Duke Energy Corporation (DUK)

AGM 2013

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May 2, 2013

Good morning, ladies and gentlemen. My name is Bill Kearns, and I am a Director of Investor Relations for Duke Energy. I welcome you to the 2013 Annual Meeting of Shareholders. We are broadcasting this Annual Meeting by teleconference and webcast, and I also welcome everyone online and on the phone. We always begin meetings at Duke Energy with a brief safety message because safety is our top priority and something we should never be complacent about. So please pay attention to how we exit this building safely in the unlikely event of an emergency. The primary emergency exits from this auditorium are the doors behind this stage on your right. Exit through these doors, turn right and proceed down Stonewall Street. Those of you in the atrium area can exit out the front door, turn right as you go out the building, then turn right again and proceed down Stonewall Street. If anyone needs assistance, security and safety personnel will be available to help you. If we do have to evacuate, please do not reenter the building until you have been told that it is safe to do so. As you entered the auditorium this morning, you should have received a copy of the meeting program. If you did not, please raise your hand and we will bring one to you. In order Please be sure that all electronic devices are turned off at this time. Now let me quickly review the items on this morning's who will call the meeting to order. After taking care of certain procedural matters, Jim will introduce Duke Energy's Board of Directors. We will then move to the business portion of the agenda, which includes several items, including the election of directors, 3 other management proposals and 2 shareholder proposals. All votes will occur before the question and answer portion of the meeting. As we begin, let me inform you that today's discussion will include forward looking information and the use of non GAAP financial measures. You should refer to information contained in our SEC filings concerning factors that could cause future results to differ from this forward looking information. A reconciliation of non GAAP financial measures can be found on the Investor Relations section of our website at www.duke energy.com. Now it is my pleasure to introduce our Chief Executive Officer, Jim Rogers. Good job. Thank you, Bill. Good morning. The meeting will please come to order. Ladies and gentlemen, welcome to the 2013 Annual Meeting of Shareholders. With Delaware General Corporate Law, I point Nancy Wright, Associate General Counsel here at Duke Energy and Sid Rodriq of Broadridge Investor Communication Solutions, our proxy tabulator to act as inspectors of election for this meeting. Nancy and Sid, please stand and be recognized. Thank you. Our Executive Vice President, Chief Legal Officer and Corporate Secretary, Julie Janssen, also acting as Secretary of this meeting will now report the number of shares entitled to vote and the number of shares and votes represented in person are by proxy at this meeting. Thank you, Jim. As of the close of business on March 5, 2013, Duke Energy Corporation had outstanding and entitled to vote 705,473,667 shares of common stock, each of which is entitled to one vote. There are here represented by proxy, 593,900 and 53,705 shares of the corporation's common stock, which constitutes 84 0.19% of the total shares entitled to vote at this meeting. The final reports of the inspectors of election will include the votes, if any, of the shareholders present and voting in person. Thank you, Julie. Legal notice of this meeting has been duly given. A quorum is present and the meeting is now lawfully convened for the transaction of business. First, I have the pleasure of introducing the members of your Board of Directors, all of whom are here with us today. As I introduce each of them, I ask them to stand and be recognized. Bill Barnett, Chairman, President and CEO of Barnett Development Corporation Alex Bernhardt, Chairman of Bernhardt Furniture Company Michael Browning, Chairman and President of Browning Investments Harris DeLoach, Executive Chairman of Sunoco Products Company Dan D'Amico, Executive Chairman of Nucor Corporation John Forsgren, Retired Vice Chairman, Executive VP and Chief Financial Officer of Northeast Utilities Ann Gray, former President of Diversified Publishing Group of ABC and our Lead Director Jim Hance, Retired Vice Chairman and Chief Financial Officer for Bank of America John Herron, Retired President, CEO and Chief Nuclear Officer of Entergy Nuclear Jim Heiler, Managing Director of Investors Management Corporation Marie McKee, President of the Corning Museum of Glass Jim Wrench, Retired Senior Vice President and Partner of Bechtel Group Jim Rhodes, President and CEO of the Institute of Nuclear Power Operators Carlos Sallegriquez, Chairman and CEO of Regis HR Group and Phil Sharp, President of Resources For the Future. Also seated in the few rows behind them are the members of your management team. In the interest of time, I will not introduce them individually. I hope you had a chance to meet some of them on your way in. If not, I urge you to do so after this meeting. I want to express my personal appreciation to the Directors and the management team for their support and commitment to the introduce Marco Rosello from our Corporate Security Department, who is serving as Sergeant at Arms. Finally, I would like you to meet Charlie Moha and Sean Byrd of Deloitte and Touche, the company's independent public accountants. On a personal note, I would like to thank my wife, MA, who has been at every one of my 25 annual meetings. That's a tough job dealing with me. It's beyond the call of duty for her to be here. Over all these years, she has been my toughest critic and my biggest supporter. It may stand up and thank you. We will now proceed with the matters to be voted on. We have a declassified Board of Directors, which means that all of the directors stand for election every year at the annual meeting. The Board of Directors has duly nominated Directors Barnett, Bernhardt, Browning, DeLoach, D'Amico, Forsgren, Gray, Hance, Heron, Heiler, McKee, Wrench, Rhodes, Saligriguez, Sharp and myself. They have been nominated for election as directors for 1 year, a term that expires in 2014. These nominees set forth beginning on Page 15 of the proxy statement are hereby considered presented for the purpose of voting for their election as Directors. The selection of Deloitte and Touche as the company's independent public accountant for 2013 as set forth on Page 33 of the proxy statement is also hereby presented for the purpose of ratification. A vote on an advisory basis of our named executive officers' compensation as disclosed on Page 35 of the proxy statement is hereby presented for approval. The amended Duke Energy Corporation executive short term incentive plan as set forth on Page 67 of the proxy is hereby presented for approval. Also to be presented are 2 proposals we have received from our shareholders. The first relating to shareholder action by written consent and the second regarding an amendment to our organizational documents to require majority voting for the election of directors. I would like to ask Julie Janssen to introduce these two proposals. Thank you, Jim. This year, we received proposals from shareholders to be submitted for vote at the meeting. For the reasons outlined in the proxy statement, the Board has recommended a vote against each of these shareholder proposals. In the interest of time, we will not discuss our reasons for opposition here at the meeting, but they are spelled out in the proxy statement made available to all our shareholders. However, the shareholder proponents present now will be given an opportunity to present his or her proposal and a brief supporting statement. I'd like to remind those presenting that your remarks should be limited to the proposal. There will be time later in the meeting to engage in question and answer, if you are so interested. The first shareholder proposal relates to shareholder action by written consent as set forth beginning on Page 69 of the proxy statement. Here to present this proposal on behalf of the proponent, John Shevedden, is Carolyn Williams. Ms. Williams, would you please come forward to the microphone to present the proposal? Good morning, Mr. Rogers and Board members. I'm Carolyn Williams and I'm presenting Proposal 5, shareholder proposal regarding shareholder action by written consent sponsored by John Chevedden of Redondo Beach, California. Resolve shareholders' request that our Board of Directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present in voting. This written consent includes all issues that shareholders may propose. This written consent is to be with giving shareholders the fullest power to act by written consent consistent with applicable law. The shareholders of Wet Seal successfully used written consent to elect better qualified directors in October of 2012. This proposal topic also won majority shareholder support at 13 major companies in a single year. This included 67% support at both Allstate and Sprint. 100 of major companies enable shareholder action by written consent. Please vote to protect shareholder value. Proposal 5, shareholder action by written consent. Thank you. Thank you. The second shareholder proposal relates to an amendment proxy statement. Here to present this proposal on behalf of the proponent, the United Brotherhood of Carpenters and Joiners of America is Randy Jenkins. Mr. Jenkins, would you please come forward to the microphone to present the proposal? Thank you, Mr. Chairman. I am Randy Jenkins representing the United Brotherhood of Carpenters Pension Fund, which along with other Carpenter funds holds approximately 676 1,000 shares of Duke Energy common stock. Our funds take a long term patient investment perspective and it is that ownership perspective that motivates our efficacy for majority vote in directory elections. The majority vote standard proposal presents a simple proposition uncontested director elections in which there are no opposition to the slate of candidates, each nominee should be required to receive half the votes cast to be elected. It's fair and reasonable and unlike uncontested elections with a plurality vote standard, the outcome is not guaranteed. The bottom line is that shareholders have a reasonable and meaningful Board accountability mechanism in majority vote elections. The Board's adoption of a post election director resignation policy along with the retention of plurality voting is an inadequate response to the call of majority voting. Every corporation that has adopted majority voting has also adopted a director resignation process. The post election resignation process is not a substitute for majority voting. It is a companion post election component of true majority vote standard. The Board's continued opposition to the adoption of a majority vote standard contrast is with the actions taken by the nearly every peer company in the energy industries. Companies like Dominion Resources, NextEra Energy, Exelon, Instar, TECO Energy and many others have established majority voting rights for their shareholders. As of today, 86% of the companies in the S and P 500 index have adopted majority voting. And it is interesting to note that at the 2 companies where Chairman Rogers currently sits on the Board of Directors, Applied Materials and Cigna, shareholders have majority voting rights in director elections. So at those two companies, Mr. Rogers must receive at least half the votes cast to be elected to the Board, while here at Duke Energy, the plurality vote standard means that as soon as Chairman Roger cast his vote for himself, he is elected regardless of how every other shareholder votes. Once again, we urge the Duke Energy Board of Directors to establish a majority vote standard along with its director resignation policy and join the mainstream of American corporations on this important election reform. Thank you, Mr. Chairman. Thank you, Mr. Jenkins. That concludes our presentation of the proposals before us at the Annual Meeting. If you have not previously voted your shares or if you would like to change your vote, a vote by ballot will now be taken for each of these items. Please complete it and raise your hand again so we can collect it. Does anyone need a ballot? The polls are now closed. If you have not yet returned your ballot, please raise your hand so we can collect it now. I think we've collected all the ballots at this point. Got a few more. I will now ask Julie Janssen for the Inspectors of Election report. Thank you, Jim. Based on the proxies received prior to the meeting, 1st, each nominee for director has received the approval of at least a majority of the shares voted, more than sufficient for his or her election. 