How Green is This Giant?

How Green is This Giant?

He Talks to Environmentalists and Backs Coal-Fired Power Plants. For Duke Energy CEO Jim Rogers, Balance is the Key

Jun 03 - The Charlotte Observer (Charlotte, N.C.)

The environmentalists had lambasted their host for nearly a year about his plans for a coal-fired power plant.

Still, Duke Energy chief executive Jim Rogers invited them to dinner at an exclusive Raleigh club. He wanted their advice for Duke to become a greener company.

Use more renewable sources, such as wind. Focus on efficiency programs. Use less coal, they told him. Rogers later proposed an ambitious efficiency and renewable energy plan.

The CEO, who already had plans in the works, called the dinner eye-opening. "I've always been able to see two sides of everything."

It's ironic that a man who runs a fleet of coal-fired power plants that spans five states seems so cozy with environmentalists.

He's gone through his career with a pragmatist approach, that it's better to negotiate than to fight, better to take part in regulation than simply oppose it. The 59-year-old Rogers believes coal-fired power plants contribute to global warming, but he's not sure how much. He has a duty, he believes, to deliver electricity and turn a profit for shareholders.

This year, he has been on Capitol Hill arguing for a national cap on carbon dioxide in hopes of shaping legislation that will affect Duke. At the same time, he plans to build a coal-fired power unit in the Blue Ridge foothills.

"It's hard to reconcile being for taking on the challenge of climate change and for building a dirty, conventional coal plant at the same time," said Michael Shore, an analyst with N.C. Environmental Defense who attended the dinner in Raleigh with Rogers.

CEOs of various companies have been stepping up lately to be friends to the environment, part of a broader trend known as sustainability.

Rogers' approach, however others regard it, leaves a mark on the air we breathe, the rates we pay and how power is produced in this region.

Just last week, Duke asked regulators for permission to increase its base electricity rate in North Carolina for the first time in 16 years, hoping to maintain its built-in profit of 12.5 percent.

Some environmentalists think Rogers is genuinely committed to green programs, but they're waiting to see if he comes through. The efficiency and clean energy plans have not taken effect yet. Duke's main clean energy, hydroelectric power, makes up about 3 percent of its generation.

Sitting in a Starbucks one recent morning, Rogers -- who'd already drunk several shots of espresso that day -- talked excitedly about the innovations of the Moors in Spain, the latest research into clean-coal technologies, and his habit of tapping academics and others for secret reports on various issues. He calls it "skunkworks," covert research that drives his managers "crazy."

He says he's a speed reader, devouring at least a book a week. He often attends the annual meeting of the World Economic Forum in Davos, Switzerland. The Democrat favors conservative suits and bright ties.

He talks about his long view in planning, what he calls "cathedral thinking." It took generations to build the great churches of Europe. He makes power plant investments he knows will last 40 years, he said.

He insists he can be green and a coal-burner at the same time.

"But that doesn't mean I don't have a true north," he said. "As CEO, it's a balancing of interests: investors, customers, employees. I went for 16 or 17 years without ever laying anybody off. I think I can create value for the investors if I'm advancing the ball. That's my true north."

Work and school

He grew up in Danville, Ky., with fewer residents than the 18,000-plus people who work for him today.Married at 19 and soon with two children, Rogers worked as a journalist as he attended the University of Kentucky in Lexington, about 35 miles north of home.

He was writing for the Lexington Herald-Leader in 1970 when UK students were suspected of burning the campus ROTC building as a Vietnam War protest. Rogers, with hippie Fu Manchu mustache and long hair, covered the event. He saw both sides, and didn't take a strong stance on the conflict that divided the nation and caused family friction, he said.

Rogers, whose brother enlisted, received a deferment because he had a family. His father felt his eldest son should have volunteered.

The World War II veteran and railroad company lawyer told Rogers "to take our family to the next level," the CEO remembered. "I grew up knowing I had to do more. "

Consumer advocate

After his newspaper job, Rogers graduated from law school in 1974. Three years later, he was working as a consumer advocate for the state of Kentucky. A Louisville utility made a revolutionary request to voluntarily reduce emissions. But it needed to raise rates to install the equipment. Rogers on behalf of consumers argued against the increase because it wasn't required by law. He was surprised when the regulators approved the rate increase anyway.

That power company decision to invest in clean air stayed with him, he said, as he moved to Washington to work as a lawyer with the Federal Energy Regulatory Commission, which watches over utilities and sets some rates.

He soon moved to a politically connected law firm that represented utilities before federal regulators. Arguing for both sides taught him to embrace his critics and to view environmentalism as a corporate asset.

Washington law firm colleague Bill Grealis said he and Rogers called it the "Ferris wheel of life" rule because alienating opponents could come back and knock you down.

Rogers worked 10- to 12-hour days, always on Saturdays and sometimes on Sundays, Grealis said. Rogers said he took an "immigrant" philosophy to Washington: "Everything was new," and "I was going to work harder than anybody else."

Stuart Eizenstat, who worked with Rogers on Capitol Hill, said his friend learned the importance of personal relationships in creating policy but that Rogers knows "his ultimate taskmaster is the shareholders."

"He's always on like a light bulb, smiling, cheering, energetic," said Eizenstat, who served in various posts under Presidents Carter and Clinton. "He's got these great people skills. In terms of being a leader, he's got an extremely sharp business sense."

Building ties

Hired in 1988 as CEO of Indiana utility PSI, he immediately reached out to environmentalists, regulators and friends in Congress.

He was the only CEO to testify in favor of 1990 amendments to the Clean Air Act to reduce acid rain. He won concessions for companies in the coal-dependent Midwest.

Phil Sharp, an Indiana congressman from 1975 to 1995, said Rogers was unorthodox in consulting with traditional utility foes -- environmentalists, consumer advocates, labor leaders.

He had his critics when he launched a plan to merge with Cincinnati Gas & Electric. A hostile takeover bid for PSI from another utility threatened the deal.

It would test Rogers, accused by some of planning the merger for self-serving reasons. But he won a key shareholder vote in 1993 and eventually became CEO of the combined company, called Cinergy and based in Cincinnati.

Cinergy had operations in Indiana, Ohio and Kentucky and relied on coal plants for 98 percent of its power generation. But the company did take on a greener hue, including an extra fee customers could pay for renewable energy.

Rogers continued to consolidate power in his deal with Paul Anderson to merge Cinergy and Duke into the nation's fifth largest utility by stock market value.

The 2006 merger added more coal-fired plants to Duke's fleet, and Rogers has walked a tightrope between profits and green energy as he has pushed a new nuclear plant in Cherokee County, S.C., and two new coal-fired units west of Charlotte.

In late February, N.C. regulators approved only one coal-fired unit.

Rogers says that looking out for the environment and for profitability, over the long haul, are really the same thing.

With federal carbon dioxide regulation, he stresses the need for it to be "economy wide," so utilities aren't singled out.

Years before other CEOs, he broached the idea of regulating carbon dioxide in 1999 at the New York office of Fred Krupp, the longtime head of Environmental Defense. Rogers wants clear rules so he can plan projects that will last 40 years, Krupp said.

"That's a business motivation," he said. "But I do think from talking to him that he's got children and grandchildren. He talks in a way that makes me believe he does have concerns with the problem of climate change."

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