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August 2009
Powering Up
By Ellison Clary

 Duke Energy, headquartered here in Charlotte, has been the principal driver of economic development for the Charlotte region and much of the Carolinas, promoting the resources available within and beyond. Like the power it wields, the megalith corporation is so pervasive in the generation of economic activity, so woven in the fabric of business activity, that it operates largely unacknowledged.

     Today, Duke Energy is more often defined by headlines of residential sales impact on the consumers’ pocketbook rather than the company’s rich history of support and vision for the area.

     No one is more aware of this than Jim Turner, the man at the helm of Duke Energy’s electric and gas operations and located right here in Charlotte.

 

“Sticker Shock”

     Recently, Duke Energy has been in the news for the rate increases it seeks in North Carolina and South Carolina. Rate increases are usually met with initial adversity, much less in troubled economic times.

     As the president and chief operating officer of Duke Energy’s U.S. Franchised Electric and Gas operations, Jim Turner realizes that the 12.6 percent hike sought of the N.C. Utilities Commission is a tough sell. Still, he makes the case without hesitation.

     Duke Energy’s North Carolina average retail rates are already 31 percent below the current national average and 24 percent below the average for the Southeast. And, although it comes in a deep recession, the hike is the first the utility has sought since 1991, another tough economic time.

     “You’re never popular when you ask for a rate increase, even when times are good,” observes Turner.He points out that in 2008, the 2006 Duke Energy-Cinergy merger resulted in a rate cut of about 7 percent to North Carolina customers, a fact not so long remembered by the same customers.

     Since April 2007, Turner has presided over the company’s franchised electric and gas business, having overall profit and loss responsibility for the firm’s largest segment. He is responsible for Duke’s regulatory strategy and execution at the state and federal levels, and oversees the power delivery, gas distribution, customer service, fuel and portfolio optimization, wholesale business, new generation and environmental health and safety.

      He doesn’t hesitate to describe his biggest challenge. “The hardest task we have is producing power that is affordable, reliable and clean,” he says.

     “Everything we do as a company is trying to find the right place in that balance so we are honoring our customers’ need for reliable and affordable power, but also minimizing our environmental footprint.

     “We froze salaries this year for all management employees,” he continues. “We’re working really hard to hold down operating costs.”

     Then he gets to the big driver, the company’s prodigious investment in new capital projects, among them environmental controls. For example, the Allen coal-fired plant on Lake Wylie still emits its trademark plume, but these days it billows only from a stack that vents scrubbed gasses.

     “So it’s really almost just water vapor coming out of there now,” Turner points up.

     “All that costs money,” he adds. “It cost $450 million or so for that scrubber at Plant Allen.” Duke Energy has also installed scrubbers at the Marshall Steam Station and Belews Creek coal-fired units.

     “We’ve invested a lot of capital, and we need to begin recovering the cost of those investments,” Turner says.

     He’s worked with utility commissions the better part of two decades and has found those who serve on the panels to be conscientious. Though appointees, their caliber has risen as political leaders “recognize the complex, challenging issues those folks are asked to weigh in on,” he says.

     The balancing act is a struggle, as is forecasting changes in living habits that might make big changes in how the company operates. Duke is conscientious about experimenting with and investing in new technologies to keep abreast of such consumer developments, to be responsive to environmental concerns, and to continue to provide reliable and affordable power to an increasing demand for it.

 

The Power of Vision

     Turner describes Jim Rogers, Duke Energy chairman, president and chief executive, as able to see the future “better than anybody in our business.”

     Turner, now 50, has known Rogers since 1991 when he was consumer advocate for the state of Indiana and Rogers was chief executive of PSI Energy in the Hoosier state. That company became part of Cinergy, based in Cincinnati, and Turner joined Rogers’ management team there in 1995.

     After the 2005 merger of Cinergy and Duke Energy, Turner says, “we both converged on Charlotte at the same time.”

     Turner didn’t know Bill Lee, the legendary Duke leader, but likens Rogers to him.

Until shortly before his death in 1996, Lee led what became Duke Energy and was influential in building Charlotte’s center city. He also was a national defender of nuclear power. After the Three Mile Island nuclear accident, Lee created the Institute of Nuclear Power Operators (INPO), which remains prominent today.

     “I see Jim Rogers pushing clean coal and carbon regulations, and working for nuclear power in sort of the same way Bill Lee used to push,” Turner says. Indeed, Rogers this year has been no stranger to the national stage, appearing on television programs as varied as “60 Minutes” on CBS and “The Colbert Report” on the Comedy Channel.

     Turner pretty much serves as the local face of Duke Energy, in conjunction with two important co-workers also active in Charlotte affairs—Brett Carter, president of Duke Energy Carolinas, and Ellen Ruff, president of Duke Nuclear Development. Recently, he has been busy as chair of Charlotte Center City Partners, and helping with Charlotte Chamber and United Way of Central Carolinas projects.

     Michael Smith, president and chief executive of Charlotte Center City Partners, praises Turner’s leadership.

     “Jim Turner is an outstanding chairman for Charlotte Center City Partners,” Smith says. “He is a thoughtful community leader and also one of the most creative thinkers and problem solvers in our region.”

     Turner says simply, “I want to do as much as I can to help the city.”