2nd, the ratification of Deloitte and Touche as the company's independent public accountant for 2013 has received the required affirmative vote of shareholders sufficient to ensure ratification. 3rd, the approval on an advisory basis of our named executive officer compensation has received the required affirmative vote of shareholders sufficient for approval. 4th, the approval of the amended Duke Energy Corporation Executive Short term incentive plan has received the required affirmative vote of shareholders sufficient for approval. 5th, the shareholder proposal relating to shareholder action by written consent has received the required affirmative vote of shareholders sufficient for approval. Finally, the outcome of the vote on the shareholder proposal relating to an amendment to organizational documents to implement majority voting and director elections is yet to be determined. The final results will be made public within the next few days after all ballots are counted. Any shares noted that the meeting today will be tabulated and included in the final vote and filed with the minutes of the meeting. Thank you, Julie. The final reports of the inspectors of election are hereby ordered to be filed with the minutes of this meeting. This concludes the formal business portion of our 2013 Annual Meeting. Now before taking your questions, I'll give a brief report on our company. Much has happened since we met this time last year. We completed the Duke Energy Progress Energy merger 10 months ago. As you all know, it turned out to be a very complex transition. Throughout this period, our Board has taken responsible, deliberate and steady steps to ensure we meet the high standards of corporate governance. We have remained focused on the continued strong performance of the company and on positioning Duke for long term success. We are delivering on that objective. Our performance speaks for itself. Our employees have pulled together as one team. They've been resilient in the midst of change. They stayed focused on our core mission and are achieving outstanding results. From the time we announced the planned merger in January 2011 through the end of 2012, Duke produced a total shareholder return of about 32%. To put that in perspective, that was nearly double the return of the S and P 500 and the Philadelphia Utility Index. So far this year, we have produced a total shareholder return of about 19%. Last year, we delivered adjusted diluted earnings per share near the top end of our target range, which is 4% to 6%. Tomorrow, we report our earnings for the Q1 of 2013 marks our 87th straight year of paying quarterly cash dividends. Great track record. Not many can match it in this country. Duke is moving forward as a stronger company building positive momentum. Our new logo is symbolic of this new beginning in our 1st full year as a combined company. We have greater scale, diversity and flexibility. We're better prepared to lead the changes in our industry. We're well positioned to build on our long successful track record. Today, Duke is the largest publicly traded utility in the world, not just the United States. Too often, big means slow and complacent. In contrast, we intend to be agile and innovative. We serve a diverse mix of stakeholders, customers and communities, shareholders, employees, retirees. They and others have a stake in what we do and how we do it. We see it as a tremendous responsibility and do our very best to strike the right long term balance on these various issues that we face. In the end, we all benefit when Duke performs its core mission well. Simply put, providing affordable, reliable, increasingly clean electricity in safe and sustainable ways 20 fourseven, three sixty five days a year. Post merger, our customers in the Carolinas are benefiting from the cost savings of operating our power plants here as one fleet. And we're creating additional efficiencies across the company. This is producing value for our customers and our investors. It is important that we be cost effective to offset as much of the rising cost of doing business as we can. Even so, we must raise customer rates to modernize our plant system, infrastructure and meet new environmental regulations. We're also promoting the health and success of the communities we serve. This includes economic development and it includes the philanthropy of the Duke Energy Foundation as well and this is so important as well as the volunteerism of our employees and our retirees. Duke helps lead community initiatives such as Envision Charlotte. This is a unique initiative compared to other cities around the country. This is an innovative effort to use energy and water more efficiently in the city's urban core. We're also promoting the expansion of the successful Charlotte Energy Hub into a regional energy cluster. This will stimulate jobs across the Carolinas. Another success story is Google's recent announcement that it will invest an additional $600,000,000 in its data center in Caldwell County, North Carolina. Duke is developing a rate plan that will enable us to provide renewable energy to customers such as Google. My point is simply this. We take corporate citizenship seriously and independent assessments recognize that fact. For example, in 2012, Duke was named to the Dow Jones Sustainability Index for North America for the 7th consecutive year. And just last month, Corporate Responsibility Magazine named Duke 1 of the 100 Best Corporate Citizens for the 5th consecutive year. We were ranked 26th out of the 100 after being assessed in 7 areas from the environment and climate change to employee relations and governance. Serving our stakeholders well requires that we prepare for and shape a changing energy landscape. I call it readiness for the road ahead. This means upgrading existing power plants, retiring older, high emitting, less efficient plants and building new state of the art generation to serve our customers. In these ways, we are diversifying our mix of fuels and technologies, we're increasing our efficiency and we're dramatically reducing our environmental impact. Since 1999, Duke and our predecessor companies have invested about $7,500,000,000 to install air emission controls. By 2015, we expect to reduce our regulated generation fleets admissions of sulfur dioxide by 90 percent from 2,005 levels and our nitrogen oxides by about 80%. We also reduced our carbon dioxide emissions last year. More than 1 third of the electricity that Duke produced in 2012 was from carbon free sources. This year, we're completing a $9,000,000,000 multiyear construction program. This is part of our effort to serve 7,200,000 retail electric customers in 6 states. We brought 3 new plants online in North Carolina last year. 2 more new plants are scheduled to begin service later this year. One is Edwardsport in Indiana, an innovative plant that will convert gold into synthetic gas that can be burned cleanly. The other is the Sutton plant. It's a highly efficient plant in Eastern North Carolina. It will run on natural gas and is bringing more gas to that part of the state, a terrific boost for economic development in that region. These and other projects are enabling us to retire 3,800 megawatts of older high emitting coal and oil fired generating units by the end of this year. That retirement total could increase to as much as 6,800 megawatts over the next few years. Meanwhile, we are expanding our renewable energy portfolio. Since 2,007, we have invested more than $2,500,000,000 to grow our commercial wind and solar business. Last year alone, we added 5 new wind farms and 3 new solar ones, almost doubling our renewable capacity. In recent years, we've been adding on average about 4 75 solar panels a day as well as 1 new wind turbine every 2 to 3 days. So we now have more than 1700 megawatts of renewable energy capacity, a total of 15 wind farms, 15 solar farms in 10 states across our country. Just last month, we acquired 2 solar projects in California, which pushes us past the 100 Megawatt milestone of solar energy capacity. Between the investments made by Duke Energy Renewables and our regulated business, our solar and wind energy resources can serve about 500,000 homes. Think about that, 500,000 homes. Here in North Carolina, our utilities purchased more than 180,000,000 kilowatt hours of solar energy in 2012 alone. That's enough to power about 15,000 homes here in North Carolina. North Carolina as a whole is making great strides in solar energy development. The state more than doubled its solar capacity last year. North Carolina ranks 5th in the U. S. For the amount of solar power added in 2012 and 6th in cumulative solar capacity. We're also evaluating other advanced clean energy technologies. Recently, I went to the grand opening of our new battery storage system at our No Trees Wind Farm in West Texas. By the way, the place is called No Trees for a very good reason. If you've been to West Texas, you know or you've been to the Permian Basin, you know what that looks like. The project is North America's largest battery storage system at a wind farm. It has 28,000 batteries in a building the size of a football field. It was partially funded by the Department of Energy and the project is assessing this way to address the variability of wind power. And by the way, the wind really blows in West Texas and I've been told because I used to have a lot of clients when I practice law that were from West Texas. The only thing that stands between West Texas and the North Pole is a Bob Mar Fence. So you can appreciate how windy it is and how cold it is in that part of the country. We also are aggressively promoting energy efficiency. For example, since 2010, Duke's utilities have distributed nearly 37,000,000 CFL bulbs. That's enough energy saved to power almost 100,000 homes and offset the carbon output of more than 200,000 cars. Meanwhile, our overall efficiency programs in 2012 delivered a combined 1,400,000,000 kilowatt hours of energy efficiency savings. To put that in perspective, that's enough power for roughly 115,000 homes. 