We're delighted to have you join us today. Thank you. Also seated in the first few rows are the members of our management team. In the interest of time, I will not introduce them individually. I hope you've 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 company, and also you, our investors. I would also like to introduce Tom Bowman from our Corporate Security Department, who is serving as Sergeant at Arms. Finally, I would like for you to meet Charlie Muha and Jason Enoch of Deloitte & Touche, the company's independent public accountant. I forgot to introduce my wife, Emma Rogers, my greatest cheerleader, and my best critic, as only wives can be.
I'm delighted that she's here because this is our 23rd annual meeting, and she's been at every one of them. We will now proceed with the matters to be voted on. We have a declassified board of directors, which means all of the directors are up for election every year at the annual meeting. The board of directors has duly nominated Directors Barnett, Bernhard, Browning, DiMicco, Forsgren, Gray, Hanks, Brinch, Rose, Sharpe, and myself. They have been nominated for election as directors for one-year terms expiring in 2012. These nominees, except for beginning on page five of the proxy statement, are hereby considered presented for the purpose of voting for their election as directors. The selection of Deloitte & Touche as the company's independent public accountant for 2011, as set forth on page 21 of the proxy statement, is also hereby presented for the purpose of ratification.
An advisory vote on the compensation of our named executive officers, as disclosed on page 22 of the proxy statement, is hereby presented for approval, as well as an advisory vote on the frequency of future advisory votes on executive compensation, as outlined on page 23 of the proxy statement. Also to be presented are three proposals we have received from our shareholders. The first relating to the preparation of a report on Duke Energy's global warming-related lobbying activities. The second relating to the issuance of a report on the financial risk of continued reliance on coal, and the third regarding an amendment to our organizational documents to require majority voting for the election of directors. We take all proposals submitted by our shareholders very seriously. I would like to ask Marc Manly to introduce these proposals.
Thank you, Jim. Upon receipt of a shareholder proposal, we engage in a dialogue with that shareholder to see if we can come to some appropriate resolution of the issue. This year, we were not able to reach resolution on the three proposals Jim mentioned, and 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 this meeting, but they are spelled out in the proxy statement made available to all of our shareholders. However, each of the shareholder proponents will now be given an opportunity to present his or her proposal and a brief supporting statement. I'd like to remind those presenting that at this time we ask that your remarks 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 the preparation of a report on Duke Energy's global warming-related lobbying activities, as set forth beginning on page 24 of the proxy statement. This proposal is being presented by Dr. Thomas J. Borelli, who is appearing on behalf of the proponent, Mr. Shelton Ehrlich. Mr. Borelli, would you come forward to the microphone to present the proposal?
Morning. Shareholders, Mr. Rogers, the Board. My name is Dr. Thomas J. Borelli. I'm the Director of the Freedom of Pride Projects, National Center for Public Policy Research. It is my honor here today to represent our proposal on behalf of Mr. Shelton Ehrlich. We dare to tell the shareholders to vote for our proposal calling for a global warming lobbying report. This report will provide greater transparency about the way the company's resources are being used to within progressive policy goals. Unfortunately, under Jim Rogers' leadership, Duke Energy has joined President Obama's war against fossil fuels. Since Duke Energy derives most of its electricity from coal, following Obama's anti-fossil fuel, anti-coal political agenda is indeed reckless and dangerous for shareholders. President Obama's extreme dislike of coal has been consistent and unyielding.
While running for president, then candidate Obama said his cap-and-trade energy policy would, I quote, "necessarily make electricity prices skyrocket." He also warned that utilities could still use coal, but he warned his energy policy will bankrupt them. Ladies and gentlemen, that's us. Faced with the mortal threat to Duke Energy's business from a bullying and threatening president against our business, Mr. Rogers decided to switch then fight. Instead of defending the use of coal that provides almost half our nation's electricity, Rogers became one of Obama's biggest cheerleaders for cap-and-trade legislation. Rogers put all our chips on cap-and-trade legislation, or using a casino analogy, he put our shareholder money on Black 11. Duke Energy joined the United States Climate Action Partnership, a coalition of corporations and environmental activist groups that sought federal cap-and-trade legislation. Mr.
Rogers justified his lobbying for legislation that a carbon cap on emissions would give our company regulatory certainty. After years of joining hands with progressive politicians and environmental activist groups, how did the spin of the roulette wheel work for our shareholders? Rogers lost his bet. The Waxman-Markey cap-and-trade bill passed the House of Representatives, but it died in the Senate. After years of lobbying trips to D.C., meeting with President Obama and other legislative officials, doing commercials with environmental activists, groups that detest coal and nuclear for that matter, and millions of dollars in lobbying efforts, our company now faces the same uncertain regulatory environment that it did when Mr. Rogers joined Obama's crusade against coal. Mr.
Rogers recognized that cap-and-trade is dead and gone when he said cap-and-trade cannot be sold, quote, "cannot be sold and must be reinvented." Shareholders, not only did we lose money on this gambit of lobbying for cap-and-trade, we lost valuable time. Who knows what the cost is in terms of the opportunity cost of years that lost, and now we don't have a certain regulatory environment. While cap-and-trade is dead, President Obama is now wielding the power of the executive branch to continue his war on fossil fuels. The EPA is moving ahead with its plan to regulate greenhouse gas emissions under the Clean Air Act. EPA regulations would be devastating to utility companies such as Duke that use coal. Now what's plan B for our company? What's plan, Mr. Rogers, plan B? It seems once again Rogers is not leading, but following President Obama.
In his State of the Union speech, Obama called for a clean energy standard that would mandate 80% of our electricity comes from renewable energy. In a recent meeting, Mr. Rogers seemed to endorse that notion when he said, "Let's drive down the cost of solar and wind and make them competitive." Think about how much it would change if the debate, if solar and wind were as cheap as coal. Fantasy thoughts, I might add. Finally, shareholders, Rogers is not only following Obama's war on fossil fuels, but now he has Duke Energy shareholders banking the Democratic National Convention. In an unprecedented decision, our company is backing the Democratic Convention with a $10 million line of credit. Fellow shareholders, I'm concerned that there may be a method to Mr. Rogers' madness of following Mr. Obama. Maybe Mr. Rogers is looking for his next job in the Obama administration.
Shareholders, this is why we need greater disclosure and transparency regarding our company's lobbying priorities. Accordingly, I urge you to vote for our proposal. Thank you for your time and your attention.
Thank you, Dr. Borelli. The second shareholder proposal relates to the issuance of a report on the financial risks of continued reliance on coal as set forth beginning on page 27 of the proxy statement. Here to present this proposal on behalf of the proponent is Andrew Behar. Mr. Behar, would you come forward to the mic to present the proposal?
