Some readers of a recent New York Times Magazine profile of Duke Energy CEO Jim Rogers were no doubt surprised by the piece. If its title, “A Green Coal Baron?” flummoxed some readers, the article’s general thrust likely have frustrated others.
The casting of the utility behemoth’s president and chief executive officer as a visionary energy executive-cum-environmentalist was hardly new, however. He’s been gaining attention for years as an environmentally proactive business leader. In the midst of continuing debate over the expansion of Cliffside, the coal-fired power plant about 60 miles from Charlotte, it’s worth looking at the rhetoric versus the reality. What is Rogers’ record, really? Is he a hybrid of environmental advocate and energy mogul? A Green pragmatist? Or is he trying to board the pollution-control train before it runs him — and his company — over? While it may be impossible to know a person’s true intent, one can look at the record on a few recent key controversies.
1. Cliffside
Environmentalists have overwhelmingly lined up against coal-fired power plants. Coal is a leading cause of smog, acid rain and global warming. Duke Energy has acknowledged the need to move away from coal, but on March 25, Duke Energy broke ground and began construction on the 800-megawatt coal-fired power unit at Cliffside, a facility that straddles Rutherford and Cleveland counties. Area elected officials and residents of the bucolic area are hopeful it spurs economic development, but critics, ranging from environmental activists to the National Park Service, are protesting the project. The National Park Service warned the project would harm air quality and visibility at the Great Smoky Mountains National Park. Rogers originally wanted to build two units, but state regulators approved only one unit. Environmental groups are continuing to fight Cliffside. “He’s basically locked the electric consumer in North Carolina to 40- to 50 years of coal-fired generation, with no plans to the [carbon dioxide] emissions,” said Stephen Smith, executive director of the Southern Alliance for Clean Energy.
2. Carbon reduction legislation
“I am unwavering in my support for mandatory federal action on climate change,” Rogers has said. And Duke Energy has been on record as favoring carbon cap-and-trade programs. Yet he opposed a bill sponsored by Sens. Joe Lieberman, a Connecticut independent, and John Warner, a Virginia Republican, that would regulate carbon dioxide. The legislation would have spawned a federal cap-and-trade program in which companies must purchase pollution credits. In effect, the system would reward companies who become more efficient because they would spend less on pollution credits. While Lieberman-Warner awarded Duke credits, the utility didn’t think it would be given enough.
Smith and many environmentalists believe such cap-and-trade programs would work better if pollution credits were auctioned off — a competitive atmosphere in which environmental groups could buy up credits and refuse to sell them, reducing the overall carbon that’s allowed to be released in the air. “We do not need people like Jim Rogers trying to get free pollution credits,” Smith said. “Polluters need to be paying.”
Based on its analysis of the Lieberman-Warner proposal and potential allowance prices at $30 and $45 a ton, Duke Energy estimated its customers’ power bills could increase by up to 53 percent when the legislation became effective in 2012. Power bills would continue to escalate in subsequent years as allocations decreased and more allowances had to be purchased through auction. The power companies weren’t the only factions lining up against the bill — interests as disparate as the AFL-CIO and the U.S. Chamber of Commerce were among opponents.
3. Save-a-Watt
Utility companies make more money when they sell more energy. Under Save-a-Watt, Duke Energy would charge customers an extra fee if they agreed to have meters installed that would turn off appliances during periods of peak power use. In essence, the utility’s customers would pay Duke Energy not to produce energy. Duke Energy said that instead of paying what they normally would for electricity and for new power plants, consumers would pay 90 percent of that amount. It also would bring the company cash. A Duke Energy official at a Wall Street Analyst Forum conference said, “Our energy-efficiency model will generate enough revenue to recover all program costs and would produce earnings comparable to building new generation.”
Some environmentalists say Save-a-Watt would be a cash cow for Duke Energy that actually makes energy efficiency look less attractive for consumers. “He’s playing on all the right notes, saying all the right things, but he’s basically pick-pocketing consumers to the company’s advantage,” Smith said.
Opposition to the program has come from environmental groups as well as the public staff of the N.C. Utilities Commission. In a rare meeting of the minds, staff from the libertarian John Locke Foundation and the progressive N.C. Public Interest Research Group have written an op-ed, published in Raleigh’s News & Observer, criticizing the measure.
Avram Friedman, executive director of the Canary Coalition, believes energy efficiency programs shouldn’t be, in effect, in charge of reducing energy consumption, and that such a position would be a classic example of a conflict of interest. “We feel that a more effective program would incentivize the consumer rather than the power producer,” Friedman said. “It’s a backwards way of doing it.”
Rogers first attracted attention for his environmental leanings when, as head of Cinergy, he acknowledged a global warming threat. Many environmentalists believe this acknowledgement was played up, while the policies of the companies Rogers helmed were downplayed. “Even some people in the environmental community … basically held Jim Rogers up on some sort of pedestal,” Smith said.
Pete MacDowell, program director of N.C. WARN (Waste Awareness and Reduction Network), said Rogers and Duke Energy have perpetuated a “green scam” on consumers. “It’s as if he’s saying, ‘I am a sinner … help me Lord,’ and then not doing anything about it,” said MacDowell. “He’s just confessing.”
This article appears in Jul 9-15, 2008.