754,000,000 kilowatt hours was here in the Carolinas and that's about 63,000 homes. These are just a few examples of how our company is shaping the road ahead and how we're living up to our mission of affordable, reliable, increasingly clean energy. As for me, I will complete my tenure at Duke Energy this year. I'm looking forward to reinventing myself. I've been reinvented a lot, some by others and some on my own. But the bottom line is, is I'm very grateful for the support of the many people throughout my 25 years as CEO in this industry. And I really appreciate all those who have attended all these annual meetings and all the questions that have been asked during that period of time. But the one thing I take from this experience is that over these years, I've learned by listening to a wide range of viewpoints. I don't always do what people tell me to do, but at the end of the day, I listen, I try to understand what's behind their thinking and I do my best to incorporate it into what we do. I've always tried to anticipate what's coming and what's possible, whether that's new ways to reduce our environmental impact or better ways to serve our customers. In closing, I just want to assure you that our Board of Directors and management team are focused on the sustained success of Duke Energy and a smooth transition to the next CEO. Now I'll be delighted to take your questions. I want as many of you as possible to be able to ask your questions. So as a courtesy to others, I would ask you to limit your questions. I did this last year and it didn't work, but I'm going to enforce it this year. To limit your questions to 2 minutes and try to ask one that hasn't already been asked. Also, please state your name and the name of any organization you might be representing. Raise your hand if you have a question. After I call on you, please go to the nearest aisle and we'll bring you a microphone, so we can keep this thing moving along and we have 4 people with microphones, so we can move through this quickly. And we want to get as many questions as we can in the time that we have here together. So let's get going. Who wants to raise their hand? There's one right here, please. Good morning. My name is Justin Danhof. I'm representing the National Center For Public Policy Research. We're a free market think tank and a company shareholder. I appreciate the opportunity to speak with you this morning. Mr. Rogers, first of all, I want to thank you. I want to thank you for standing up to radical leftists who have tried to coerce Duke into severing its relationship with the American Exchange Council. We thank you for sticking with ALEC as it continues to work in defense of liberty, prosperity and free markets. Secondly, I just want to get your opinion about North Carolina's renewable energy and energy efficiency portfolio standard. It requires utilities to use at least 12.5 percent renewable energy by 2021 and thereafter and permits the passing of extra costs on to consumers. As you probably know, yesterday, a North Carolina Senate Committee voted to repeal the standard and future votes are expected to be very close. A study by the John Locke Foundation and Beacon Hill Institute found that North Carolina consumers will pay an extra $2,000,000,000 in coming years for this law. These unnecessary costs are unfortunately regressive. They hit the poor hardest. An analysis by my organization found that North Carolina households with annual incomes of $30,000 or less already spend as much as 1 third of their after tax income on power bills, yet Duke and its subsidiary Progress are seeking rate increases of 14.2% and 11.7% respectively. With an unemployment rate of 9.4%, North Carolina can ill afford to discourage businesses from relocating here, but that's what the renewable energy mandate is doing. As the Heartland Institute pointed out in the Charlotte Observer, renewable energy can and should have a chance to develop, but it shouldn't be done on the backs of people, especially the poorest and the most vulnerable among us. So will you agree with us that North Carolina's Renewable Energy Portfolio Standard should be repealed? And if not, why? Thank you. Thank you very much for your question. I'd start out by simply saying there are 29 states plus the District of Columbia that have renewable portfolio standards in their state. And they vary from state to state. And Congress is considered a renewable portfolio standard for the country. The bottom line is, is that in the statute we have in this state, there is an economic cap. So if the prices are too high for renewables, we're not required to meet those standards. Most important thing is, is the cost of solar has come down pretty dramatically. The Holy Grail was to have it at $1 a watt. Today, it's at $0.60 and we see visibility to $0.40 50% of the cost of installing solar on the rooftop is installation. We see the install costs coming down. So the costs are coming in line. Now North Carolina is not a state for wind. Many of you all have heard me say this, the only place you could put wind in North Carolina is on the ridge lines and that's kind of a house in the mountains, that's not going to happen. And on the coast, some have suggested to me and I've said this before that maybe we ought to put a wind farm around Raleigh, because there's a lot of talking going on in our state capital. But my belief is simply this that we have a renewable portfolio standard in place. It has an economic check on it, so it didn't put too great a burden. The important thing we have to fix in this state is the net metering tariff, because the net metering tariff more than this renewable portfolio standards shifts the loss revenue cost to the low and fixed income people in the state. And 43 states have net metering tariffs that do that and that's a bad outcome. So we have to fix that. I agree with that. Thank you so much. Right here. Thank you. Hey, Mr. Rogers. Hello. My name is Caroline Hensley. I'm a proud Wolfpacker and I'm from Hendersonville, North Carolina. I grew up next to the Asheville coal plant. And actually when I was younger, my parents told me that the air coming out of it was actually cleaning the air. And since that, I've dedicated the last 4 years of my life to environmental justice and hoping that children won't have to grow up looking at that. So, what I'm here today to talk to you about is in your recent sustainability report, it actually contradicts something that you said today and on page 23, I quote it says, our current forecast indicates an upward trend in CO2 emissions in the years ahead. And you said you're reducing your environmental impact. So I'm a little bit confused about how those two statements coexist in the same place. And the fact that scientists agree we have only a few years to continue coming out. And I just am wondering how you can look me in the eye and tell me my generation, which is so little represented here today, you're doing the long term balance in our best interest. How is that possible with what your plans to grow profits by building more dirty dangerous nuclear and coal plants? How do you justify that? That's a good question and I appreciate you asking it. Let me kind of respond to you this way. Let's take nuclear first. 70% of the carbon free electricity in this country comes from nuclear. If you're serious about climate, you need to be serious about supporting nuclear. That's the first thing. The second thing is, yes, we're number 2 in the country in terms of our carbon emissions. But in terms of carbon intensity, we're 14th in the country. That's because of the solar that we own and operate. That's because of the hydro that we own and operate and that's because of the nuclear. So while we emit a lot of CO2, our carbon intensity is low relative to other in the country. The other important point I'd make is this. In the United States, we think that we're on track to achieve President Obama's objective of reduction of 17% off the 2,005-eleven by 2020 and we see ourselves on track to achieve that. So that's where we think we are in terms of moving forward. A lot of it has to do with this simple fact. And the environmental community has really supported natural gas because it's a cleaner burning fuel, still a fossil fuel. Well, they used to support it a lot when it was $12 and they didn't say we were running out of it. Now it's $4 and we have a hell of a lot of it. And so as a consequence switching to gas really reduces the emissions. And that's why you see the United States today with the same carbon emissions as we had as 1992 and on a per capita basis the same as we had in the 60s. So as a country, we've made progress. It's due to technology. It's due to renewables, but it's also due to shale gas, which has been probably the most transformative thing to happen in our country in a decade. And the last point and you make a legitimate point, carbon needs to be addressed, but we also have to get China engaged. We have to get India engaged. And when you look at the emissions that are coming from those countries, not only are they emitting a lot of CO2, but if you've seen the pictures of Beijing, you know you can't see your hand in front of yourself because of the other emissions. 85% of our coal plants that we have today really have the ability to reduce SOX and NOX and we've made and mercury and so we've made significant reductions of that. So thank you for your question. Right here. Sorry. My name is Curt Lord. I don't represent anybody but myself. I'm a stockholder. Good for you. And my question is, with all these new efficiencies that you're getting, how come you keep raising the rates? That's a very good question. Now, this is a good question because let me tell you what we've done. We've spent $9,000,000,000 building new plants to serve our customers and maintain reliability. These were all we had historically used old plants that were high admitting, but they were fully depreciated plants. And so when we replace those plants and brought the new ones on, by definition that drives our prices up. But it makes us cleaner. And clean energy is not necessarily cheap energy. And so the consequence of cleaning up by building new plants has driven our prices up. Our increases in prices are all driven by that $9,000,000,000 in Investments that we've made to modernize our fleet put it in some context. By 2,050, every power plant in this country is going to be retired or replaced except hydro and unless they extend the lives of nuclear plants to 80 years. So you're going to see a steady rise in prices as we modernize this generating fleet that we built to provide universal access to the people in this country. So that's what's driving this increase. That's why we put money into helping customers use electricity in a more productive way. That's why we've encouraged CFLs, we encourage LEDs because we know the price is going up. And so we want to help you manage your bill going forward. The tough thing to explain to customers and I'm glad you asked this is that before when you looked up at the lights when it was cheaper, you said, okay, good lights, fine, throw the switch, lights come on, I hope. And they do 99.99 percent of the time. But the reality is we've cleaned up by building new plants, but you can't see any difference in the light. But there's a big difference in the air and in the efficiency of our plants. I'm going to stay over here and go right here. Jim and Roger, it's Phil Radford from Green Peace. I'd like to start by just congratulating you on a very impressive long and must have been very, very difficult and rewarding career. So I'll start there. Thank you. One thing you mentioned was the expense of clean energy versus older sources of energy. And so a couple of questions. The