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May 2006
A Surge of New Energy
By Ellison Clary

With over a hundred years behind them, Duke Energy Carolinas is poised to push for an even brighter future with Ellen Ruff as its new president.

Ruff was part of a strong leadership team that pulled Charlotte’s Duke Energy out of a dark spot early in this decade. Now she’s determined to help position the venerable utility to serve a new generation of Carolinians with the power necessary for continued economic vitality.

Forged by an April 3 merger with Cincinnati-based Cinergy, Duke Energy is an energy company with about $36 billion in market capitalization and 5.5 million retail customers. Headquartered in Charlotte, its combined assets of $70 billion place it among the biggest two or three power firms in the United States.

That position of strength is extra sweet for Duke. The long-time bastion of integrity was accused of holding back electric power during California’s rolling blackouts and of underreporting profits in the Carolinas, both for financial gain. Ruff is quick to point out that the company was exonerated on both counts, but it did suffer fiscal reverses that halved its stock value in about 24 months.

The financial situation began to brighten shortly after former president and chief operating officer Paul Anderson returned from retirement to become chairman and chief executive. He shed unprofitable ventures and instituted money-saving initiatives. The company reported 2005 earnings per share of $1.94 on net income of $1.82 billion, up from 2004’s $1.59 per share and $1.49 billion net income.

Duke stock, which dipped below $20 a share in 2002, now trades near $30. Along the way, Duke won the 2005 Charlotte Ethics in Business Award from the Society of Financial Professionals.

At the new Duke Energy, Anderson is chairman of the board and Cinergy’s James Rogers is president and chief executive officer. Then comes Ruff at Duke Energy Carolinas, co-equal with the presidents of the company’s other units, all known as Duke Energy now, but formerly PSI Energy in Indiana, Cincinnati Gas & Electric in Ohio and Union Light, Heat and Power in Kentucky.

Duke Energy Carolinas is the entity that started in 1904 and became Duke Power Company, named for James Buchanan Duke, who founded it along with Dr. W. Gill Wylie and William States Lee. Its first name was the Catawba Power Company.

With Duke since joining the legal department in 1978, Ruff has enjoyed the good times and endured the bad. She’s gratified to look forward to a brighter future. “There was a sense and a feeling that we were tarnished and lost some of our glow,” Ruff admits in her Charlotte office. “You felt like you were in a ditch.”

But she looks you in the eye and adds: “We have our reputation back. We’ve worked hard to reengage with the customer and to remind ourselves that our customers and our employees are most important to our success.”

Ruff, 57, was born in Hartford, Conn., and received her law degree from the University of North Carolina after earning a bachelor’s in business at Simmons College. At Duke, she rose through the ranks, often getting advice from mentor and general counsel Steve Griffith, now retired.

Along with her extremely supportive parents, Ruff praises Griffith. “I don’t think there was anything he didn’t think I could do,” she says. “He gave me task after task that was new.”

Ruff became senior vice president and general counsel in 2001. Two years later, she was named senior vice president of Power Policy and Planning, then became group vice president in that capacity. In 2005, her title changed to group vice president for Planning and External Resources.

“In the legal department, I worked in every area and the lawyers were part  of the business team,” Ruff explains. “I became very familiar with the operations of the plants, very familiar with the regulations.”

 

Restoring Customer Confidence

As a leader in Duke’s Power Policy and Planning area, Ruff worked closely with Ruth Shaw, the company’s former Carolinas president who now is group executive for Public Policy and president of Duke Nuclear. They concentrated on restoring customer confidence.

Ruff worked to craft a program that returns 50 percent of Duke’s profits from off-system electricity sales to the communities it serves. Although slightly different in both states, the effort includes lower rates for industrial customers, grants for community colleges and manufacturers, support for economic development, and increased aid to special assistance programs such as Share the Warmth, fan relief and cooling assistance. The initiative continues in North Carolina through 2007 and through 2010 in South Carolina.

The utility tried harder to understand customer needs. Most industrial customers acknowledged that Duke’s power rates were among the nation’s lowest, but they wanted the utility to provide cost forecasts. Duke had shied from that, fearing inaccurate projections.

Finally, the company gave its customers projections based on a range of likely fuel cost increases, which are about a third of electricity bills. “It made an unbelievable difference, even if we couldn’t be absolutely sure,” Ruff said. “They at least had something to base their budgets on and that was the important thing to them.”

Reliability is another Ruff hot button, even though the company ranked highest among the South’s 52 utilities in a business customer satisfaction survey report released by J.D. Power and Associates in March. “We always think of continuous improvement,” Ruff says, and points to a fairly localized ice storm in upstate South Carolina in late 2005. “We had some glitches,” she admits, “with our capability to manage customer phone calls.”