Yeah, thank you. Members of the Board, Mr. Rogers, and assembled shareholders, good morning. My name is Andrew Behar. I'm the CEO of As You Sow, a shareholder advocacy organization. I'm here to move resolution number six on the proxy. As You Sow has filed this proposal on behalf of the Obadiah Brown, Sarah Swift Benevolent Fund. The proposal requests that Duke Energy's Board of Directors, at reasonable cost and omitting proprietary information, issue a report by November 2011 on the financial risks of continued reliance on coal, contrasted with increased investment in efficiency and cleaner energy, including assessment of the cumulative costs of environmental compliance for coal plants compared to alternative generating sources. I ask you to vote yes on proposal number six.
We believe that Duke's reliance on coal exposes our company to material financial risk, and we're concerned about this long-term value of Duke Energy's coal-fired generating assets. This is the moment in time to plan for the future. Numerous reports by industry analysts have been published in the past year regarding the cumulative risks that are eroding the value of these assets. Our company's write-down of $2.275 billion in 2009 and 2010 for impairments of its regulated and non-regulated generating assets intensifies our concern. The high cost of environmental compliance and uncertainty regarding future compliance costs of coal plants, lacking the required pollution controls, come at a time when commodity risk is driving historic changes for electric utilities. The fundamental change undermining coal-fired power plants is the price reversal of coal relative to natural gas. The U.S.
has abundant supplies of gas, and the consensus among analysts is that natural gas prices are likely to remain competitive with coal for the foreseeable future. In many markets, natural gas is placing downward pressure on electricity rates at a time when coal-dependent utilities are facing the prospect of making massive capital investments in their coal fleets. A series of mandates from the EPA and increased enforcement actions by EPA will force a decision whether to invest enormous sums to bring aging coal plants into compliance or retire them and invest in energy efficiency, renewable energy, and gas. In addition to the greenhouse gas permitting program adopted by the EPA and proposed rules for coal ash, mercury, and other hazardous air pollutants, electric utilities face stricter enforcements of existing environmental laws governing emissions of nitrous oxide, sulfur dioxide, ozone, and particulates.
Industry analysts have concluded that the cost of environmental controls, particularly for mercury, will lead to the retirement of 24% or more of U.S. coal-fired generation, and companies have already announced the retirement of 40 U.S. coal plants. The estimated cost of installing an SO2 scrubber for a 500 MW coal plant is on the order of $210 million. Duke Energy has five coal plants that do not have SO2 emission controls. These plants accounted for 2,244 MW of its electricity generation in 2010. Upon completion of the merger with Progress Energy, the combined company will own and operate 20 coal-fired plants with over 6,600 MW of unscrubbed coal-fired capacity. In response to the changing economics for coal, Duke Energy is retiring 17 older coal-fired units at six of its plants and is building two new combined cycle natural gas plants.
However, our company is also building new coal plants in Edwardsport, Indiana, and Cliffside, North Carolina. Moreover, both the Edwardsport and Cliffside projects have encountered significant construction cost increases. The Edwardsport plant, originally estimated to cost $1.95 billion, is now projected to cost $2.88 billion. Costs for Cliffside's unit six have also increased from $1.9 billion to $2.4 billion. Cost overruns for the new coal plants raise the prospect of disallowance of these costs by regulators. Duke Energy has received approval to recover only $33 million of the $121 million site assessment plan for carbon capture and storage at the Edwardsport plant, and construction costs over $2.76 billion for Edwardsport are subject to prudence review in the next base rate increase request.
Duke Energy has disclosed information regarding some of the risks, but has not provided investors with a cumulative risk assessment that examines the interplay and timing of these risk factors and their bottom-line impact for our company. While the timing of several of the environmental mandates may be uncertain, the probability of these mandates being imposed is not zero, and many of the anticipated compliance costs can be reasonably estimated at this time. Investors need to understand the magnitude of these capital expenditures on new and existing coal plants in the context of the historic reversal of coal and gas prices, which analysts believe will persist for a decade or more.
In closing, the name of my organization is based on a quote from the Bible: "As you sow, so shall ye reap." This proposal is intended to give our company the impetus to plant the seeds of the clean energy future, that our employees, the community we serve, and our children may all reap the bounty of a clean and prosperous future. I therefore urge you to vote yes for proposal number six on the proxy. Thank you.
Thank you, Mr. Behar. The third shareholder proposal relates to an amendment to our organizational documents to require majority voting for the election of directors, as set forth beginning at page 29 of the 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, will you come forward to the microphone and present your proposal?
Thank you, Mr. Chairman. I'm Randy Jenkins, representing the United Brotherhood of Carpenters Pension Fund. Our funds hold approximately 532,000 shares of Duke Energy common stock, and we are committed long-term owners. We appreciate the opportunity, again, to introduce our majority vote shareholder proposal that we believe advances an important corporate governance reform. While the majority vote proposal did not pass at last year's shareholders' meeting, it did receive 41% of the votes cast despite the board's opposition. As our statement in the proxy in support of the majority vote proposal indicates, most of Duke Energy's peer companies, including American Electric Power, Dominion Resources, CenterPoint Energy, Consolidated Edison, Constellation Energy, FPL Group, and Exelon, have adopted this important governance standard.
Beyond the peer companies, nearly 80% of the companies in the S&P 500 index have adopted a majority vote standard, representing nearly 90% of the total market capitalization of the S&P 500 companies. In total, approximately 830 large and mid-cap companies with $9 trillion of market value have adopted a majority vote standard for director elections. Majority voting is clearly the established vote standard for director elections among leading corporations. We urge the Duke Energy Board of Directors to establish a majority vote standard and join the mainstream of American corporations on this important election reform. Thank you.
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'd like to change your vote, a vote by ballot will now be taken for each of these items.
Mr. Chairman, shareholders, the polls are now open. If you want to vote by ballot, please raise your hand. The polls will close in just a few minutes. After you've received your ballot, please complete it and raise your hand again so we can collect it. Does anyone need a ballot? Polls are now closed. If you have not yet returned your ballot, please raise your hand so we can collect it now.
I'll now ask Marc Manly for the Inspectors of Election report.
Thank you, Jim. Based on the proxies received prior to this meeting, we can report the following results. First, each nominee for election of director has received the required affirmative vote of shareholders sufficient for his or her election. Second, the selection of Deloitte & Touche as the company's independent public accountant for 2011 has received the required affirmative vote of shareholders sufficient to ensure ratification. Third, the advisory vote on executive compensation has received the required affirmative vote of shareholders sufficient for approval. Fourth, the option of every one year as the preferred frequency for holding an advisory vote on executive compensation has received the affirmative vote of shareholders sufficient for approval.
Finally, the shareholder proposals relating to the preparation of a report on Duke Energy Corporation's global warming-related lobbying activities, a report on the financial risks of reliance on coal, and the amendment to our organizational documents to implement majority voting in director elections have each failed to receive the vote necessary for approval. Any votes voted at the meeting today will be tabulated and included in the final vote and filed with the minutes of this meeting.