first is there is a study done by a company called Ventix that showed that Duke could save about $108,000,000,000 for rate payers by investing far more in efficiency and clean energy in all of your territory. So the first question is, it's great you're increasing your clean energy, but how do you catch up to Texas, which is 13% wind or Iowa 20% wind? And how does Duke really lead instead of growing slowly but behind? Question number 1. Question number 2 is just about the costs and risks of your current fleet. So we're hearing from Bloomberg that there are concerns about investments to $1,000,000,000 to fix dams for nuclear facilities and other risks. So when you're looking forward about 1,000,000,000 of dollars of investments, how are you thinking about investing in those versus investing in efficiency and renewables? Two good questions. Let me first address the wind, because if we were in Texas where the wind really blows, we'd be building wind here. But the wind doesn't blow here, except on the ridgelines as I said earlier and on the coast. And so investing in wind here is not a good investment. If you study wind maps that really show you the flow of air, it doesn't make sense to build wind here. It's just not economic in any sense of the word. So maybe we should buy utility in Texas or Oklahoma or Kansas where the wind really blows and then we've had more. And in fact, most of our wind farms sell to utilities in those regions. So we kind of you have to go where the wind blows. On the solar, I talked about it in my prepared remarks. We've really I mean I was surprised to find that North Carolina is the 5th largest state in the country in the installation of solar. So we're kind of in a leading place. We're not number 1, but we're in a leading position with respect to that. With respect to the $1,000,000,000 expenditures, I mean, the reality is we're the most capital intensive country. And what we try to do is we reinvest and take our nuclear because you're thinking about our Oconee plant and how do you deal with the dam and that situation. That's our nuclear fleet because of the investments we make in it, over the last several years, our cheapest electricity our nuclear fleet is that provides electricity at a lower price than any other nuclear fleet in the United States. So cost is really important to our consumers. So our ability to invest that money, maintain that fleet is important. But one of our big challenges take Oconee is in 2030 onethirty 2, we're going to have to start retiring those units. And the question is what will we replace them with? And so that's the challenge that comes. So thank you very much for being here. Let me move to the other side. Orange tie, I'll pick an orange tie, it's kind of bright. All right. Thank you for letting me speak today. My name is Grant Mitzi and I'm with the Statewide Group Clean Water for North Carolina. And I wanted to mention some things about natural gas. So Duke Energy just reported that you've increased natural gas use by 25% in 2012, probably because of hydraulic fracturing and shale gas exploration methods. There's a few things that we'd like to bring up about that. Couple being, first, I want to note that a number of peer reviewed scientific journals have noted problems with shale gas exploration. As far as water goes, there's impacts to water quality and quantity. And then there's also the what do you do with the flow backwater? In open ponds, it can impede back into the groundwater. Center For Sustainable Shales has also noted, well, if there is a problem with that, well, we can do deepwater injection. Geological Society of America, Journal of Geology has linked that to seismic activity. And then also talking about natural gas and climate change, we're talking about reducing your CO2 emissions, but we seem to forget that one of the main components of natural gas is methane. Methane is 21 times the greenhouse gas as carbon dioxide. Furthermore, so the EPA just came out and said that well methane projections and everything may actually be lower for industry than we think. But even with that calculation, climate impact is still greater than coal. So it does burn cleaner and that there's no sulfates or extra particulates, but the climate impact is much greater. Beyond that with EPA, they're also not the only ones monitoring. National Oceanic Atmospheric Association has noted massive methane leaks out west. So with all of that, it's kind of in our estimation that doubling down on natural gas is probably not the best idea to move forward when we're talking about sustainable energy practices and all that. And as the health risks to the environment and the biosphere are too great and there's a number of peer reviewed reports that support that claim. So talking about efficiency and conservation programs, the long term IRPs of Duke Progress Energy, there is efficiency standards and everything, but there is a doubling down on natural gas especially nuclear and even with the retirement coal plants. So I guess the question is, is there a possibility for Duke to relook at their long term IRPs and make an honest effort at really doubling down on efficiency programs, which will increase jobs especially past the shale gas boom and also conservation programs, which reduces emissions and will also reduce rates for ratepayers? That's a very good question, very good commentary on the gas issue and the shale gas issue and I appreciate that question. I think we look at shale gas and which has 50% of the carbon footprint of coal, we view it as a bridge fuel. And in fact, most of the environmental community embraced gas as a bridge fuel as we move to heavy dependence in a country of about 50% dependent on generating electricity from coal to using gas and nuclear to kind of bridge as new technologies evolve in the future. Shell gas, just to kind of I used to run the largest gas pipeline network in the country. And so what I would say about gas is this, most of the shale gas is a mile to 2 mile below the surface, it's much lower than the aquifers for water. So you don't really if you get the casing right, any damage to our water supply is not affected if the drilling is done appropriately. The second thing is that there are technologies being developed to be able to do it to capture the water first. And then there's technologies being developed to actually fracture the geology without using water with kind of a heat type technology. So I think what you're seeing is an evolution in technologies that allow us to use this 100 year supply for our country. Now why is that a good thing? The good thing is, it's creating jobs. Dow Chemical is building a huge facility and hiring several 1,000 people. The steel industry is expanding in the United States. The fertilizer industry is expanding. And all the customers across the country where utilities are dependent on natural gas have gotten a great economic benefit from this. And it's broken the old sort of way of thinking. The old way of thinking is, if it's cleaner, it must be more expensive. But what's happened is, now by using shale gas, it's cheaper and cleaner when it displaces coal. Now so I think it has to play a role. And my last point on this is simply this. The oil I mean the transport sector got in trouble because they were solely dependent on oil, gasoline. In our sector, we can produce electricity from coal, from nuclear, from natural gas, from renewables and energy efficiency, because the most environmentally benign plant we build is the one we don't build. And that's why we invest a lot into energy efficiency. So the strength of our industry is the diversity of fuels that generate electricity. And I think we need to keep them all in the mix, because we don't know what technologies will come to allow them. In other words, I guarantee you 5 years ago if somebody told me shale gas is going to come and have 100 year supply at the prices, I mean, this time a year ago, it was $1.87 MMBtu. If they'd have told me that, I'd say no way. So I think there might be new technologies to allow us to use fossil fuels in a more environmentally responsible manner. At the same time, we're developing new technologies watching solar panel costs decline. So we're very conscious of that. And the methane by the way, they're developing systems to capture the methane when they drill the wells. So I think that they will figure this out and we'll do it in an environmentally responsible way. And the other thing I would say, it was the independence, independent oil and gas producers who developed this, but the majors have bought most of much of it. And they will do this in a safe responsible way because they're going to be here for over 100 years and they're going to do it right. Ma'am, right here. My name is Phyllis Jones, and I live in Charlotte. I graduated from Hollins University, and I have a master's degree in Liberal Studies. I taught school and worked for non profits for many years. I'm now retired and live on a fixed income in an apartment. I'm here today to ask Duke Energy to help people like me buy weatherizing apartments. Residents who live in total electric apartments terribly high utility bills. Weatherized apartments will greatly reduce energy use as your rate hikes increase and at the same time decrease the need for more expensive power plants. Duke Energy can make excellent profits using weatherization and other efficiency programs. Just imagine the jobs Duke Energy can generate to help our economy grow. I urge you to adopt this solution that will serve both our community and Duke Energy. Now that we live in the 21st century, weatherization and other efficiency programs would be the answer for Duke's customers' needs. After all, customers pay for the building of these huge expensive power plants that contaminate our air, water, soil. Our voices mean something and eventually we will be heard. Mr. Rogers, I am determined to educate my community about Duke's 20 year plan. The stock market may be bouncing back, but my community is still suffering with no relief in sight. I ask you to listen to me, not just tolerate me. Duke's plan to keep building more power plants when they could make money by adopting massive efficiency programs is a moral injustice. The plan threatens the ability of senior citizens to just survive. Do you really want to be responsible for 70 year olds having to skip meals or skip buying monthly prescriptions just to pay high energy bills. I wonder, how is my Duke Energy bill any different from a tax since I am given no choice but to buy my electricity from Duke? Like the government, Duke should be held accountable for spending our money wisely. Huge cost of many new power plants on seniors like me when we would benefit so much more from massive energy efficient programs? Thank you. I want to one thank you for being here and I want to thank you for your statement. And I would just simply add that we have invested in weatherization. We've invested in fixed income and low income to help people meet their bills in that area. We get that. We know it's important. But we also know it's important to keep the lights on for everybody because our society is dependent on power. Without power, you can't turn the lights on, you can't turn on the television, you can't run your computer, you can't run your Internet our businesses can't operate. So our challenge is to try to keep the costs low and we're about 20% lower than the national average, which is no comfort when the prices are going up, but to keep our prices low, but to keep the lights on. So I'm going to pay attention to what you said