average of kilowatts hour and Ms. Jones’ word about the prices going up. If she moved to Germany she’d be paying four times more for electricity because they built too much wind and too much solar too fast.

So the issue really is the timing and the blend. By being later adopter of solar, we have seen the price go down. Now its $0.60, went from $1 to $0.60, on the way to $0.40, it’s going to be a lot of cheaper and at the end of day that make sense for many of our customers.

On the other hand if you look at wind, we have seen in the actual cost of wind turbines and the efficiency improve and the costs come down. So it’s not a question of whether we use wind and solar. It's when and how much. And so I think the important thing is to get a right because my job at the end of the day is to balance affordability for fixed income, low income and our industrial customers and everybody else with reliability.

Remember wind and solar is intermittent. When the sun didn’t shine and the wind doesn’t blow, you don’t get electricity and as batteries technologies develop will be better able to do that, but also increasingly clean and we have done that. So we don’t disagree on anything other than the timing of how to get this done in the right way.

Unidentified Analyst

(Inaudible)

Jim Rogers

I think you will see it. It’s difficult to predict how these technologies will unfold, what the subsidies will be from the government. But the reality is I think that, I think it’s going to be more than a decade before offshore wind prices come down. I will tell you kind of my personal view and not the corporate view, I believe this solar will trump wind. Wind at the end of the day is going to failed and a relative basis because it can’t be distributed the way the solar can. You have to build where the wind blows and then build huge transmission lines to bring it where the load is and that’s going to be more expensive, than when you can put it on the rooftop or you can put it in a neighborhood. So I think solar at the end of the day will be cheapest alternative.

Okay, Mr. Warren, I'm calling on you. I'm reluctant to call on you, and let me tell you why. I get a call from my mother, and she saw your add in the paper, and I don’t mind the misleading statements about you, me, but the picture, that picture she says is an embarrassment to me and it makes me look bad. So she told me to give you a better picture the next time you run out of ad.

Jim Warren

We had quite a few of your pictures and chose.

Jim Rogers

My wife wanted a better one.

Jim Warren

We captured one with wind and the solar behind you and smoke from a coal plant in front of you for a reason there. I'm Jim Warren with N. C. Warren and I appreciate, I'm going to be pretty brief. I want to touch on just a couple of things. Yes, you're doing a lot more wind and solar, but 90% or more of it is not in the Carolinas or any of your monopoly states. Let's be clear about that. And you're not projecting any more than 2.5% in the Carolinas of your total generation for the next 20 years. So you're right, timing is an issue and the urgency of climate change is knocking on the door. We ran the ad, we posted the letter and I hope people will read the letter, whether you agree with me at this point or not.

I want to pick up on something that was said earlier a few times. Jim, I think your folks need to be looking at reality. The idea that you'll are going to protect these monopoly fortresses in the Carolinas and your other states over the several years I think is delusional. The Edison Institute itself is out and they spoke with you and they were picking up on something that you were saying two years ago, basically your industry is rapidly changing and they're talking about a variety of factors, including the falling price of distributed energy that they say, quoting, these factors are potential game changers to the U.S. electric utility industry and are likely to dramatically impact customers in the company and availability of capital.

Skimming on down into summary and this is a January report, that the Edison Institute, your trade group indicated the investment community has been very slow to pick up on this very rapid change, they say again quoting, investors are not taking notice of this phenomenon, despite the fact that the pace of change is increasing and will likely increase further as costs of disruptive technologies benefit further from scale efficiencies.

So I'll just say that people from left and right, across the political spectrum don't link monopolies. We see the monopoly control in this state as directly linked to serial rate hikes to fund power plants that we are arguing are not needed and the people in your monopoly states are not going to stand by as NRG and other large corporations with heavy financial backing come into nearby states and install solar on low and middle income homes for free, with no cost to the home motor, and people are not going to stand by and let Duke Energy block that kind of advanced in our state. So, I encourage you and the Board and the management to look at the rapidly changing situation.

We are calling for leadership from Duke Energy, because of the climate clock that is ticking so rapidly. It seems inevitable, as you had said earlier that you're industry and Duke Energy is going to be making major changes in clean energy direction. Jim for god's sake, why would you not front end that change and keep us with a chance to avert the climate tipping point that is coming so close.