Thank you, Marc. The final reports of the inspectors of election are hereby ordered to be filed with the minutes of this meeting. This concludes our 2011 annual meeting. Now I'd like to spend some time giving you an overview of where our company is today and where it's headed tomorrow. At the end of my remarks, I'll be delighted to take your questions and comments. The theme for our 2010 annual report was delivering today, investing for our future. In 2010, that's exactly what we did by delivering strong financial results. I want to give a big thank you to all of our employees for their hard work in 2010. So far, in 2011, we're building a strong foundation for another successful year. Thanks again to an outstanding employee performance.
Earlier this week, we announced solid results for first quarter of 2011, and we continue delivering strong competitive return to our investors. Excuse me. Yesterday, our closing price, I get choked up when I read this. Yesterday, our closing price reached a 52-week high of $18.85. The last time our stock closed at that level or higher was in May 2008. It's the start of the deep recession our country has faced. Our total shareholder return has outperformed the Philadelphia Utility Index over the past one, three, and five-year periods. For long-term earnings, we continue to target a compounded annual growth rate of 4%- 6% based on adjusted diluted earnings per share. In 2010, we continued to increase the quarterly dividend from $0.24- $0.2450 per share.
2010 was the 84th consecutive year Duke Energy has paid a quarterly dividend, and we anticipate continued growth in the dividend going forward. 2011 is off to a great start. This year's most significant event is our pending merger with Progress Energy. We're on the front end of a new round of consolidation in the electric utility industry. Our merger, announced in January, is targeted for year-end completion. The new Duke Energy will be the nation's largest utility, but being the nation's biggest utility is not our goal. Being the nation's best utility is our objective and our mission. Four indicators comprise that mission. First, delivering electricity that's affordable, reliable, and clean 24/7. Second, maintaining reasonable customer rates. Third, providing excellent customer service. Fourth, generating solid returns for our investors. We've already made most of the required regulatory filings for the merger.
Decisions by state and federal agencies are expected later this year. In addition, we look forward to hearing from you, our shareholders, through your votes on the merger. Later this year, both Duke and Progress will have separate shareholder meetings focused exclusively on the merger. At these meetings, we'll discuss the merger in greater detail and answer your questions on that topic. Another significant event this year is the Japanese nuclear plant incident. Now, while it doesn't directly involve Duke Energy, it is really critical to the development of nuclear worldwide. It's an event we're monitoring very closely. Nuclear energy is a key component of our company's long-term strategy, and that hasn't changed as a result of the accidents in Japan. Deeply embedded in the culture of our company is safety and continuous learning.
That's why nuclear is going to continue to be an important part of what we do. When the merger is completed, Duke Energy will operate 12 of America's 104 nuclear reactors. As a result of the Japanese accident, the U.S. Nuclear Regulatory Commission will conduct an industry-wide review to ensure U.S. nuclear plants continue to operate safely. Duke Energy and the entire U.S. nuclear industry will learn from the Japanese accidents and will make modifications at our plants if they're needed. One thing is certain: nuclear energy remains vital to the world's energy future. It is the only technology that's available today to generate carbon-free, reliable baseload electricity 24/7. Nuclear energy must remain a key part of our existing generation fleet. We remain firmly committed to building new nuclear reactors as well. We'll continue to move forward with a licensing process for our proposed Lee Nuclear Station in South Carolina.
The two-reactor station has a projected online date in the early 2020s. We'll continue to pursue joint nuclear partnerships with other entities to spread the cost of building the Lee plant and reduce the rate impact on our customers. Let me now turn to our $7 billion modernization strategy. We've talked about that strategy at this meeting for the last several years. Now it's coming to fruition. Our modernization strategy is the cornerstone of our long-term plans to provide reliable, affordable, clean electricity well into the future. Four new power plants currently under construction, two coal-fired plants, two natural gas-fired plants, represent the first stage of that strategy. I apologize for coughing. It's that time of the year when the pollution count's high, and breathing and talking is a challenge. All four plants are expected to come online by the end of next year.
Together, they'll generate some 2,700 MW of electricity and provide more than 400 well-paying permanent jobs. In addition, and this is a very important point during these troubled times, during their ongoing building phase, these plants have created nearly 6,500 construction jobs. Our modernization strategy, coupled with the additional $5 billion we spent retrofitting our existing coal plants during the past decade, puts us in an excellent long-term position. Thanks to these large-scale strategic investments, we're a step ahead of the new federal environmental regulations facing our industries. We've already taken steps to comply with many of these new rules by reducing our carbon footprints, as well as our nitrous oxide, sulfur dioxide, mercury, and fine particulate emissions. It's important to remember that building advanced power plants and improving the environmental performance of existing plants, thank you, doesn't come cheap. That's good. That's not vodka, by the way. That's water.
The U.S. electricity rates adjusted for inflation have remained flat for the past 50 years. Think about that. They've been flat for the past 50 years. During the next 20- 30 years, the real price of electricity will increase across this nation as our industry replaces aging infrastructure with new generating facilities, new distribution, new transmissions. Of course, if it's true for our industry, it's true for our companies that our prices are going to go up in the future. That's inevitable. The benefits of modernization are clear. All four of Duke Energy's new plants are highly advanced, state-of-the-art facilities designed to generate electricity as efficiently as we possibly can. Equally important, they represent large-scale innovation and increasingly cleaner energy technologies. Finally, they represent a major step forward in our quest to eventually operate an entire fleet of power plants that are both highly efficient and environmentally friendly.
Next, I want to discuss two issues that have been in the news lately. The first issue is the Democratic National Convention, which will be held in Charlotte in 2012. In early 2010, I was honored to be asked by Charlotte Mayor Anthony Foxx to co-chair the effort to recruit the convention to Charlotte. My willingness to co-chair this recruitment effort was rooted, deeply rooted in Duke Energy's traditional longstanding mission of promoting economic development and growth throughout our service territory in every way possible. Our company's business success is directly tied to the regions we serve. It's important to note that Charlotte's recruitment efforts have been a bipartisan effort. It has had bipartisan support. Every member of the Charlotte City Council, Republicans, and Democrats alike, endorsed the effort.
Two prominent Republicans with statewide name recognition also supported the bid and wrote an op-ed that was printed in the Charlotte Observer. It was co-authored by Governor Jim Martin, who I just introduced, and also by former Charlotte Mayor Richard Vinroot, who was a three-time Republican gubernatorial candidate in North Carolina. Charlotte's selection clearly elevates our city to a new level in terms of national and world stature. The economic and reputational significance of our city being chosen for this honor cannot be overstated. The convention will showcase Charlotte. It will showcase North Carolina to a national and international audience in the millions. The estimated economic benefit for our city is between $150 million and $200 million. Conservatively, we estimate the convention will bring at least 35,000 delegates, news media, elected officials, and other visitors to our city.