and I'm going to check on our sequestration, I mean, on our programs. And I think we're already doing a lot in that area, but maybe we should do more, you're telling me and we will. Thank you. May I contradict something? There are no weatherization programs in the City of Charlotte. In the state of North Carolina, Florida, there are. And Gastonia is the only place who have these programs. Thank you. I'm going to go right over there. Thank you. Mr. Chairman, my name is Sean Lamont. I'm a Charlotte native. My family has been here for generations and been Duke stockholders for generations. My question is more of a business model. It does pound a little bit off of what I've already heard here today. Duke in their annual report stated that we're now safer because we're regulated. The majority of the company is a regulated utility. I would urge the Board and I'd like to know what the Board is doing in the way of planning for the day when we're not. Historically, as an economist and a former legislator, I've never seen a company get to this size with this social footprint and maintain a evolutionary process. What I've heard here today, you've got ALEC here. They're free market oriented. You've got other people that are viewing the Duke monopoly as a tax. I think that's going to happen and continue. And I very much like my children own Duke stock and have Duke still here. And I was an investor back when the telecommunications industry got deregulated. And I'd like to know what the Board is going to do about proactively driving the ship and dealing with the inevitability of deregulation and coming up with a plan and a proposal on our own as a company rather than so that we can drive the bus rather than being thrown under it. Thank you. That's good advice. We operate in 6 states. 1 of the states is deregulated generation. So we've had an experience with deregulated generation. And what we're finding in the deregulated markets, the returns are really low and they're not modernizing their fleet and they're getting ready to kind of go into a death spiral. So what we found in 19 states have deregulated generation in this country, the remainder are regulated the way we are in North Carolina and South Carolina and Florida and Indiana and Kentucky, were basically were vertically integrated and regulated. And there you see more modernization, you see more investments in energy efficiency. So I think the move toward deregulating our business is going to come back to us and we're going to be in a strong position. The reason we've combined these 5 companies just to give you a great stat, if you go back 20 years ago and you looked at these 5 companies, we operate our business today with 40% fewer people than we did then. And on a per employee basis, we produce 130% more electricity per employee than we did 20 years ago. Now part of the story is we combine these companies, but the other part of the story is technology. And this is happening in businesses all across our country becoming more efficient and greater productivity gains. But I take your point, we are we have one state that's deregulated. So we're staying in touch with how that's evolving, not putting all our eggs in one basket. We are operating in South America where the growth in in demand is 5% to 6% compared to less than 1% in the United States where the middle class is actually expanding there not contracting as in the United States. So we're keeping an eye on different ways and different places to make investments. And actually our investments in renewables is part of an effort to kind of ride that wave and learn how to make money selling wind and selling solar to other utilities across the country. But keeping our eye on the future is really important and to make sure we have the right business model. And I will say that our management team just came out of a strategy retreat and guess what? We brought a guy in from the telecom industry to tell us how that happened and who won and who lost and what did you have to do to win when they went through that transition. And this expert thought Verizon did it better than anybody else. So it's a good road map for us. So we're paying attention to that possibility and we're looking around the corner. So we'll be ready when the world changes. Yes, sir. Yes. Thank you, Mr. Rogers. Thank you. Last year, I asked you a question about your plans for offshore wind. You had basically said it was too costly. And I think you reiterated that in your remarks earlier today. And I'd like to dig into that a little bit deeper and find out what you know that apparently Europe and Asia and all the other states up and down our coast don't know because they're moving forward. As you know, I'm sure, but perhaps the Board of Directors do not know, Europe and Asia are already enjoying affordable, reliable and clean offshore wind energy generation on a grand scale basis. You were proud to say that you've got 17 megawatts of renewable energy in production now. And as I understand your integrated resource plan for 2,032, you're planning to have 4 57 Megawatts of wind power from all sources available. Let's compare that to what's already been brought online in Europe since 1991. Yes, their first turbines went in production 20 years ago. More than 1500 turbines are installed in 56 farms in 10 countries, 10 countries think differently than you do, generating more than 4,300 megawatts of power. Compare that to your 17 megawatts from all sources. 1700. Pardon? 1700. Okay. 1700 megawatts, much better. 1700 megawatts, got that correct. Sorry. Okay. I want to get full credit for whatever I've done. All right. Okay. So let's start again. More than 1500 turbines are installed in 56 farms in 10 countries generating more than 4,300 megawatts now. That's an astonishing 10 times what you show in your 2,032 forecast from both onshore and offshore wind capacity. In fact, Great Britain alone already has 1586 megawatts in production offshore or almost 4 times your 20 year plan. And there are 13 additional wind farms in Europe currently under construction, doubling the capacity with an additional almost 4,000 megawatts. China already has 300 megawatts installed and they want to dominate the manufacturing market. And let's not forget the tens of thousands of jobs in construction and operation of those wind farms. I'm sure you already know that North Carolina has the greatest potential for offshore wind power along the Eastern Seaboard. It's been studied in great depth by the universities, the scientists and the build businesses. We have sustained wins like Texas. We have shallow water for affordable construction. We have the market for the energy. We have uncontested flyways and fisheries and shipping. All of those are studied and you're limited to just those areas that no one will argue about. There's enough land left for massive generation of power. So please don't just tell us again that offshore wind is more expensive now. Uncontested right now offshore wind surely is more expensive than dirty coal, toxic nuclear and carbon based natural gas. But tell us when you think it will be appropriate here in North Carolina and what Duke Energy will do what you said at the podium is to provide leadership for the industry due to make it happen sooner and tell us why you were conspicuously absent from the Bureau of Energy and Ocean Management's solicitation of interest recently for 3 sites off our coast expressing the federal government's interest and others were there. If you don't develop it other companies will to the detriment of Duke and its shareholders. So when will you establish an aggressive plan? It's totally absent in your 20 13 plan. 20 years, no mention, no real mention. When will you launch a pilot program to prove what you think you know right versus what all of the other states Virginia, New Jersey, Massachusetts, Rhode Island, even Maine are going to put turbines in the water to make sure they're right about. Right or wrong, they're going to learn. When will you market and promote offshore wind to educate the ratepayers and the legislature? And when will you promote and support meaningful regulation and rate structures to make it happen here? Thank you for that series of questions. And let me start by saying that we went to offshore North Carolina and we were trying to develop an offshore wind project working with the State Senate and others. And at the end of the day, everybody said no because it costs too much. That's the first thing. So we have experimented and tried to develop a pilot offshore to test it. The second thing is, is you tell me to go look at the countries in Europe. I have been to those countries and I've been to Germany. Germany is probably the leader of all the countries in Europe in terms of wind and solar. And as a consequence of the subsidy that they have provided, the rates in Germany are about $0.35 a kilowatt hour. Our rates are $0.08 on average a kilowatt hour and Mrs. Jones is worried about the prices going up. If she moved to Germany, she'd be paying 4 times more for electricity because they built too much wind and too much solar too fast. And so the issue really is the timing and the blend. By being a later adopter of solar, we've seen the price go down now at $0.60 Went from $1 to $0.60 on the way to $0.40 it's going to be a lot cheaper. And at the end of the day that makes sense for many of our customers. On the other hand, if you look at wind, we've seen the actual cost of wind turbines and the efficiency improve and the cost come down. So it's not a question of whether we use wind and solar. It's when and how much. And so I think the important thing is to get it right because my job at the end of the day is to balance affordability for fixed income, low income and our industrial customers and everybody else with reliability. Remember wind and solar is intermittent. When the sun doesn't shine and the wind doesn't blow, you don't get electricity. And as battery technologies develop, we'll be better able to do that, but also increasingly clean and we've done that. So it's not we don't disagree on anything other than the timing of how to get this done in the right way. I think you see it. I mean, it's difficult to predict how these technologies will unfold, what the subsidies will be from the government. But the reality is, I think that I think it's going to be more than a decade before offshore wind prices come down. I'll tell you kind of my personal view and not the corporate view. I believe that solar will trump wind. Wind at the end of the day is going to be a failed in a relative basis because it can't be distributed the way solar can. You have to build where the wind blows and then build huge transmission lines to bring it where the load is. And that's going to be more expensive than when you can put it on the rooftop or you can put it in the neighborhood. So I think solar at the end of the day will be the cheapest alternative. Okay. Okay, Mr. Warren, I'm going to have to you know what, I'm calling on you. You know what, I'm reluctant to call on you. And let me tell you why. Okay. I mean, I get a call from my mother and she saw your ad in the paper. And she said, I don't mind the misleading statements about you, me, but the picture that picture she says is embarrassment to me and it makes me look bad. So she told me to give you a better picture the next time you run an ad. We had quite a few of your pictures and chose to That was one of the better We captured 1 with wind and solar behind you and smoke from a coal plant in front of you for a reason there. I'm Jim Warren with NC