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January 2004
Powering the Piedmont -- Celebrating 100 Years

      The resume of Ruth G. Shaw, Duke Power’s president, reads like a river running through the heart of the Carolinas. By age 10, she was living in Greenville, N.C. In her teens and early 20s, she earned both her bachelor’s and master’s degrees in English at East Carolina University. Her Ph.D. in educational administration followed albeit in Dallas, Texas. But by her late 30s, she was back in the Carolinas distinguishing herself as the president of Central Piedmont Community College. For most, that would be enough; however other forces were at work – namely the executives at Duke Power – that would change her life and place her in one of the most powerful positions in the region as president of Duke Power. 

       “It was just one of those things that was so fundamentally odd. It truly was just baffling to me,” Shaw says of the courting that took place in order to convince her to leave an honor-laden career in education for corporate Carolina, if not corporate America. “Here I was, the community college president and Bill Lee (then president and chief operating officer of Duke Power and grandson of hydroelectric pioneer William S. Lee) and Bill Grigg (soon-to-be chairman and chief executive officer) wanted me to join the power company. They were either smart or crazy to give me enough time to get comfortable with the idea.”

       Within 90 days, Shaw made her decision and joined Duke Power as vice president of corporate communications. That was in 1992. Promotions continued and in March of 2003, she was named president of a company that serves today more than two million customers, employs more than 10,000 Carolinians and has been at the forefront of electricity generation and delivery for 100 years.  

 

Carving a legacy of prosperity

      Duke Power generated its first 3,300 kilowatts on April 30, 1904, at the Catawba Hydro Station at Indian Hook Shoals near Fort Mill, South Carolina. “It’s a fascinating story of economic development, of taking a new technology and pushing the envelope on that technology and literally becoming the key to the transformation of a region,” says Shaw. “I don’t think there are many business that can say that’s a part of their history.”  She recalls reading a history of the company and can envision its founders James Buchanan “Buck” Duke and Dr. W. Gill Wylie walking up and down the shores of the Catawba River and literally being able to see what could happen if they could capture that power, and more importantly, be able to deliver it from a dam to a mill.

       Deliver it has, first by birthing a post-Civil War manufacturing boon most notably in textiles with the promise of reliable and affordable electricity; and during its first 100 years of operation, ushering in cutting-edge methods of generating electricity and growing its system to today’s capacity of 19,900 megawatts generated by nuclear, fossil fuel and hydroelectric stations. Duke Power changed the economic landscape of a struggling region; the physical landscape which now includes 11 reservoirs with names like Norman and Wylie, out the pages of history of Duke Power; and James, Rhodiss, Hickory, and Mountain Island which Duke Power literally put on the map. The names conjure images of recreation on lake shorelines, prime real estate development and an economic impact that made the region thrive.

 

A catalyst sunk deep in the clay of the region

       Shaw says that the economic health of the region is one of her favorite topics. She describes how, on assuming her role as president, she took time to develop a plan for Duke Power to move forward and on doing so, saw how the company’s and the region’s health are meshed. “As I began to immerse myself in what the drivers were for prosperity for the company, I realized how parallel they are to the drivers for prosperity for the region,” she says. “It’s inescapable. Today’s great erosion in the region – the decline of textile, tobacco and furniture manufacturing – was affecting our prosperity as a company. It was clearly affecting our region. I think we have an important role and that key businesses have an important role in being catalysts for the prosperity of their whole regions. And unlike any other business in the Carolinas, we’re not going anywhere. We are sunk deep in the clay of this region. This is were we live and where we are going to stay.”

       She speaks with determination about the economic summit the company will host April 29 and 30, 2004, in honor of its 100th anniversary. The summit will be chaired by governors Mike Easley (N.C.) and Mark Sanford (S.C.). Its board of advisors includes prominent regional business leaders such as Ken Lewis, Bank of America Corp.; Ken Thompson, Wachovia Corp.; Jim Macali, Michelin North America; Roger Milliken, Milliken & Company; and Robert Ingram, GlaxoSmithKline. Shaw describes the goal of the summit advisors and
participants as a mission to examine ways to brand the region and determine what it offers that is singularly better for a prospective industry, and will include the identification of places where there is development capability
and a competitive edge.

        “We’ll engage the invited guests in a dialogue around the key areas we think are essential to promote prosperity,“ says Shaw, who describes it as a theme desperately needed. “We’ve not put together that clear, confident message of what the competitive edges are that this region offers to the world. We have much more capability than we give ourselves credit for or that we present to the public at large.”