That's great news for local hotels, restaurants, and a wide variety of other businesses and their employees. Let me give you a comparison. The 2008 Democratic National Convention in Denver brought an estimated 50,000 visitors to that city, including 6,000 delegates, 18,000 national and international media, and 26,000 dignitaries, delegate family members, and other guests. The 2012 convention in Charlotte will generate a tremendous volume of national and international media exposure to help recruit, so important in these tough times, to help recruit new business, new jobs, and new residents to our community. Duke Energy's support for the convention is all about economic value and exposure for our region. Let me give you a little history. Duke Energy also actively supported an effort to bring the Republican National Convention to Charlotte in 2000. We didn't make the final four.
We will aggressively support any future effort to bring the Republican Convention or any other convention to Charlotte or other cities we serve, such as Indianapolis or Cincinnati. In short, recruiting big, prominent conventions just makes good economic sense. Let me now turn to the second issue I wanted to discuss before we get into the Q&A. I want to talk about mountaintop removal. That's the process of excavating mountaintops to extract coal for power plants and other industrial facilities. During the past few years, customers and shareholders have expressed deep concerns about this process. I want you to know that we've listened and we've taken action. Our new commitment is to buy as much non-mountaintop coal as possible without paying an additional premium for doing so. Whenever we can obtain non-mountaintop coal from our suppliers at a price equal to or less than mountaintop coal, we will.
Our new commitment represents an example of how we have balanced the need to provide affordable electricity and the competing need to reduce our environmental footprint. In summary, we had a great 2010, and 2011 is off to a strong start, as I said earlier. We've made significant progress in modernizing our fleet of power plants and reducing our environmental footprint. We've had some tough challenges in Indiana, but we've addressed them and we're moving forward. We've stayed on track and maintained a clear strategic direction. Now let me highlight what I believe is our greatest asset: our nearly 19,000 employees whose commitment and dedication keep the electricity flowing in the light zone 24/7, 365 days a year. Our employees are the key reason that we achieved some exceptional results in 2010. For example, we set an all-time record in nuclear capacity factor of 96%.
Another example, we operated our regulated fossil generation fleet with a commercial availability factor of 89%. We provided outstanding service reliability for our customers and achieved some of the highest customer service ratings among utilities in the Southeast. We're one of only 15 electric companies in the entire world that have been named to the Dow Jones Sustainability Index's World Index. Earlier this year, we honored 21 of our employees with the James V. Duke Awards for their exemplary service. Now, I'd like to show you a brief video about these outstanding employees. Could we run the video, please?
At Duke Energy, we value our employees. We celebrate and honor individual leadership and service through the James B. Duke Awards. In 2010, a total of five individuals and two teams were honored for their accomplishments. At the Jocassee Pumped- Storage Facility in South Carolina, 12 employees were awarded for their efforts. This team worked together to correct a problem that, if ignored, could have produced fatal results.
I looked down and checked all the units. I went in the wheel pit and heard the noise. It was a different noise that I had never heard. I get a hold of my tech support team, and I get a hold of my crew. We started investigating. We realized right quick that we couldn't let the unit run, so we took the unit out of service. It could have been minutes. It could have been hours. It would have flooded the power house.
They deserve this award because this was a significant event that was averted by the actions of that team that night.
Another award-winning Duke team dealt with a very different situation. In the Netta-Haylor region of North Carolina, employees worked for months to choose the best site for an electrical tie station. Everyone agreed until the Cherokee Indians determined the site was too close to its sacred mound.
This wasn't just the side of a mountain that happened to be next to any old Cherokee historical site. This was like putting something up next to the Statue of Liberty.
The Dune is the most sacred place in the Cherokee world. It was this place that the Creator brought us together and basically taught us to be Cherokee people.
Our team recognized very clearly that the decision that we would make for that situation was going to define who Duke Energy was. We could have just made it about a legal fight, but that wouldn't have been the smart thing to do. I don't think it would have been the right thing to do.
We all came together, came out with the solutions that resulted in us using the Flint County industrial plant site. The county is happy. We're happy. I believe the Cherokees are happy.
Award winner Stu Heichmann has successfully recruited new business for Duke Energy by creating a new data center corridor in North Carolina.
Once we landed Apple, the American Express and Facebook deals had no choice but to look in North Carolina after Apple put the stamp of approval on our state.
When I think about what Stu did with attracting these data centers, his tenacity with going out and talking specifically about why our region would be perfect for their business rang a lot of bells in the minds of the site selectors and the major companies.
Data centers are absolutely the ideal client for Duke Energy. Nothing but power usage going on 24/7. We are clearly focused on the industries that we think can be complementary to our five-state service footprint, and we intend to win.
Lee Taylor is Duke Energy's reliability expert. Through his award-winning leadership, power outages have been tremendously reduced.
He got our safety numbers down into an area that, to be honest with you, years and years ago when we started down this path, I don't think any of us thought was doable. Lee has been the one that's kind of driven us there. Without the work he's done, I don't think we'd be anywhere near where we are today.
The vision that we have of trying to reduce every single outage, stop every single one, we can continue to do and improve it. We really don't know where the lowest level actually is, but we are now in what my bosses call uncharted territory as far as lowering outages.
In Pennsylvania, James B. Duke winner Tim Ansel has a passion for making things better. For Duke Energy's combined cycle plants, he developed a better, standardized way to start up the power plants, saving money on fuel while reducing emissions and increasing safety.
We saved over $5 million on fuel purchases for startups, and those were savings that are sustainable. Going forward, it gave us an opportunity to compare startups at the three facilities. The improvement that we were able to make was incredible.
Tim is also making things better at home. He and his wife have adopted 11 children from around the globe.
When we try to give them a family of love, of caring, of respect, and something that they may not have had.
I don't know anybody that had stronger ethics, morals, and standards of value than Tim and myself.
Award winner Jenny Bulak works hard as a Production Manager at the East Bend Station in Kentucky. Five years ago, when her daughter was diagnosed with cystic fibrosis, Jenny began working to find a cure for this deadly disease. Today, Jenny is one of the best CF fundraisers in the nation.
Currently, the average life expectancy for CF patients is 37. I'm looking for a cure because there is not one, and she will die.
Jenny has been involved in so many different layers within our organization. Nationally, she comes highly recognized. She has been asked to attend our National Volunteer Leadership Council. She steps up wherever we need her. She's amazing. Because of people like her, but really because of how hard she works, I truly know that we will find a cure in her daughter's lifetime.
In Cincinnati, Mike Butler's goal is to make a difference in his job at Duke Energy and throughout his community. Last year, while traveling on a mission trip to Haiti, this James B. Duke winner found himself involved in a life-or-death situation.