Jim Rogers

Since there was no question embedded in your comment, I want to thank you.

Jim Warren

Why would you wait?

Jim Rogers

We're not waiting and the reality is we are not waiting. Five years ago we started investing, before others did and by the way NRG, we have more renewables than NRG. So they are a piker on a relative basis.

Jim Warren

They're moving past you now though.

Jim Rogers

Not yet. And second thing is, is that we started investing five years ago and went in solar to develop the capability to do it and understand how those markets play, but unfortunately we get pushed back when we want to build the wind and solar in the state. We went to the regulators and said we want to put solar on the roof tops, we put it on her roof top for free and pay her to let us put in the rooftop and we ask for a $100 million to do megawatts and what do the public council do? They said no. They said no.

Jim Warren

Others will support that.

James Rogers

But we didn't find any support.

Jim Warren

You got to try again.

James Rogers

Okay let's keep trying. Yes ma'am?

Kate Melges

Thank you Mr. Rogers. I appreciate you letting me speak. My name is Kate Melges. I am an Ohio resident, a Duke Energy rate payer here today here as a shareholder. I am here today representing the 60,000 Duke Energy Ohio rate pairs in Cincinnati, that chose last year and thought for a better option through energy aggregation. During the Cincinnati aggregation process, it was pretty clear what the rate payers of Cincinnati and the greater Cincinnati area wanted which was cleaner, cheaper, affordable, electricity powering our homes and small businesses and unfortunately your company was not able to meet that demand. So, my question is, the residents of Cincinnati would gladly welcome you back to Cincinnati as our electricity provider, not just a distributor; if you are able to invest in large scale renewable energy deployment in the city. What is your plan to do so?

Jim Rogers

Well first of all the way the bidding process went, it was really in the low cost supplier that won. And so we couldn’t beat the price. If we had to blend it in a lot of renewables, we would have been even farther from the price. So it was all call space. Because the City of Cincinnati wanted to pay less, and so we lost. And that goes to the question earlier from our friends and economists that that’s how competition works. But it had nothing to do with who had the cleaner energy. It had everything to do with who had the cheapest energy.

Kate Melges

But your action for the lowest cost, 100% green energy action, your price was the highest of all the seven bidders. So that was my point.

Jim Rogers

Well, I mean we try to do things in a business like way, and if it was higher, but we didn’t preclude others from bidding. So we gave them an opportunity. Thank you.

Kate Melges

Do you have a plan to invest in large scale renewable energy in the city?

Jim Rogers

We don’t have any current plans. But we are really focused on is putting smart meters in and as a consequence helping consumers in Ohio reduce their use of electricity and we have got a number of programs where we are doing that today. So our focus is on energy efficiency in that state. Oh my god, more hands go up every time. I am going to go right here. I am only going to take four or five more and then I will go have to get out of here.

Louis Zeller - Blue Ridge

Thank you Mr. Rogers. My name is Louise Zeller, I am the executive director of Blue Ridge Environmental Defense League. We operate in seven states in the south east. I just want to talk briefly and ask you a question having to do primarily with the risks of nuclear power. Duke Energy, as you know, operates Catawba and McGuire, just north and south of where we are standing here. An ice condenser rector, which is one of the two most dangerous reactors in operation for commercial nuclear power. Arguably the most dangerous is the type that melted down in Japan, just two years ago, and which I believe signaled the end of the nuclear renaissance and certainly on that side of the world and in other nations like Germany, which are planning to phase out their nukes by the beginning of the next decade.

As you know the Catawba and McGuire plants operate ice condensers which have a weaker containment structure. A typical hydrogen explosion can be on over 100 pounds per square inch. Those containment buildings can only withstand a little over 60 pounds per square inch and in fact some of the studies that we have been able to access show that ice condensers are 100 times more vulnerable than other commercial reactors in the United States.

The U.S. Energy information’s latest forecast shows levelized cost for winter bonds to be 80% the cost of advanced nuclear for units brought online by 2018. Westinghouse AP1000 is one of those advanced nuclear plants which the company plans to open in Gaffney, South Carolina, which features weaknesses of modular construction and another weakness which could siphon radiation directly into the environment.