Again, she feels communication can help improve Duke’s performance. Until recently the utility has been reluctant to give customers an estimated time for when their electricity will be restored. It worried about being inaccurate. But customers want that best guess, so Duke now gives it to them.

Listening and responding often leads to developing new products and services, which Ruff wants to expand. “Over the years, we’ve developed things like flexible payment plans and equal payment plans that were directly in response to customers,” she says.

 

Carolinas Economic Growth a High Priority

For Duke, continued economic growth in the Carolinas is a high priority. And there again, Ruff seeks more customers to listen to, as well.

“We are going to attract more business and industry and keep the ones we have,” she states simply. To lead that effort, she has Winston Kelley, fresh from the successful drive to win the NASCAR Hall of Fame for Charlotte. Tony Almeida will transition gradually from economic development to customer relations.

As a board member for the Charlotte Regional Partnership, Ruff expects to help mediate development battles between North Carolina and South Carolina that recently have resulted in some employers moving from Mecklenburg County to the Palmetto counties of York and Lancaster.

To replace a largely eroded textile base, Ruff will concentrate on businesses that are less likely to move offshore. She cites the success of the automotive industry in upstate South Carolina and she likes pharmaceuticals and plastics, too.

Duke recently led a study to identify large tracts of land that could serve potential new industrial customers and provided that information to the commerce departments in both states. Ruff sees it as part of showing customers and prospects that Duke has a plan for the future.

Another essential element in planning, she believes, is demonstrating “that you will be there with the power when customers need it and will provide it at a price that will support their success.” Duke’s Carolinas service area adds between 40,000 and 60,000 electricity customers a year. To serve them, she says, the company will need new “base load” generating units designed to operate 24/7.

Duke looks ahead 10 years and longer to make power-need projections. It will take until 2011 to build and operate a new coal-fired plant and until 2016 for a nuclear unit, she explains.

“I think we’ll have to build a nuclear plant,” she states matter-of-factly. Nuclear is important for fuel diversity, she adds, a big reason Duke’s rates are among the lowest in the southeast.

Although no final decisions have been made, Duke has picked a site in Cherokee County, S.C. – where it started but never finished a nuclear plant in the 1970s – for a new generating unit that will most likely be nuclear. The company has selected a spot in Rutherford County, N.C., where it almost assuredly will build a coal-fired plant.

“When we look at generation going forward,” Ruff says, “it will not only include nuclear, it will also have to include coal. We will look harder at renewables, something non-fossil like wind or peat moss, solar, methane or ocean waves.”

 

Protecting Environment Is Important

Protecting the environment is important to Ruff, who has worked in both North Carolina and South Carolina on measures to reduce pollutants from Duke’s coal-fired plants. Duke is investing $1.5 billion to reduce nitrogen oxide and sulfur dioxide emissions at its seven coal-fired plants in North Carolina. That promises to bring it into compliance with “Clean Smokestacks” legislation that Ruff helped champion in 2002.

JoAnne Sanford, chair of the N.C. Utilities Commission, praises Ruff for her work on “Clean Smokestacks” and for her general competence. “Ellen speaks with tremendous authority on all pertinent issues,” Sanford says. “She is the right person for the job at the right time.”

Sanford adds that she, too, feels Duke’s reputation is on the upswing.

That’s music to Ruff’s ears, because with expensive capital projects on the horizon, she’ll be asked to help Duke gain the assurance of a broader cost recovery mechanism before plant construction begins, rather than waiting until the unit is finished.

“We have very good regulation,” Ruff says. “No, we don’t always agree, but the regulators understand the importance of strong utilities being able to build generation and transmission lines to provide the level of service customers want.”

Bill Johnson, president and chief operating officer of Progress Energy, based in Raleigh, has known Ruff for 22 years and believes she will produce impressive results, internally and externally. “I think she will make clear to everybody what she is trying to do at Duke,” Johnson says.

He praises her “persistence” and “crisp execution.”

Ruff smiles. “If I have an issue that I think needs to be advanced,” she says, “I don’t let it go easily. I do believe in educating on the issues.”

Going forward, Ruff sees more consolidation of utilities but vows Duke will remain among the nation’s largest. She forecasts more cooperation on electricity transmission issues, with utilities working together on regional power needs.

Though she admits that some mornings she wakes up and is surprised she’s running Duke Energy Carolinas, the mother of three says she enjoys her new job. “I really like to feel that I make a difference,” she says. “I thought in this role I could make one.”

Winding down is hard for her. She walks her dogs and reads, often books related to cooking, which she always finds time for.

She likes entertaining and that brings her back to what she likes about her job – the people she works with and meets. She enjoys their intellectual stimulation.

“But in the end,” she says, “it’s being able to make a difference – for the community and for the future.”

Ellison Clary is a Charlotte-based freelance writer.
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