We just heard this loud roar, like a scream of people raising their voices. As we turned to look, we saw that another Haitian tap-tap had hit a bump in the road, and several people were thrown off the back of that pickup truck.
I saw one girl literally fall back and land right here on her neck. I kept hearing them saying, "She's not moving. She's unconscious.
I was just praying because I didn't want this girl to die.
Mike made the decision to leave the group and take the unconscious woman to the hospital.
We got word that she had woken up. It was just an incredible experience to see her, to see her awake and to see that she was going to be okay.
What happened in Haiti is characteristic of what happens on a day-to-day basis here at Duke Energy. Mike is always doing the right thing, no matter what it is.
He's always volunteering to help people, and he doesn't even think twice about it. He's just like, "Yeah, I'll help.
We should be making a difference everywhere, not just in the workplace. Wherever we go as Duke employees, we should be making a difference.
We want to congratulate and thank all of our James B. Duke Award winners for their contributions to Duke Energy and the communities we serve.
We're pleased to have a few of the honorees with us today. Please stand as a group. We'd love to recognize you again. Please stand. We thank you, and we thank all of our employees for their service to Duke Energy. As the video so vividly demonstrates, our employees' dedication to their customers, to communities, and fellow citizens around the world is what sets Duke Energy apart from other companies in our industry and other companies around the world. Finally, let me express my appreciation to you, our committed shareholders, for your investments in Duke Energy. In 2011 and beyond, our company will continue to work hard to deliver the strong results you've come to expect year after year. Now, I'd be delighted to take any questions that y'all might have. We have standing microphones in each aisle for you to use.
I'm sure we have a lot of people who want to ask questions, so please limit your question or your comment to two minutes as a courtesy to others. Also, before you ask your question, please state your name, the name of any organization you may be representing, and the number of shares you own. If you're here representing another shareholder, please state that person's name and the number of shares owned. Thank you. Now, one of the things I'd like to do before I start answering the questions, and people are already in line, that's a good thing. Andrew, Andrew Behar, where are you? I remember from a conversation we had recently that today is a special day for you. Is it a special day?
I'm pretty weak at the same.
I just want to say, while your proposal got voted down, we appreciate your engagement. The truth of the matter is we learned a lot from it, and we're going to be better for it. It's informed us in terms of things we can do. I just want to wish you a happy birthday. All right. Would you like to go first?
My birthday is in three weeks.
Come on back, and we'll do a celebration.
I'm Denene Borelli, and I'm here representing National Center for Public Policy Research.
Yes, ma'am.
I am concerned as a shareholder that shareholder assets were used to possibly secure your next job in the Obama administration. There's a $10 million line of credit that was offered to the DNC that wasn't your personal money. You also support Obama's initiative to drive energy costs higher by promoting cap and trade. You're very open and vocal about that. Should you take such a position, would you be willing to agree to a callback position for your compensation for the year of 2011?
Good question. First, let me kind of address some of the assumptions embedded in your question before I answer it. First of all, I have been studying the science of climate change for over a decade. I testified in 2000 before Congress that I believe that climate change was an issue that needed to be addressed by Congress. I supported cap and trade long before President Obama even thought about running for president. The important point here is that I thought on the horizon, and I wanted to shape it in a way to minimize the cost impact on our consumers because we're so heavily dependent on coal. 70% of our electricity in our company comes from coal. Some people were talking about carbon taxes, and that would have put a huge burden in these tough times on our people.
In every testimony I had before Congress, and I did it many times, before and after President Obama was elected, in each of them, I said, "I'm here as a consumer advocate," which, by the way, I was in an earlier time as the Assistant Attorney General Consumer Advocate in my home state. I told them, "I'm here as a consumer advocate to protect our customers, to make sure you pass this law that's right." Earlier, your husband made the observation that the EPA is now being ordered by President Obama to.
They're regulating greenhouses.
To regulate greenhouses.
Right.
I would respectfully suggest that they're doing it because the Supreme Court of the U.S. ordered them to do that.
It is still under the Obama administration.
No.
They didn't get cap and trade passed in the Senate, so he's using the EPA really as a backdoor method.
The important point here is this: the Supreme Court acted, I believe, I have to go back and check the dates, even before President Obama was elected. It went to the EPA. The EPA has a statutory responsibility under the Clean Air Act to do it. It didn't matter who's the President of the United States. They have a responsibility to do it. Now, there's legislation in Congress that's trying to block what the EPA is doing. It may or may not get passed. It's pending in Congress. President Obama said this. Lisa Jackson, the head of the EPA, said this.
All independent analysts have said this, that if the EPA regulates it, and they've been ordered to do it by the Supreme Court of our country, then it's going to be far more expensive on people in our country than if Congress would have rolled up their sleeves and come up with a way to do this that would smooth the cost out impact on customers. My work on climate change is the recognition that it's going to be regulated and to make sure we can do it in the lowest cost way for our customers, recognizing our dependency. Now, your question is, if I get a job from the Obama administration, I can't afford the pay cut. I've got eight grandchildren, and I want to spend time with them, and I want to help educate them. The reality is, I'm not looking for a job.
I've got a job, and I'm happy with what I'm doing. If you want to promote me to the administration, you're happy to send them a letter.
Do you have no problem agreeing to a callback provision? Is that what you're saying?
Listen, I'm not going to agree to any kind of provision like that. I'm just saying to you in a very straightforward way that I'm not looking for a job, and that's not what this is all about. What this convention is all about, and I thought I articulated it, maybe not as clear as I should have, but this convention is about our city. It's about our state. This is the first time in the history of our city or our state that we have ever been chosen for a national convention, and we're the ninth largest state in the country. I'm proud of that.
Yeah, that's great. I just want to make sure this wasn't for a personal gain for you. That's why I asked you that question.
No personal gain.
The other thing is, any regulation on greenhouse gases is going to cause energy costs to go up. One of your biggest customers is the state of Indiana. 90% of their energy comes from coal. If you're going to raise energy costs through these bad policies, you know this is something that you're promoting. There are a lot of people online here. I don't want to take up a lot of your time, but that is my concern.
Thank you.
People on fixed incomes, and we're being squeezed now with higher energy costs. Pushing a policy such as that will make matters worse.
Thank you very much.
Thank you for your time.
One last thing as you walk away, and I thank you for everybody that's going to ask questions. We have a very tough job. We have to balance affordability with reliability and with clean. There are a lot of environmentalists that are outside and in here that say, "I need to look just through the clean lens to make every decision," forget affordability. There is a whole set of people that say, "I need to look at this just through the affordability lens and forget about clean. I just want the cheapest power I can get." That is not how it works. I have to balance all these. As y'all think about that, that is a tough assignment. I have to do this over 30- 40 years. Our friends in Washington, their time horizon can be defined as two, four, six, which is the term of office.
Thank you very much.
You can't grow an economy with high energy costs.