Warren and I appreciate I'm going to be pretty brief. I want to touch on just a couple of things. Yes, you're doing a lot more wind and solar, but 90% or more of it is not in the Carolinas or any of your monopoly states. Let's be clear about that. And you're not projecting any more than 2.5% in the Carolinas of your total generation for the next 20 years. So timing, you're right, timing is an issue. The the I want to pick up on something that was said earlier a few times. Jim, I think your folks need to be looking at reality. The idea that you all are going to protect these delusional. The Edison Institute itself is out and they spoke with you and they were picking up on something that you were saying 2 years ago. Basically your industry is rapidly changing and they're talking about a variety of factors including the falling price of distributed energy that they say take it quoting these factors are potential game changers to the U. S. Electric utility industry and are likely to dramatically impact customers and the company and availability of capital. Skimming on down in the summary, this is a January report that the Edison Institute, your trade group indicated the investment community has been very slow to pick up on this very rapid change. They say again quoting investors are not taking notice of this phenomenon despite the fact that the pace of change is increasing and will likely increase further as costs of disruptive technologies benefit further from scale efficiencies. So I'll just say that people from left and right across the political spectrum don't like monopolies. We see the monopoly control in this state as directly linked to serial rate hikes to fund power plants that we are arguing are not needed. And the people in your monopoly states are not going to stand by as NRG and other large corporations with heavy financial backing come into nearby with no cost to the homeowner. And people are not going to stand by and let Duke Energy block that advance in our state. So I encourage you and the Board and the management to look at climate clock that is ticking so rapidly. It seems inevitable as you had said earlier that your industry in Duke Energy is going to be making major changes in a clean energy direction. Jim for God's sake, why would you not front end that change and keep us with a chance to avert the climate tipping point that is coming so close. Thank you. Since there was no question embedded in your comment, I want to thank you. Why would you wait? We're not waiting. And the reality is we're not waiting. 5 years ago, we started investing before others did. And by the way, NRG, we have more renewables than NRG, so they're a piker on a relative basis. They're moving past you now though. Not yet. And the second thing is that we started investing 5 years ago in wind and solar to develop the capability to do it and understand how those markets play. But unfortunately, we get pushed back when we want to build the wind and solar in this state. We went to the regulators and said we want to put solar on the rooftop. We put it on her rooftop for free and pay her to let us put it on the rooftop and we asked for $100,000,000 to do 20 megawatts. So what is this what did the public council do? They said no. They said no. But we didn't find any support. Okay. Let's keep trying. Yes, ma'am. Thank you, Mr. Rogers. I appreciate you letting me to speak. My name is Kate Malgis. I am an Ohio resident of Duke Energy ratepayer and here today as a shareholder. I'm here today representing the 60,000 Duke Energy Ohio ratepayers in Cincinnati that chose last year and fought for a better option through energy aggregation. During the Cincinnati aggregation process, it was pretty clear what the ratepayers of Cincinnati and the Greater Cincinnati area wanted, which was cleaner, cheaper, affordable electricity powering our homes and small businesses. And unfortunately, your company was not able to meet that demand. So my question is, the residents of Cincinnati would gladly welcome you back to Cincinnati as our electricity provider, not just a distributor. If you are able to invest in large scale renewable energy deployment in the city, what is your plan to do so? Well, first of all, the way the bidding process went, it was really the low cost supplier that won. And so we couldn't beat the price. If we had blended in a lot of renewables, we'd have been even further from the price. So it was all call space because the city of Cincinnati want to pay less and so we lost. And that goes to the question earlier from our friends and economists that that's how competition works. But it had nothing to do with who had the cleaner energy. It had everything to do with who had the cheapest energy. Okay. No. But your option for the lowest cost 100 percent green energy option, your price was the highest of all the 7 bidders. So that was just that was my point. Well, I mean, we try to do things in a business like way. And if it was higher that's but we didn't preclude others from bidding. So we gave them an opportunity. Thank you. Do you Do you have plans to invest large scale renewable energy in the city? We don't have any current plans. Okay. But what we're really focused on is putting smart meters in and as a consequence helping consumers in Ohio reduce their use of electricity. And we've got a number of programs where we're doing that today. So our focus is on energy efficiency in that state. Thank you. Oh my God, more hands go up every time. I'm going to go right here. I'm only going to take 4 or 5 more and then I'm going to have to get out of here. Thank you. Thank you, Mr. Rogers. My name is Louis Zeller. I'm the Executive Director of Blue Ridge Environmental Defense League. We operate in 7 states in the Southeast. I just want to talk briefly and ask you a question having to do primarily with the risks of nuclear power. Duke Energy as you know operates Catawba and Maguire just north and south of where we are standing here an ice condenser reactor, which is one of the 2 most dangerous reactors in operation for commercial nuclear power. Arguably the most dangerous is the type that melted down in Japan just 2 years ago and which I believe signaled the end of the nuclear renaissance in certainly on that side of the world and in other nations like Germany, which are planning to phase out their nukes by the beginning of the next decade. As you know, the Catawba and Maguire plants operate ice condensers, which have a weaker containment structure. They a typical hydrogen explosion can be on over £100 per square inch. Those containment buildings can only withstand around a little over £60 per square inch. And in fact some of the studies that we have been accessed able to access show that ice condensers are 100 times more vulnerable than other commercial reactors in the United States. The U. S. Energy Information's latest forecast shows levelized cost for wind turbines to be 80% the cost of advanced nuclear for units brought online by 2018. Westinghouse AP1000 is one of those nuclear plants, which the company plans to open in Gaffney, South Carolina, which features weaknesses of modular construction and another weakness which could siphon radiation directly into the environment. My question to you is this. The concept of the baseload power you mentioned when the wind don't low and when the sun don't shine is outdated and should be abandoned. A recent study published in 2013 found that by using inland wind, offshore wind photovoltaics, 99 0.9% of electric power demand could be provided by them alone and 90% of the power would be below normal costs and this is based on projections forwards to 2,030. This study looked at 1 5th of the United States Energy Grid. It accounted for 4 years of electric load and solar and wind potential covering an area stretching from North Carolina to Indiana. Duke Energy's long range plan relies on fossil fuel for 82% and nuclear fossil fuel and nuclear for 82% of our electric power projected forward in their latest integrated resource plan looking forward 15 to 20 years? How can that be? How can Reliance on outdated polluting energy sources still be part of this company's plan when there are other solutions out there? Mr. Rogers, I believe we don't need coal. We don't need nuclear. We don't need hydro fracking. We don't need biomass. What we are asking for is 100% clean renewable energy. Thank you, sir. Well, I would simply say our nuclear 1st our nuclear plants have run over 90% load factor for 13 years or 14 years now. And they've been operating in a safe and responsible way for a long time. And they've been they are one of the reasons one third of the electricity that we produce a day is carbon free is because of those nuclear plants. So they play an important role. Now you're sad about the Germans shutting it down, the ones with the $0.35 rates, they're burning coal. The coal that we used to burn in the Midwest is now being shipped, So they can burn the coal in Germany, because they're shutting down their gas plants, shutting down their nuclear plants. And at the end of the day they're going to pay a high price for their experiment. We don't have the ability to do a scientific experiment on this. We have to provide electricity 20 fourseven, 3 65 days a year. We have kind of continued to operate in blend. And as I listen to you correctly, you'd say no to nuclear, no to gas, no to coal, right? That's correct. And then all you'd use is wind and solar. And the battery technology is really not developed to do that. And in states like this with no wind, all you have is solar. So at nighttime, you got a problem unless you got huge batteries. So my only point is this, you can't transform this infrastructure overnight. And what you're calling for might work someday, but not in the next 100 years. And so what I believe is, is that we need to get the timing right, work on these technologies, improve the batteries. I mean, I told you about the 36 Megawatt plant, I mean, battery in West Texas, we have 6 other battery projects that we're working on. You're talking to a company that's embracing these new technologies, just deploying them, learning how to use them, but we have at the end of the day a responsibility to keep the lights on and to keep it affordable for the people in our system. So with all due respect, you don't have the time. The meltdown that happened at Fukushima Fukushima in Japan, we are still suffering the consequences from that. It erased a $1,000,000,000 liability in a millisecond and people are still paying the $13,000,000,000 cost for cleanup. How can Duke Energy and the shareholders stand for that kind of risk to be ongoing over the next 10 years? Sir, you don't have the time. You need to follow what ethical leaders in the world have done and move as rapidly as possible to phasing out of these dangerous nuclear plants and certainly not to add any new ones. Thank you, sir. Thank you. You need to talk to the Chinese who are building 25. You need to talk to the Indians who are building them. Need to talk to the people in the Middle East who are building nuclear. You need to talk to people that are trying to provide electricity and provide universal access to electricity, so they can build the middle class and not be caught behind. Yes, sir. A bunch of numbers about how important energy efficiency is DSM and all that. I think most folks in the room probably are already familiar that buildings take about 40% to 50% of our energy budget every year. So you've already made a commitment to look more into these programs, hopefully maybe breaking some silos and finding