My question to you is this. Concepts that base load power you mentioned when the wind don’t blow and when the sun don’t shine is out dates and should abandoned. A recent study published in 2013 found that by using inland wind, offshore wind photovoltaics, 99.9% of electric power demand could be provided by them alone and 90% of the power could be below normal cost and this is based on projections forwards to 2030.

This study looked at one fifth of the United States energy grid. It accounted for four years of electric load and solar and wind potential covering an area, stretching from North Carolina to Indiana. Duke Energy’s long range plan relies on fossil fuel and nuclear for 82% of our electric power projected forward in their latest integrated resource plan, looking forward 15 to 20 years. How can that be? How can reliance on outdated polluting energy sources still be part of this Company’s plan when there are other solutions out there. Mr. Rogers I believe we don’t need coal, we do not need nuclear, we do not need hydrofracing, we do not need biomass. What we are asking for is 100% clean renewable energy. Thank you sir.

Jim Rogers

I would simple say, first our nuclear plants have run over 90% load factor for 13 years or 14 years now and they have been operating it in a safe and responsible way for a long time and they are one of the reasons that one third of the electricity that we produce a day is carbon free, is because of those nuclear plants. So they play an important role.

Now your stat about the Germans shutting it down, the once with the $0.35 rates, they’re burning coal. The coal that we used to burn in the Midwest is now being shipped so they can burn the coal in Germany because they’re shutting down their gas plants, shutting down their nuclear plants and at the end of the day they’re going to high price for their experiment.

We don’t have the ability to do a scientific experiment on this. We have to provide electricity 24x7, 365 days a year. We have kind of continued operating blend and if I listened to you correctly, you’ll said, no to nuclear, no to gas, no to coal, right?

Louis Zeller - Blue Ridge

That’s right.

Jim Rogers

And then all you’d use is wind and solar. And the battery technology is really not developed to do that and in states like this with no wind all you have is solar. So at night time you got a problem unless you got huge batteries. So, now my point is this. You can't transform this infrastructure overnight and what you’re calling for might work someday, but not in the next 100 years and so what I believe is that we need to get the timing right, work on these technologies, improve the batteries. I told you about the 36 megawatt battery in west Texas.

We have six other battery projects that we’re working on. You’re talking to a company that's embracing these new technologies, is deploying and learning how to use on but we have at the end of the day a responsibility to keep the lights on and to keep it affordable for the people on our system.

Louis Zeller - Blue Ridge

Sir, with all due respect, you don’t have the time. The meltdown that happened at Fukushima in Japan, we are still suffering the consequences from that. It created a billion dollar liability in the millisecond and people are still paying the $13 billion costs for cleanup. How can Duke Energy and the shareholders stand for that kind of risk to be ongoing over the next 10 years? Sir, you don’t have the time. You need to follow what the ethical leaders in the world have done and move as rapidly as possible to phasing out of these dangerous nuclear plants and certainly not to add any new ones. Thank you, sir.

Jim Rogers

Thank you. You need talk to the Chinese who are building 25. You need to talk to Indians who are building them. You need to talk to people in the Middle East who are building nuclear. You need to talk to people that are trying to provide electricity and provide universal access to electricity, so they can build the middle class and not caught behind. Yes Sir.

Unidentified Analyst

We're building scientist and work energy efficiency. I was going to have bunch of numbers about how important energy efficiency is, DSM and all that. I think most folks in the room probably already familiar that buildings take about 40% to 50% of our energy budget every year. So you’ve made a commitment to look more into these programs, hopefully maybe breaking some silos and finding more integrated plans, but what I wanted to ask you is what you’d need from us as the energy efficiency community to do help you meet those goals?

Jim Rogers

You need to work with us. Think about Envision Charlotte. There is 68 million square feet of property in downtown Charlotte where we’re trying to reduce the use of electricity 20% in five years, so you need to talk to our team and work with our team so we can do it. We’re doing it first by having a kiosk in every building and there is sort of a competition between buildings and the competitions within buildings, but at the end of the day it’s going to take new technologies to get the savings we really need to be able to achieve our goal within Envision Charlotte. So work with us. Help us deploy the technologies. We are deploying them and we need more advise, more help and we’d appreciate your help. Please.