I understand.
You have 19,000 employees. They want to keep their jobs as well.
Thank you.
Thanks for your time.
Let me go over here. Maybe I'll have better luck.
Actually, you have it easy with me because I simply have a statement to read. My name is Mary Olson. I'm the Director of the Southeast Office of Nuclear Information and Resource Service. However, I'm here on behalf of one of my members and one of your major shareholders, at least. I don't actually know how many shares Peter Gill Wiley has, but this statement is from him. I have excerpted it in the interest of time, but I hope I can read the part that I have left. It says, "To Duke Energy CEO James Rogers, the Duke Energy Board of Directors, and the assembled Duke Energy shareholders at the meeting today. My name is Peter Gill Wiley. I am the great-grandson of Peter Gill Wiley, an original co-founder of Duke Power. Myself and Lake Wiley were named after my great-grandfather. I'll just note that it was a hydro company back then.
Nuclear power is the single most dangerous technology on Earth, as recent events have made obvious. Although Duke Energy does not own and operate any General Electric Mark I reactors like those in crisis in Japan, Duke owns and operates four Westinghouse ice condenser reactors, Catawba I and II, McGuire I and II, that are even more susceptible to hydrogen buildup and explosion than the Mark I design, three of which exploded at Fukushima in March. Such an event on Lake Wiley in the Catawba reactors would create an extensive nuclear desert. The U.S. Department of State told U.S. citizens in Japan to move 50 miles away from the Fukushima site. If such a radius were adopted for U.S. citizens at Lake Wiley, it would include most of metropolitan Charlotte.
Unfortunately, instead of moving for closure, Duke has already received a license extension to operate these reactors for 50% longer than the original design intentions and license permits. Time has proven that serious nuclear accidents do happen. The Chernobyl and Three Mile Island disasters were the result of human error. At Fukushima, catastrophic acts of nature caused the quadruple meltdown, which is still unresolved and will pollute the planet for years to come. Nature also caused the recent near-miss at the three Browns Ferry reactors in Alabama, where an emergency shutdown occurred when the power was knocked out by tornadoes. Luckily, the backup cooling generators were not destroyed by flooding as at Fukushima.
These events may all pale compared to what a malicious attack on a nuclear reactor could do." Any of these nuclear accidents could happen to Duke 's reactors and to the half a dozen more Duke aggressively seeks to build. Peter then talks extensively about safety culture and compares and contrasts U.S. corporate safety culture to the European Union situation, where there are much stronger labor unions that are actually represented on corporate boards of directors. He notes that countries like Germany have already decided to phase out nuclear very solidly by 2020, and Sweden and Italy are moving in the same direction. The world's insurance companies have recognized the extreme potential dangers and have wisely refused to insure nuclear fission.
Wall Street has also made it clear that it wisely will not invest in a new generation of nuclear power reactors, which leaves all the insurance cost and accident risk as a burden of the ratepayers who are our customers and taxpayers. I oppose Duke 's attempt to force ratepayers to finance new nuclear reactors and coal burning plants, including the Duke shareholders are not going to be risking our. Turning.
Carolina citizens should not be forced to pay for energy projects that mega-corporations are wise enough to avoid. Insurance and Wall Street players properly fear the incalculable expense associated with widespread radiation exposure, covering hundreds of square miles, such as happening in Japan now. He goes on to talk about radioactive waste challenges, the fact that there is no safe dose of radiation. I will just give a couple more little pieces here. About a quarter of Duke's tons of high-level waste is stored on the shores of beautiful Lake Wylie. The greatest danger that the world still faces from the Fukushima disaster is the molten radioactive waste coming into contact with groundwater.
Such an event could produce an enormous explosion under all six reactor units and seven fuel pools, releasing far more dangerous radioactivity than the Chernobyl accident and fire, which was catastrophic, that had no such huge explosion. We can only hope that someone figures out how to bring the increasingly perilous Fukushima situation under control. May I assume that Duke has loaned experts to the Japanese to assist in their ongoing crisis, that those experts will come home knowing better how to handle such a situation here? May I assume that Duke has an extensive evacuation plan and public health measures like iodine stockpiles in place in case it happens here? He goes on to call upon Duke , a leadership corporation, and he recommends two steps.
The first would be that Duke would stop supporting any federal subsidy for nuclear power and actually work to oppose that. Secondly, take a much greater investment into truly clean and green renewable non-nuclear energy sources that then would allow the shutdown first of the ICE condensers because they are the most dangerous reactors in the fleet of U.S. reactors. Secondly, then the phase-out of the other plants. He closes with, Duke needs to make a choice between moving toward a safe, green, non-nuclear energy future or backward to face not only bankruptcy but also the eventuality of inevitable creation of a vast Carolina nuclear wasteland like the endless tragedy in Fukushima. Thank you very much for your time and consideration. I'd like to hand to a Duke employee the unexcerpted version.
Perfect. I'll let you go on longer than two minutes because he was an employee of our company.
A founder of your company.
A great leader. Let me make just a few comments because I don't want to leave a misimpression for the rest of our shareholders here. 50% of the electricity in North Carolina to our customers comes from nuclear. Our rates in North Carolina and South Carolina are 30% - 35% below the national average. If you look at the entire nuclear industry in the United States over the last 40 years, there's been no fatalities at nuclear plants. They've been operated safely.
All teams in a heartbeat.
They've all operated safely. When you compare that to coal or natural gas and mining accidents, at the end of the day, what makes nuclear safe? It is safe. It's embedded in our culture. You should assure him that we continue to be safe operators. Thank you.
Thank you. The low cost, however, only lasts as long as the safety does.
Good point. I'm going to stay over here and then I'll come over there, if that's OK. Yes, sir.
Good morning, ladies and gentlemen, fellow shareholders, members of the Board of Directors of Duke Energy. I have one question. I know this pertains to the merger with Progress, but I would like you to take action before that happens as far as corporate governance goes. I would like to know whether you're going to appoint a non-executive Chairman of the Board of the new Duke Energy.
Under the terms of the merger agreement, I will become the Executive Chair for two years after the close of the merger, and then the board will make a decision in terms of how to go forward after that.
You haven't considered becoming non-executive or appointing a non-executive Chairman to the board?
We have a lead director, which basically serves the same function as an independent chair. Thank you.
Thank you.
Yes, sir.
Hi, I'm Mickey McCoy. I've got a proxy for Anna Prather. I would first like to congratulate you, sir, on your efforts on bringing a major convention here to the beautiful city of Charlotte. I'm not from here, but I know what it will mean, this economic development. I'm unfortunately from a land that is without economic development. To ask my question without a preface of explanation would be a violation of the spirit of conversation and downright unfair to those for whom I posed the question. Since I wish no accusation of either, I shall briefly set the stage for understanding with the help of, you know, I thought I'd never wear these. I used to make fun of people that wore them, but you know, I close.