more integrated plans. But what I wanted to ask you is what you would need from us as the energy efficiency community to do to help you meet those goals? You need to work with us. I mean think about Envision Charlotte. There's 68 1,000,000 square feet of property in downtown Charlotte where we're trying to reduce the use of electricity 20% in 5 years. So you need to talk to our team and work with our team so we can do it. We're doing it first by having a kiosk in every building and there's sort of a competition between buildings and competitions within buildings. But at the end of the day, it's going to take new technologies to get the savings that we really need to be able to achieve our goal with Envision Charlotte. So work with us, help us deploy the technologies. We're deploying them and we just we need more advice, more help and we'd appreciate your help. Please. Thank you for your comments. My name is Kendall Hale. I am a ratepayer and a shareholder in Duke Energy Progress. I live in Asheville. I have a different perspective, but I'd like to share that with you and I'd like you to hear about my plan. More importantly than being a ratepayer and a shareholder, I am a mother and a grandmother. I take this role very seriously as a guardian and a protector of the future. I am currently organizing grandparents and rate payers in North Carolina to join the July 2013 walk for our grandchildren. Our demands are to keep all fossil fuels in the ground, Climate Action Now. We are going to start from Camp David to Harpers Ferry and to the White House. We are willing to walk 10 miles a day for 6 days at the hottest time of the year with Americans from every state to speak and give voice to our children, their children and future generations, I would like to invite you and the Board of Directors to join us. And I want to tell you what we're going to stand for, because I think you believe in exactly what I believe in. I just feel that we have to move faster and quicker because I don't see the time. We're walking to express our deep concern for what the world will be what will be left of our world if corporate fossil fuel extraction and burning continues. I don't want to bore anyone here, but I think this is important. Climate change has brought extreme drought. We've seen wildfires out in the West. Our Arctic ice melting at an historic rate and we've seen super storms have caused death and unprecedented destruction. The year 2012, as I'm sure you know, was the hottest record in the United States. We are walking to demand that polluting companies change their business plans to invest in energy efficiency now and to spare our grandchildren the tragic cost to their health and well-being. And I think you would like to walk with us and I represent 1,000 even 1,000,000 of people who can't be here today to tell President Obama and the public that we need a democracy in this state. With all due respect, as a citizen, I don't feel that I live in a democracy, because I do feel that your company has stolen part of my democratic right. And the reason I feel that is because I've tried to lobby down there and I've tried to lobby for alternative green municipalities. I found that it's illegal and I have found answer after answer. Our politicians have been bought by your company. Our regulators have been bought. Our governor has been bought. And you don't take any risk. And I think in fact you sometimes feel proud about passing the cost of expensive nuclear dangerous operations, gas operations and deadly coal fired plants to regulated taxpayers. With all due respect and I do mean this, I hear what you're saying. I feel that I need to have a choice. I need to have a choice. I want to be able to invest in a utility company that's not gambling with our lives and the lives of our grandchildren and all living creatures on this planet. So I am recruiting grandparents my age and older to join the growing rate payer revolt in North Carolina. We are wise elders of all faiths and colors and beliefs and we are fighting for a sustainable world. We're going to walk in the hottest time of the year. So my question to you is, will you end our slavery to fossil fuels? Will you please end your outdated 20th century business plan? And will you set us free? Mr. Rogers? Thank you. I'm going to keep the lights on first because our society depends on having electricity in every home and every business. I admire what you're trying to do. Good luck on your walk. I've got a jawbone that measures steps. So you ought to get one of those, because that will measure the steps you take every day. But at the end of the day, we're all in the same journey. We're all going a little different pace. But the reality is this country is at the same place it was in 1992 in terms of our carbon emissions. And per capita as I said earlier in 19.60. We've done more than what the Europeans have done who've talked a lot about it and they've raised their rates to levels 4 times higher than our rates in the United States. We can learn from them. We can learn from the Chinese and Indians and others around the world. But at the same time, there's 1,300,000,000 people that wake up every morning and have no switch to throw, have no access to electricity. So I'm saying to you step back, think about all the people of the world, not just in your neighborhood and all the people in the world in the developing countries like China and India want it, electricity. This is going to happen and global warming is not a North Carolina phenomena. It is not a United States phenomena. Global warming is a worldwide phenomena. And at the end of the day, we will find a way to do this as we have in this country of actually reducing our emissions of CO2 and yet still have a vibrant economy. And that is the hard thing that we have to do. Good luck on your walk. Yes, sir. My friend from I know exactly what you're going to ask me, so I really want you to my friend from Long Island. I'm delighted to see you here actually because I was looking for you. Thank you very much. In fact, it's the Western Shore, Brooklyn. For a Southerner, it's all kind of mixed together. I do have a topic that's a complement to you last year for the off-site environmental meeting occurred in June, Mr. Stowell. At that meeting, a brief conversation, and that was Mr. Williams. And it is regarding some volunteerism blood donation specifically in complement for the company promoting volunteerism and especially donating blood. Superstorm Sandy want to compliment Mr. Krampster who referring me to Mr. Lee Friedman. Mr. Friedman introduced me to some of the Duke employee responding to super storm Sandy restoration in my area. And that I've understood it's over 2,800 just under 3,000 Duke employees responded, compliment to them too, to yourself, to the directors and management who have had the foresight and they should have to have enough people on staff that in a disaster like this that Duke was able to respond. I do also compliment that you've listened. I have had, as you indicated, a comment to have the name Duke Power, and I compliment the shareowner last year responding in the corridor outside our room for a suggestion and that it would bring it as I think it's worthy of consideration. Overall, compliment to you with your directors, management and employees. Job well done. The dividend has increased modestly rather Modestly means we should do more. Indeed continuing as financial conditions indicate. But most of all to the stock market impartial who have found value and have found superior value in our shares bidding them up. Thank you very much. And Mr. Rogers, the best to you as this will be your last meeting and on your retirement. Thank you. Okay. We're going to take 2 more questions and then we're out of here. Yes, sir. Thank you. My name is David Harmon. I'm from Boone. I've been a businessman for 42 years. I was a CPA for 29 years here in North Carolina. And I'm co owner of 3 companies. I'm a financial consultant. I'm co founder of the Appalachian Institute For Renewable Energy in Boone. I would like to think I'm a job creator. I understand the profit motive. I understand that your Board operates under the general statutes that generally recommend or request that this Board does everything possible to increase shareholder value. I get that. But my business background, I also understand science. I'm an avid science reader. I've co authored a book about climate change. I'm writing another book about climate change. I've been to the Arctic to meet with people whose lives are changing right now because of climate change. We now all know that climate change is real. It's increasing. It's measurable. It's caused primarily by human activities and it's already bringing about negative outcomes on the planet. And we've got to do something about it, because the earth has a serious carbon problem, human society will eventually deal with this. We're trying to do it now. I understand the calculus of a rational business decision where you look at costs and benefits. I understand that you have to evaluate that. I have an economics degree in addition to having been a CPA. What's different now is that the paradigm of how the synergy is generated, the last century's paradigm involving large expensive often dirty and dangerous power plants is in my opinion an obsolete paradigm. It does not deal with the fact that A, the public is clamoring for renewable and clean energy. It does not deal with the fact that climate change has an external deadline. We don't know exactly when we're going to reach a tipping point. But your Board who must consider profits, dividends to shareholders, I get that. There's now a new calculus that you can't ignore and that calculus is there's an external factor that doesn't just fit into your, ledgers and journals. It's something that you as individuals need to start considering that we truly are facing a common threat. And it doesn't just come down to earnings per share. We have to think that way. So some folks here have said that we ratepayers are starting to organize. We're starting to educate each other. We're very determined and we're hopeful that Duke Energy, which is this largest ship in the water, if Duke will move I understand that you are moving toward wind and solar. Our complaint, I guess, is that it's not doing fast enough. I understand that it comes down to cost. I would argue that you have to factor in these other issues in addition to the cost. It's getting late. And I would just ask you to please stop resisting renewables and move quickly, move faster, start encouraging them. By Duke Energy's adoption of more renewables, you will help bring the cost down. You will help make it better for everybody. Will you please join us in helping make this planet more livable for our grandchildren? Thank you. Well, thank you for that comment. And what I would ask you to do and everybody else here is go to the state commission and tell them, let Duke build solar. Let us put it on the rooftop. Let us put it on the rooftop and pay people to put it on the rooftop. You need to help us do that because they're stopping us. You need to go to Raleigh and tell them to let us build solar and to sell it to our system, utility scale solar, transform the world and we're going to you have to join with us if we're going to transform the world and we're going to make this a better environment for investment in solar and wind in this state. So we got work to do. And I'm a neighbor. I have a little place in Lynvol just down the road from you. And so I've had the same vested interest as you do. It's