Kendall Hail

Thank you for your comments. My name is Kendall Hail (ph). I’m rate payer and a shareholder in Duke Energy progress. I live in Ashville. I have a different perspective but I’d like share that with you and I’d like you to hear about my plan. More importantly than being a rate payer and a shareholder I am a mother and a grandmother. I take this role very seriously, as a guardian and a protector of the future.

I am currently organizing grandparents and rate payers in North Carolina to join the July 2013 walk for our grandchildren. Our demands are to keep all fossil fuels in the ground, climate action now. We’re going to start from Camp David to Harpers Ferry and to the Whitehouse. We are willing to walk 10 miles a day for six days at the hottest time of year for the Americans from every state to speak and give voice to our children, their children and future generation. I would like invite you and the Board of Directors to join us and I want to tell you what we’re going to stand for because I think you believe in exactly what I believe in.

I just feel that we have to move faster and quicker because of I don’t see the time. We’re walking to express our deep concern for what will be left of our world, if corporate fossil fuel extraction and burning continues. I don’t want to bore anyone here but I think this is important. Climate change has brought extreme drought. We have seen wild fires out in the West, arctic ice melting at an historic rate and we have seen super storms that have caused death and unprecedented destruction.

The year 2012 as I am sure you know was the hottest record in the United States. We are walking to demand that polluting companies change their business plans to invest in energy efficiency now and to spare our grandchildren the tragic cost to their health and wellbeing and I think you would like to walk with us and I represent thousands, even millions of people who can’t be here today to tell President Obama and the public that we need a democracy in this state and with all due respect, as a citizen, I don’t feel that I live in a democracy because I do feel that your company has stolen part of my democratic right and the reason I feel that is because I have tried to lobby down there and I have tried to lobby for alternative green municipalities. I found that it is illegal and I’ve found answer after answer. Our politicians have been bought by your company. Our regulators have been bought. Our governor has been bought and you don’t take any risk and I think in fact you sometimes feel proud about passing the cost of expensive nuclear dangers operations, gas operations and deadly coal-fired plants to regulated tax payers.

With all due respect and I do mean this. I hear what you are saying. I feel that I need to have a choice. I need to have choice. I want to be able to invest in the utility company that is not gambling with our lives and the lives of our grandchildren and all living creatures on this planet. So I am recruiting grandparents, my age and older to join the growing rate payer revolt in North Carolina. We are wise elders of all faiths and colors and beliefs and we are fighting for a sustainable world. We are going to walk in the hottest time of the year. So my question to you is will you end our slavery to fossil fuels? Will you please end your outdated 20th century business plan and will use that us free, Mr. Rogers?

Jim Rogers

Thank you. I am going to keep the lights on first. Because our society depends on having electricity in every home, in every business. I admire what you are trying to do, good luck on your walk. I have got a jaw bone (ph) that measures steps. So you are going to get one of those because they will measure the steps you take every day. But at the end of the day, we are all on the same journey, we are all going at a little different pace, but the reality is this country is at the same place it was in 1992, in terms of our carbon emissions, and per capital as I said earlier in 1960, we've done more than what the Europeans have done, who talked a lot about it, and they have raised their rates to levels four times higher than our rates in the United States.

We can learn from them, we can learn from the Chinese and Indians and others around the world, but at the same time there's 1.3 billion people that wake up every morning and have no switch to throw, have no access to electricity. So I'm saying to you, step back, think about all the people of the world, not just in your neighborhood, and all the people in the world in the developing countries like China and India want it; electricity. This is going to happen. And global warming is not a North Carolina phenomena, it is not a Unites States phenomena.

Global warming is a worldwide phenomenon and at the end of the day we will find a way to do this as we have in this country of actually reducing our emissions of CO2 and yet still have a vibrant economy and that is the hard thing that we have to do. Good luck on your walk. Yes sir, my friend, from, I know exactly what you're going to ask so I really want you to, my friend from Long Island, I'm delighted to see you here actually because I was looking for you.

Unidentified Analyst

Thank you very much, in fact it's the Western Shore, Brooklyn.

Jim Rogers

You know for a southerner it's all kind of mixed together.

Unidentified Analyst

I do have a topic that's a compliment to you. Last year for the offsite environmental meeting occurred in June, I must have a stole, at that meeting a brief conversation and that was Mr. Williams and it is regarding volunteerism, blood donation, specifically in complement for the company promoting volunteerism and especially donating blood.