Trust me, I'm in your camp.
OK. I've lived my entire life in Inez, Kentucky. It's a seat of Martin County, where nearly 30% of the total land area has been leveled by the ungodly practice of strip mining and mountaintop removal. My county sits smack dab in the middle of the Central Appalachians, across the Tug River from West Virginia, a state that also bears a lot of scars from the true costs of coal, the true costs. That word cost has been mentioned many times today. Now, the cost of mountaintop removal is apparent to one with half the understanding of the guns and butter supply and demand sort of business mind, which I don't really have that much of. You know, MTR, I know, is coal gotten by MTR is cheaper to extract than traditional underground mining of that resource.
It demands fewer employees and is policed sometimes with too many corrupt or overworked regulators from agencies whose job it is to regulate the industry. These agencies are understaffed. King Coal stacks their offices with an onslaught of attorneys whose job it is to tie up in court the appeal process to fight the violations cited on their job sites, while coal czars, you know, dance all the way to the bank. Energy companies, such as the one you preside over, you know, they salivate at obtaining mountaintop removal coal for a lower cost, increasing their profits, whilst also holding down consumer costs at the energy for their households. That word cost keeps coming up. Let's leave the business part of our minds for a moment and visit the human lobe to look at some of the true costs of coal.
Though King Coal shouts about giving us flat land for economic development, only 3%- 4% of the leveled land in our county is now being used for any purpose. After clear-cutting the land of all the trees and burying streams that have existed for thousands of years with the waste created by mountaintop removal, flooding has intensified in the region. Lastly, more important about the cost, heavy metals blown out of the earth to get the coal make their way to the valley water sources. As a result, one needs only to check the website of the Center for Disease Control and ponder why the Central Appalachians have one of the highest cancer death rates of all types of cancer per capita than anywhere in this nation. The demands for mountaintop removal coal by corporations such as Duke Energy is increasing the annihilation of an entire culture.
The human beings who live there, such as myself, my family, my friends, are seen as collateral damage. My question, sir, now that you understand some of the demands for mountaintop removal coal is causing the destruction of my homeland and bringing sickness and death of carcinogenic heavy metals from the carcinogenic heavy metals released from the bombing in this form of extracting coal, will you, as trustees of Duke Power, will you end any use of the coal extracted by means of mountaintop removal? Or will Duke Energy, sir, will Duke Energy continue to be an accomplice to the genocide that is taking place in my world?
That was a very elegant statement and question. I really appreciate it because I grew up in Kentucky also. I grew up in Boyle County.
Oh, yeah.
I understand mountaintop mining. One of the things that we've tried to do is move away from mountaintop mining. Our constraint is, if we went to higher cost coal in the Illinois Basin or other areas, it would increase prices. What we tried to do, as I explained earlier, is put in place a program that basically allows us to move away from mountaintop mining if we can deliver other coal here at the same price. If I was king of the world, yes, sir, I'd eliminate mountaintop mining altogether.
I vote for you as king of the world.
OK. I have to operate in a regime where the regulators want me to balance and make sure it's affordable. I push the regulators right to the edge, our company has, so we can increase the amount of coal we get from other sources other than mountaintop mining. We have more work to do in terms of educating them. What it does, again, it gets to this trade-off issue in terms of our consumers paying more.
Profits.
It’s not the profits. It’s really because when we buy coal, that cost flows through to the customers. We don’t mark it up or make anything on it. Thank you for your comment. Trust me, you have an ally with me in terms of trying to solve this problem.
OK. I was listening. Since you've got a relationship with the President, I think he's pretty cool myself. I think that you and I and he should sit down and have the second fair conference and talk energy. I tried once to help with some friends to deliver a letter to you, and it failed. By the way, your Charlotte Police Department is excellent people. They're very polite. I tried to deliver one to my buddy Obama, and the Park Police were very nice also. I appreciate talking to you. Sir, Godspeed on ending it all is what I want to see, all of it. Because when you talk about the balance, you're talking about cost to your customers and death. I mean, really.
I understand. Thank you, sir.
You're welcome. Thank you.
Thank you for coming down here. Welcome.
Thank you, and good morning.
Good morning.
I represent Dr. Doris Breckenridge. She owns 800 shares. My name is JD Doliner, and Dr. Breckenridge is my mama.
Good.
I really like your tie.
Thank you. That's the nicest thing anybody said to me today.
First, thank you for the great financial performance, really. We've been shareholders for a long time, and we appreciate the dividends. I respect your devotion to nuclear and your confidence in nuclear going forward. Can I just ask you to envision a future where the regulatory and the financial environment no longer favor nuclear? Have you done any scenario planning around ramping up your capacity with renewables, and can you share any of that with us?
We've run a lot of different scenarios. One of the really important statistics, actually, for our country is that 70% of the carbon-free electricity in the United States comes from nuclear. We're starting in 2019 in our country to start to retire nuclear plants. If we don't replace those plants, it's going to have a significant increase in the amount of carbon emitted in the generation of electricity in our country. We're going to have to retire and replace all our plants by 2050, except the hydro plants. Our focus is really looking at all these different scenarios because there is no way to generate electricity that doesn't have risk, pros, and cons. Let me just give you a quick example.
If you build a nuclear plant on a third of a square mile and produce 1,000 MW, you have to have 40 sq mi of solar to produce the same amount, and 200 sq mi of wind. If you're concerned about the land and energy sprawl, then it tilts your decision more toward nuclear. We've looked at, and we will continue to look at this in every way you can cut it. Job one for us, as I said, is affordable, reliable, clean, 24/7. There's a lot of trade-offs. This is a much longer conversation. I've been deeply engaged because with solar and wind, there's pluses and minuses, pluses and minuses with coal, pluses and minuses with nuclear. There's technological developments going on with each of them.
Part of it is a part of this important thing you do when you don't know what the future regulatory regime will be and when you don't know how the technology is going to unfold because there are some modular nuclear plants that are being developed that are significant, could be significantly safer even than the units we have today, or the new generation of nuclear. You have to really try to look at all this, balance all the issues, and at the end of the day, make the right decision. We today are at that place where we can do that planning because we know we have to retire and replace. I take your advice. I understand the different scenarios, and we will work hard on getting it right, both for the environment but also for the economy.
Thank you.
Thank you. I'm going to stay over here for one more because you like my tie.
I like it too.
Thank you.
Mr. Rogers, I'm Beth Henry. My friend Ann Wood's daughter gave me her proxy. I'm so nervous, I forgot her name. It's my friend Ann Wood who got her daughter's proxy because she wanted me to come speak.
OK, that's great.