     It was in that same spirit that Duke Energy recently stepped up to take over as principal tenant of the Wachovia Corporate Center after Wells Fargo acquired previous owner Wachovia.

     Actually, it was also a homecoming of sorts for Duke Energy. Previous CEO Bill Lee had assembled the property on South Tryon Street where Wachovia, and now Wells, are building the tower and the adjacent cultural campus with the intention of building a new headquarters many years ago, but the plan was abandoned when Duke hit hard times in the 1990s and sold the land to Wachovia.

     Duke Energy will be occupying a total of 500,000 square feet on the top floors of the new tower. Although Duke currently has 1.3 million square feet of space leased or owned uptown for 3,ployees, all employees will end up in the new headquarters or in the current headquarters at 526 S. Church Street. Turner, along with many others, will move into the renamed Duke Energy Center next year.

 

A New Energy Hub

     Chamber president Bob Morgan calls Turner an “engaged civic leader,” adding that Turner is “helping lead the effort to grow and brand Charlotte into a new energy hub for the United States. He’s quickly following the tradition of other Charlotte business leaders,” Morgan continues, and he also names Lee as well as Hugh McColl Jr. and Mac Everett.

     On recruitment, Turner says energy-related firms are prominent among prospects Duke lures this way. The Shaw Group has beefed up its center city presence, Toshiba and Siemens Energy are growing their operations in southwest Charlotte, and Areva is flexing muscle near University City.

     A Duke team cooperates with the Charlotte Regional Partnership, the Chamber and UNC Charlotte to build on that foundation. Their efforts are particularly important, Turner points out, because energy jobs tend to be high paying.

     What entices prospects? Turner lists a relatively low tax rate, a skilled work force, and the desirable climate before hitting on a favorite—economical electricity rates.

     When asked about Duke’s future directions for the region, Turner lists two major efficiency initiatives—what the company calls modernization of its “fleet,” all generation sources, and “grid,” the delivery system.

     “We’re shutting down older, less-efficient plants,” Turner says. “We’re building newer, more efficient plants, like Cliffside. We’re looking to develop the Lee nuclear plant. We are constantly on the lookout for new technologies and applications.”

     Now under construction, Cliffside is an 825-megawatt coal-generating facility in Cleveland County, N.C. Lee is the William States Lee III Nuclear Station contemplated for Cherokee County, S.C.

     Just announced is a Duke effort for permission to construct a nuclear plant in southern Ohio. Areva would be a major partner.

     Turner says plants such as these will lead to “a fundamentally different, cleaner, more efficient way of producing electricity.”

     For its grid—the transmission and distribution lines and interaction with customers—Duke wants to learn much more about consumption.

     “We’ll have two-way communication between our customers and us,” Turner says. “Over time, perhaps, we’ll even have devices in the home where we can help you control your energy usage, help ensure that you’re consuming it in the most efficient way, when prices are lower. You can program your dishwasher to run at night when the cost of electricity is much lower.”

     Admitting that his industry acts slowly, Turner estimates innovations such as these will come along in about a decade.

     Another possibility is mass production of pluggable electric hybrid vehicles. Turner thinks there might be infrastructure at customers’ homes and businesses where the batteries could be recharged.

 

Nuclear Power An Alternative

     Even a decade out, however, he doubts the Lee nuclear plant will be complete. Both permitting and construction are lengthy processes. No nuclear unit has been approved since the Three Mile Island accident of 1979, but Duke anticipates it will be among the first utilities to get a green light from the U.S. Nuclear Regulatory Commission.

     Opponents remain strong and Turner acknowledges there is no American solution to storage of spent nuclear fuel. But he thinks that will come and pushes for a step further—fuel reprocessing.

     “There is a risk,” he acknowledges, “but the French get 70 percent to 80 percent of their electricity from nuclear energy, and they’re reprocessing all the time. If the French can figure it out, I sure think we ought to be able to figure that out.”

     Using more nuclear is part of a Duke strategy to reduce reliance on coal, Turner says, but adds that fossil fuel will not be eliminated from the generation mix any time soon.

     A heavier reliance on nuclear can help Duke reduce its carbon dioxide footprint. “The way we think about that in the Carolinas is shutting down our older, more carbon-intensive coal plants,” he says. “For the older plants, it takes more coal to produce the same amount of electricity as, say, the new Cliffside unit.”

     On the global warming debate, Turner shuns extreme arguments. “I think we’re probably having some kind of an impact,” he says, “and measured, reasonable steps to end that impact are probably a good idea.”

     Other than cleaner coal units and a new nuclear station, Duke is looking to make some plants capable of burning natural gas. It also envisions large numbers of solar panels on rooftops and a growing reliance on wind generating projects like those it’s developing in the west.

     Another way Duke could look different in a decade is with its own growth in an industry many judge ripe for consolidation.

     Turner points to Duke’s five-state service area of the Carolinas, Indiana, Ohio and Kentucky and describes the company as “well-positioned to take advantage of a consolidating industry. I think we might be bigger some day.”

     But now is not the time for consolidation, he cautions, citing the still-fragile economy.

     His biggest challenge, he says, is helping the company strike that desired balance by producing power that’s affordable, reliable and clean. “It’s a constant struggle,” Turner says, “but we’re up to the challenge of striking that balance.”

Ellison Clary is a Charlotte-based freelance writer.
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