Super storm Sandy, want to compliment a Mr. Crampster (ph), who referring me to Mr. Lee Friedman. Mr. Friedman introduced me to some of the Duke employee responding to super storm Sandy restoration in my area, and then I've understood over 2800, just under 3000 Duke employees responded; compliment to them too, to yourself, to the directors and management, who have had the foresight and the initiative to have enough people on staff, that in an disaster like this, that Duke was able to respond.

I do also compliment that you have listened. I have had as you indicated, a comment to have the name to Duke Power and I compliment the share owner last year responding and the reporter outside our room for a suggestion and that it would bring it forward, as I think its worthy of consideration. Overall, I compliment with you with your Directors management and employees, job well done. The dividend has increased modestly, rather…

Jim Rogers

Modestly means we should do more.

Unidentified Analyst

Indeed! Continuing as financial conditions indicate but most of all to the stock market impartial who have found value and have found superior value in our shares bidding them up. And Mr. Rogers the best to you as this will be your last meeting and on your retirement.

Jim Rogers

Thank you. Okay we're going to take two more questions and then we're out of here. Yes, sir?

David Harman - Appalachian Institute

My name is David Harman from Boone. I have been a businessman for 42 years; I was a CPA for 29 years here in North Carolina. And I am co-owner of three companies. I am a financial consultant. I am co-founder of the Appalachian institute for renewable energy in Boone. I would like to thin I am a job creator. I understand the profit motive; I understand that your Board operates under the general statues that generally recommend or request that this Board does everything possible to increase shareholder value, I get that.

But despite of my business background, I also understand science. I am an avid science reader. I have co-authored a book about climate change. I am writing another book about climate change. I have been to the Arctic to meet with people whose lives are changing right now because of climate change. We now all know that climate change is real; it's increasing; it's measurable; it's caused primarily by human activities and its already bringing about negative outcomes on the planet and we have got to do something about it, because the earth has a serious carbon problem.

Human society will eventually deal with this. We are trying to do it now. I understand the calculus of a rational business decision where you look at costs and benefits. I understand that you have to evaluate that, I have an economics degree in addition to having better CPA. What’s different now is that the paradigm of how this energy is generated, the last century's paradigm involving large, expensive, often dirty and dangerous power plants, is in my opinion an obsolete paradigm.

It does not deal with the fact that (a) the public is clamoring for renewable and cleaner energy. It does not deal with the fact that climate change has an external deadline. We don’t know exactly when we're going to reach a tipping point. But your board who must consider profits, dividends to shareholders, I get that. There is now a new calculus that you can't ignore and that calculus is there is an external factor that doesn’t just fit into your ledgers and journals. It’s something that you as individuals need to start considering that we truly are facing a common threat. And it doesn’t just come down to earnings per share. We have to think that way.

So some folks here have said that we rate payers are starting to organize, we are starting to educate each other. We are very determined and we are hopeful that Duke Energy, which is this largest ship in the water, if Duke will move, I understand that you’re moving toward wind and solar. Our compliant I guess, is that is not doing fast enough. I understand that it comes down to cost. I would argue that you have to factor in these other issues in addition to the cost. It’s getting late.

And I would just ask you to please stop resisting renewables and move quickly, move faster, start encouraging them. But Dukes Energy’s adoption of more renewable, you will help bring the cost down. You will help make it better for everybody. Will you please join us in helping make this planet more livable for our grandchildren?

Jim Rogers

Thank you for that comment. And what I would ask you to do and everybody else here, is go to the state commission and tell them, let Duke build solar, let us put it on the roof top. Let us put it on the roof top and pay people to put it on the roof top. You need to help us do that because they are stopping us. You need to go to Raleigh and tell them to let us build solar and to sell it to our system, utility scale solar because they have made that more difficult for us.

So at the end of the day you have to join with us, if we are going to transform the world and we are going to make this a better environment for investment in solar and wind in this state. So we got work to do. And I am a neighbor. I have a little place in Linville, just down the road from you. And so I have had the same vested interest as you do. It’s seeing our company and our society transform and we will transform as we have already, as we are moving in the right direction but more work to do. I am going to take one last question, yes sir. And then we will go onto end our meeting.