 

Duke Power’s triple bottom line

     If she could choose, Shaw says Duke Power would be recognized for having been a contributor to increased, more diverse manufacturing throughout the Carolinas, and that under her leadership, Duke Power would be recognized as an active participant engaging new business and industry to the region. “We (Duke Power) have undertaken our own look at industries where there is high-growth from the interest of our own business – not only high growth, but high demand for electric power,” says Shaw. “That’s the business we’re in; we’d like to have more of it.”

       It is fair to say that Duke Power serves every customer – commercial and residential – that comes to the company’s region, and as a result, is a unique business. Shaw describes the company’s obligation as a “triple bottom line” comprised of financial results, social responsibility and environmental stewardship. The financial result includes delivering to investors solid financial results as a result of good management, superior operations and high cost-effectiveness; to customers, the pursuing of financial results in a manner that keeps electric rates competitive in the Carolinas. Its rates remain steady at 1986 levels. “It’s a constant challenge to keep rates low and meet the high standard that consumers have,” says Shaw. She describes the company’s abilities to maintain low rates as “a stunning piece of Duke’s history.”

       Deregulation created a great flurry of discussion in the industry, but according to Shaw, the time is not right for deregulation in the Southeast. “I don’t see it coming in my tenure as president of Duke Power, which I hope will be long, healthy and prosperous,” says Shaw. “We start from a position of being a region that is competitively advantaged in terms of electric power. We have low-cost generation and generally low rates throughout the region. I think the regulators who are charged with balancing the interest of consumers and companies are not going to see any near-term benefit for customers in the Carolinas.”

       While rate discussion makes for attention-grabbing headlines, Shaw says rates are not the most significant issue facing Duke Power, rather the pressure tends to come on issues of reliability. Major power outages in the Northeast and nature’s curve balls, such as a  record-breaking ice storms in the Carolinas and Hurricane Isabel, have all occurred in Shaw’s first year as president. “These are the things that are real ‘dissatisfiers’ in our business,” explains Shaw. “I think consumers have high demands for a quick response, a personal response; things that historically utilities are not very good at.” To address the issue of customer satisfaction, the company has undertaken a study designed to rate the customer experience with Duke Power. Armed with that information, Shaw hopes to establish a set of standards for the customer experience. But it must be doing something right: A recent national survey of commercial and industrial customers ranked Duke Power number one in overall customer satisfaction, energy efficiency, reliability, power quality, price and account representative performance; Financial Times Energy awarded Duke Power the title of “Best Electricity Company” for providing safe, reliable, competitively priced electricity and outstanding customer service to customers.
       As for social responsibility, according to Shaw that includes providing good jobs with good benefits for Carolinians, which is proving no small task in the current challenging economy.  Shaw acknowledges the difficulty surrounding workforce reductions such as Duke Power has undertaken.                          

       “Nobody likes to do it,” says Shaw. “But you do it in a socially responsible way that provides a fair severance, educational benefits and ongoing healthcare coverage.”  She also speaks fondly of the company’s “Share the Warmth” program, a partnership between Duke Power and its customers to help people to pay their power bills during the winter. Area agencies help coordinate the program and distribute funds throughout the Duke Power service area.

       With regard to environmental stewardship, Shaw recognizes the significant environmental impact in terms of air, water, and earth that Duke Power has on the region. “We operate to very high standards of environmental stewardship in an on-going way,” says Shaw. The company has won numerous environmental awards including the National  Wildlife Federation’s prestigious Conservation Achievement Award. Shaw is also proud of the company’s sale of 40,000 acres of its Jocassee Gorges land holdings to state and federal organizations to preserve the region’s natural resources.

       As the centennial of the company approaches, Shaw says it is enjoyable to look at the seminal moments of its past, but it’s the potential for a bright future she enjoys most.

       Successes, such as the recent renewal of the licenses of the Duke Power operated nuclear stations in York County, S.C. and in Huntersville, N.C., allow the plants to generate electric power into the 2040s. Also underway is its Catawba/Wateree project to ensure re-licensing of its hydroelectric stations and reservoirs on the Catawba River. It is a project Shaw describes as crucial for the environment, the company, and one that shapes the landscape for generations to come and a continuing part of Duke Power’s legacy. 

 

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