seeing our company and our society transform and we will transform as we have already as we're moving in the right direction, but more work to do. I'm going to take one last question. Yes, sir. And then we'll go on to end our meeting. Mr. Rogers, I'm going to be good to you. My name is E. B. Cranford. I live in Hidnite part of the time. I live in Durham part of the time. And I have a home in Pamlico County. And I can tell you about wind turbines in the sounds of North Carolina. It ain't going to happen in our lifetime. They will never let you put a wind thing in the sounds of North Carolina. They'll the the environmentalists and everybody else will be up in arms. That's just isn't going to happen. But my question is what brought me here is these ads as a stockholder I do appreciate the dividend. I'm proud to be a Duke stockholder. These ads that we're running that says paid for by the stockholders of Duke Energy. Would you please explain why we should take some of our dividend money and run these ads? And why couldn't we just have more dividend and no ads? Hey, you got my wife cheering because she's really into that dividend growing. That's a good question. But let me tell you what we're trying to do with the ads. And our goal line is not to use our customers' money for the ads, but to take them from the investor because we think the people of North Carolina need to be better educated in terms of the challenges that we have in front of us and how we're reinventing our business and the fact that in the process like I mean one of the ads shows that somebody takes a phone and it has a long line on it. I mean I don't have any of those in my house, but I grew up with them. And then in the same way we have cell phones now in lieu of the phones with the long lines that our business is changing is going to be much different. And that's going to cost more money, but maybe create more convenience in a cleaner. So what we're really trying to do is educate people in this state about what we're trying to do and what it means. But I take your point. I've never seen my wife so I'm not tired of paying for these ads. Message delivered. I want to thank all of you all for being Here's what we're going to do. Most of the questions have been predominantly environmental related And I'm going to do like I did last year and I'm going to set up a meeting that I'm going to go to and I'm going to invite all of you all to attend and we're going to sit down in that meeting and have the same conversation Jim Warren and many of you all were there had. So we can really have a conversation, not a series of speeches, so that we can find a way forward together. So I'm going to do that and you're welcome to come and I would because then it would give us a chance to really talk about it, work through the issues and find a way forward that works for everybody. Not all of us are talking about the environment. We're here to talk about ratepayers as well before people. Okay. Okay. Here's what I'm going to do. I'm going to take 2 questions on corporate governance and then we're going wrap this meeting up. Yes. May I hold it? No, sir. Go ahead. It seems a little awkward with you. Well, I'll give it my go. First, Mr. Rogers, I want to thank you for your time. But my question has to do with corporate governance. In this past year and I would like for the Lead Director to answer this question. The Board increased their compensation approximately 1 third from $150,000 to $200,000 at a time when we're coming out of 1 of the worst recessions since the 20s. And we know about disparity in income. You alluded to the fact that the middle class is not growing as fast here as in other places. And I submit to you in the future and I'm saddened to be here today and hear what I have heard. I'm a businessman. I've lived here in Charlotte. I reside at 1571 Queens Road West here in Charlotte. We have given to many of the charities that you give to and we are your neighbor. And we also belong to some of the same clubs that you belong to. But that be as it may, in my judgment, Duke Energy's business model for the long term with the CEO and Chairman is the largest individual stockholder according to the comments that he made regarding corporate governance. And also in the comments that he's made regarding corporate governance, he talked about diversity. And when I look at this board, 5 of you are tied to the nuclear industry. So the question I have, how much diversity do we have here? Now going forward, if someone had told you Mr. Rogers a few years ago that Wachovia would no longer be here. Wachovia stock went to $0.35 a share. They were broke. Merrill Lynch went broke. Goldman Sachs had to be bailed out. Bank of America stock went to $3.35 and you Matt, sir, would you let me hold this? I mean, I'm finding this awkward. Thank you very much. So, we as taxpayers bailed out these people. Now, no one knows better than Mr. Hance about the Bank of America. The taxpayer guaranteed every piece of commercial paper that they issued. They guaranteed all the bonds. And in 2,007, the CEO of Bank of America took out $97,000,000 Now Mr. Rogers took out about $8,000,000 this year and now he's retiring as the largest individual shareholder. So the only thing I'm saying to you today and I'm particularly saying it to this management team, you work hard, you do a good job, but going forward, the disparity in income in this country where the middle class is going down and the high income that's at the very top. And here's an example of it. Right here, Salary $150,000 for being on this board. This year it's 200,000 dollars And what's it going to be going forward? Now I have no reason not to like Mr. Rogers. I have no reason not to like you. But I am saying to you in my judgment, this corporate governance will lead to failure. You cannot continue to be secure where you live and continue to take out huge sums at the top, while people in this lady's neighborhood are having trouble paying the bills. Now you alluded to your and I know this is a little bit personal to your new home in Lynnville. I happen to live in the Lynnville area in the summer. I know about the mountains. And you alluded to the fact, well, I'm not going to be any windmills in the mountains, because I'm there. Well, I don't know if that's true or not. He certainly entitled to his opinion. But I do know this, there's only so much water out here and everybody along the Catawba River is trying to get some of it and nuclear plants use a lot of water. If you go to Japan and talk to the people in Fukushima about what's going there, now some of you are shaking your head and saying, well, who are you? Why are you here? But I'm just telling you for where I sit and the people that I'm coming in contact and some of these people who haven't had a chance to speak here today, right here is a lady with a PhD and there's other people here that representing all walks of life. Now this system has worked well for you and it has worked well for Mr. Rogers, because he is the largest shareholder and a lot of this has come from receiving stock options and stock grants. And the other thing that you've done and I'm talking about the leadership of this country, you have pushed down the tax rate on dividends to 15%, which means that many of you are paying less in taxes than my secretary is paying. And that's not fair. And in my judgment for the long time this will not stand. And I Mr. Rogers, again, I'm interested in your welfare and I wish you well, but I am saddened because of what is happening to my country. Thank you. Well, I think a couple of quick things. First of all, with respect to the compensation to the Board, what we pay the Board, we look at what comparable Boards around the country are paid and this is in line with what other boards of companies of size are paid. The second point is on nuclear. Nuclear is can be done in a safe way and we've done it for 40 years in a safe way for our people. 3rd, you're right. The world is changing and what people don't remember what our cities looked like in the 1900s before we had electricity, then we were burning coal in fireplaces. And then you couldn't see your hand in front of yourself just like in China. So the bottom line is electricity has led to the cleaning up of America. Every step of the way and we're going to evolve. With respect to the business model, the question was raised earlier, we get it. I mean, Jim Warren read this disruptive change that's coming to our industry. We got that. We're on that. And we're going to make sure that we have a business model that produces the dividend. I know we need to increase it. But the important point you're making is really goes to our whole society. And by the way for the last 7 years, I have not received a single dollar in cash. I paid only in stock, because I have an identity of interest with you. I want to see the dividend grow. I want the stock price to grow and there's another CEO in this country that gets paid in all stock. I don't know about all the country, but clearly in our industry nobody's paid that way. And I bet when you were in business you never got paid all in stock. So my only point is, is I'm trying to put our company in a place so that when I walk out of here, we'll be in a strong place. You recognize as we all recognize this country is changing and we need to be part of the change. We need to shape the change. But that didn't all happen in this boardroom. It's not going to happen in this company. It's going to happen at the state capital. It's going to happen at city council. It's going to happen in Congress, which can't seem to do a thing. So what your concerns really are properly addressed to Congress because they need change. There was one governance question right here and then we're going to wrap it up. Good morning, Mr. Chairman. A quick question on corporate governance since you are retiring and we're sad to see you go because you really did a good job. And thank you for being paid only in stock because you're putting your interest you're aligning your interest with ours and that's great. But my one question is that Duke Energy will now have a golden opportunity to appoint an independent Chairman of the Board and I really think that you should do that. And we have a lead independent director. So I don't think there should be a problem appointing an independent chair. Thank you for your comment. I'm sure our Board will take that into consideration. We've always had a Lead Director, a strong Lead Director and I've played the role of Chairman and CEO and generally that is tended to work. Well, this is my last words and I want to thank you all very much for being here. We will post the time so we can get together and talk in detail about these environmental issues. But it's been an honor for me to serve all these years going back to 1988 as CEO of companies who serve electricity to homes and businesses. There is nothing when I wake up in the morning, I know that I'm transforming the lives of millions of people, rich and poor, because when they throw that switch, I'm making their lives better by providing electricity. And I also know that I have a great opportunity and responsibility to help shape energy and environmental policy in this country. And I've done my best at that and I'm not through with that, although I'm not sure I'm marching with you. Sounds too far and too hot. But again, I want to thank you all very much for investing in Duke. I want to thank you very much for being here. I appreciate it. You won't see me next year. You'll see a new face, but have a great year. Thank