Unidentified Analyst

Mr. Rogers. I am going to be good to you my name (inaudible). I live in (inaudible) of the town I live in (inaudible) part of the town and I have a home in Pamlico County and I can tell you about when turbines in the sands of North Carolina, it isn’t going to not going to happen in our lifetime. They will never let you put a wind pane and the sounds of North Carolina, the environmentalists and everybody else will be up in arms. That is just is not going to happen. But my question is, what brought me here is these ads, I was a stockholder I do appreciate the dividend, I am proud to be a Duke stockholder, these ads that we are running that says paid for by the stockholders of Duke Energy, would you please explain why we should take some of our dividend money and run these ads and why couldn’t we just have more dividend and no ads.

Jim Rogers

Well you got my wife cheering, because she's really into that dividend growing. That is a good question. But let me tell you what we are trying to do with our ads and our go line is not to use our customers money for the ads but to take them from the investor, because we think the people of North Carolina need to be better educated in terms of the challenges that we have in front of us and how we are reinventing our business and the fact that in the process like one of the ads shows that somebody takes a phone and it has a long line on it. I do not have any of those in my house but I grew up with them and the same way we have cell phones now in lieu of the phones with the long lines that our business is changing it is going to be much different and that is going to cost more money but maybe create more convenience and be cleaner.

So what we are really trying to do is educate people in the state about what we are trying to do and what it means but I take your point. I have never seen in my wife so. Message delivered. I want to thank all of you all for.

Unidentified Analyst

Sir, you have had 25 years in this industry to make your point. Surely you can listen to just a couple more people.

Jim Rogers

Here is what we are going to do. Most of the questions have been predominantly environmental related and I am going to do like I did last year and I am going to set up a meeting that I am going to go to and I am going to invite all of you'll to attend and we are going to sit down in that meeting and have the same conversation Jim Warren and many of you'll, so we can really have a conversation, not the series of speeches so that we can find a way forward together. So I’m going to do that and you’re welcome to come because then it would give us a chance to really talk about it, works through the issues and find a way a forward that works for everybody.

Unidentified Analyst

Mr. Rogers would you take long question on corporate governance (inaudible).

Unidentified Analyst

Not all of us are talking about the environment. We’re here to talk about rate payers as well, the poor people.

Jim Rogers

Okay here's what I'm going to do. I’ll take two questions on corporate governance and then we’re going to wrap this meeting up.

Unidentified Analyst

It seems a little awkward. First Mr. Rogers, I want to thank you for your time. But my question has to do with corporate governance. In this past year and I would like for the lead director to answer this question, the Board increased their compensation approximately one third, from a $150,000 to $200,000. At a time when we’re coming out of one of the worst recessions, its (inaudible) and we know about disparity in income. You alluded to the fact that the middle class is not growing as fast here as in other places. And I submit to you, in the future and I’m saddened to be here today and hear what I have heard.

I’m a businessman. I've lived here in Charlotte. I reside at 15/71 Queens Road West, here in Charlotte. We have given to many of the charities that you give to and we are your neighbor and we also belong to some of the same clubs that you belong to. But that be as it may.

In my judgment, Duke Energy’s business model for the long term with the CEO and Chairman as the largest individual stockholder, according to the comments that he made regarding corporate governance, and also in the comments that he has made regarding corporate governance, he talked about diversity and when I look at this Board, five of you are tied to the nuclear industry.

So the question I have, how much diversity do we have here? Now going forward if someone had told you Mr. Rogers a few years ago that Wachovia would no longer be here, Wachovia stock went to $0.35 a share. They were broke. Merrill Lynch went broke. Goldman Sachs had to be bailed out. Bank of America stock went to $3.35. So we as taxpayers bailed out these people.

Now no one knows better than Mr. Hans about the Bank of America. The taxpayer guaranteed every piece of commercial paper that they issued. They guaranteed all of the bonds and in 2007, the CEO of Bank of America took out $97 million. Now Mr. Rogers took out about 8 million this year and he is retiring as the largest individual shareholder. So the only thing I’m saying to you today, and I am particularly saying it to this management team, you work hard, you do a good job but going forward, the disparity and income in this country for the middleclass is going down and the high income at the very top and here an example of it, right here, salary $150,000 for being on this board, this year it’s 200,000 and what’s it going to be going forward.

Now, I have no reason not to like Mr. Rogers. I have no reason not to like you but I am saying to you, in my judgment this corporate governance will lead to failure. You cannot continue to be secure where you live and continue to take out huge sums at the top while people in lady’s neighborhood are having trouble paying the bills.

Now you eluded to your, and I know this is little bit personal to your new home in Linville. I happen to live in the Linville area in the summer, I know about the mountains. And you alluded to the fact there aren’t going to be any windmills in the mountain, because I am there, but I don’t know if that's true or not. He is certainly entitled to his opinion. But I do know this, there is only so much water out here and everybody along the Catawba river trying to get some of it and nuclear plants use a lot of water and if you go to Japan and talk to the people in Fukushima about what’s going there, now some of your shaking head and saying well who are you, why are you here but I am just telling you, from where I sit and the people that I am coming in contact and some of these people who haven’t had a chance to speak here today.

Right here is a lady with the PhD and there is other people here that representing all walks of life. Now this system has worked well for you and it has worked well for Mr. Rogers because he is the largest shareholder and a lot of this is come from receiving stock options and stock grants and the other thing that you have done and I am talking about the leadership of this country, you pushed down the tax rate on dividends to 15%, which means that many of you are paying less in taxes than secretaries pay and that’s not fair, and in my judgment for the long time, this will not stand. And Mr. Rogers, I am interested in your welfare and I wish you well, but I am saddened because of what is happening to my country.

Jim Rogers

Thank you. A couple of quick things. First of all with respect to the compensation to the Board, what we pay the Board, we look at what comparable Boards around the country are paid and this is in line with what other boards company decides to pay.

The second point is on nuclear, nuclear can done in a safe way and we have done it 40 years in a safe way for our people. Third you are aright the world is changing and people don’t remember what our cities look like in the 1900s before we had electricity. Then we were burning coal in fireplaces, and then you couldn’t see your hand in front of yourself just like in China.

So the bottom line is electricity has led to the cleaning up of America, every step of the way and we're going to evolve. With respect to the business model, the question was raised earlier, we get it. I mean Jim Warren read this disruptive changes coming to our industry, we got that, we're on that, and we're going to make sure that we have a business model that produces the dividend and now we need to increase it.

But the important point you're making really goes to our whole society and by the way for the last seven years I have not received a single dollar in cash, I'm paid only in stock, because I have an identity of interest with you, I want to see the dividend grow, I want the stock price to grow, and there's not another CEO in this country that gets paid in all stock. I don't about all the country but clearly in our industry nobody's paid that way and I bet when you were in business, you never got paid all in stock.

So my only point is, is I'm trying to put our company in a place, so that when I walk out of here we'll be in a strong place. You recognize as we all recognize this country's changing, and we need to be part of the change. We need to shape the change. But that isn’t going to happen in this boardroom, it's not going to happen in this company, it's going to happen at the state capital, it's going to happen at city council, it's going to happen in Congress which can't seem to do a thing. So your concerns really are properly addressed to Congress because they need change.

There was one governance question right here and then we're going to wrap it up.

Unidentified Analyst

Good morning, Mr. Chairman. A quick question on corporate governance since you are retiring and we're sad to see you go because you really did a good job and thank you for being paid only in stock because you're aligning your interest with ours and that's great, but my one question is that Duke Energy will have a golden opportunity to appoint an independent chairman of the board and I really think that you should do that and we have a lead independent director. So I don't think there should be a problem appointing an independent chair.

Jim Rogers

Thank you for your comment, I'm sure our board will take that into consideration. We've always had a strong lead director and I've played the role of Chairman and CEO and generally that has tended to work. These is my last words and I want to thank you all very much for being here. We will post the time so we can get together and talk in detail about these environmental issues. But it's been an honor for me to serve all these years, going back to 1988 as CEO of companies who serve electricity to homes and businesses.

When I wake up in the morning; I know that I am transforming the lives of millions of people; rich and poor; because when they throw their switch, I'm making their lives better by providing electricity. And also know that I have a great opportunity and responsibility to help shape energy and environmental policy in this country and I have done my best with that and I am not through with that although I am not sure I am marching with you. Sounds too far and too hot. But again I want to thank you all very much for investing in Duke. I want to thank you very much for being here. I appreciate it. You won't see me next year. You will see a new face, but have a great year. Thank you all.

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