The one thing I know is that old nuclear energy has been supposedly cheap, but the thing you haven't really talked about is how expensive new nuclear plants are. Moody's recently projected new nukes to cost $7,500 a kilowatt, almost two to four times what they were saying they'd be just a year or so ago. To me, if we build nuclear, we're wasting money that could be spent on the cheaper, faster solutions that are going down even while nuclear is going up, especially after Fukushima. It's only in the Southeast where utilities have captive customers that nuclear is even being proposed because free markets and Wall Street won't even consider it because it's so expensive. I think it's risky for Duke to, and you saw me, you and I both testified before the Utilities Commission. I studied all your testimony there.
I reproduced your pie chart that shows that for the year 2030, your portfolio in the Carolinas is going to be over half nuclear, which will be mostly expensive new nuclear, and only 3% renewables. I think everyone knows that renewables are inevitable. I think it's in Duke's best, we don't know what will happen with nuclear after Fukushima, but we know eventually renewables are going to take off. Shouldn't Duke invest in the inevitable? Why 3% in 2030 in renewables?
That's a very good question. Here's an important point. The nuclear is 51%, which is about what it is today because by 2030, we'll have not retired any of our nuclear plants. We will have retired our coal plants, if you look at the 29%, because today, 98% of our electricity in the Carolinas comes from coal and nuclear.
Yes.
We have a very large percentage of coal, so the coal will be a lot less. We will have increased the renewables. We still have the hydro. Look at the significance that we're putting on energy efficiency and demand side management. My point in combined cycle gas plants down here, as well as CTs, we're building two combined cycle plants. We're building a new advanced technology coal down here, as you know, at Cliffside. That's going to, it's 800 MW, allows us to shut down 1,000 MW. My only point on this is we've kept everything in the mix. At the end of the day, that is where we'll be in 2030. Now, about the renewables, we're investing in renewables. In the last three years, we've invested $1.7 billion and built 1,000 MW of wind in places where the wind blows: Colorado and Wyoming, some in Pennsylvania, Texas.
We've been selling them to utilities in that area. The wind doesn't blow here in North Carolina, except on the ridge lines. I don't think anybody wants us to build them there, or on the coast. I don't think anybody wants us to build them there. Some people have suggested to me we could build them around the statehouse in Raleigh, and we would generate a little electricity. The important part, even if you have strong wind blowing, the important thing is it's still intermittent. I take your point. We're focused on renewables. We were the only company, there's only one other company in the country that has actually done solar on the rooftop. We did it here in North Carolina, where we put 10 MW on the top of the houses and businesses here in the state. We're doing our best.
We're trying to make sure every technology cost is reduced because I'm very worried about what the cost impact is going to be in the next 20 years. Thank you very much.
Thank you. I'm more worried about your grandchildren and mine. You are going to be the biggest utility in the country. We need you to lead the way to truly clean, safe energy, Mr. Rogers.
Thank you. I take that mission. OK, let me wander over here. Yes, ma'am.
Mr. Rogers, I am also pleased to be here today, thanks to the shareholders named Robert and Linda Rodriguez in Raleigh. My name is Lib Hutchby. I live close to that downtown hot air situation, as well as within 50 mi of Sharon Harris, as you know. In my learning about water, I learned that Sharon Harris uses 2,000 gal of water a minute. Is that accurate, do you think?
I'm not sure if that's the exact number. We use in every nuclear plant, we cycle through, I mean, for our company, we use 4 trillion gal in all our systems, coal, gas. 98% of it is returned to the rivers, and we lose about 2% through evaporation.
I invite you to read this book by Maude Barlow called Blue Covenant. In chapter five, she says, "The three water crises: dwindling freshwater supplies, inequitable access to water, and the corporate control of water pose the greatest threat of our time to the planet and to our survival. Together with impending climate change from fossil fuel emissions, the water crisis imposes some life or death decisions on us all. Unless we collectively change our behavior, we are heading toward a world of deepening conflict and potential wars over the dwindling supplies of freshwater, between nations, between rich and poor, between the public and the private interest, between rural and urban populations, and between competing needs of the natural world and industrialized humans only." I appreciate very much your doing the mathematics for the 4 million gal.
I was just really amazed to think that each and every day we use that much water just to have lights and for me to enjoy being able to cook. That is on a residential, and I understand that residential is defined as a weak in the sense of economic growth at this point. It is more in the industrial area that there is growth. I would point out then and ask you to speak more to the efficiency. How can we be more efficient in our use? I'm already hanging out my clothes as a way to save some energy and help my neighbors. What do you suggest, sir?
I think our company is very committed to helping our customers use energy more efficiently. We see an opportunity for productivity gains in the use of electricity by residential customers specifically, as well as industrial customers. We have programs in North Carolina. We're trying to develop programs in every state we operate so we can invest money in them. As I've said before, if I have $10 billion to spend, if I can get returns on that investment, rather than spend $10 billion on a nuclear plant, I'd rather spend the $10 billion on energy efficiency if I can earn the same return on it. We're trying to get the regulatory rules right so we can help. The last comment I'll make about your astute observation on the water: in the 20th century, water is going to be the new oil.
Water tables are down all over the industrial Western world and in other parts of the world, uniquely local issues. I think it will be one of the greatest challenges that we face in this century. Thank you very much.
Sir, if I may, I would like to actually give you this book. I've treasured this book.
You tell me what it is, and I'll buy it.
It's marked up.
No, tell me what it is, and I'll buy it.
Blue Covenant by Maud Barlow.
Who?
She is a Canadian who has authority.
OK.
I appreciate it, sir.
I'll do it. May I? Are you taking that down?
I do.
I'm glad she's here.
It is a very true concern. Half of North Carolina, according to yesterday's drought monitor, is in a drought.
I understand.
The majority of South Carolina is in a drought. That's where you want to build a nuclear power plant. The drought issue and the water issue are most delicate when it comes to water, as we know from the Japanese.
Thank you so much. We'll be focused on it. Yes, sir.
Good morning, Mr. Rogers.
Good morning, sir.
It's good to see you again. My name is Gus Presley. I am here as proxy for the McNeil Trust, and they hold about 2,900 shares. I say good to see you again because I had an opportunity to hear you address some of the same issues a few years back at Wake Forest University. You seem to me to be the kind of man who can lead a revolution. I'll use that word just a few times today. On the other hand, what I think I heard you describe and what I saw on the pie chart was a stool on two legs, nuclear and coal. One of those legs, you yourself admit, is being cut off: coal. Stools do not stand on one leg. A little background. I'm a retired property manager.
I worked for a company that owned and operated about 15 million sq ft of commercial properties. One of those properties had a peak load of 80 MW. I was responsible for that property for eight years. We had to be in business 24 hours a day, seven days a week. I know and I feel what you feel about the responsibility of having those lights on, those computers running, and air conditioning running every day of the year. For three decades, I personally participated in efforts to reduce demand. We didn't produce power, a little bit when we could, but to reduce demand. We tried everything. We were professionals. I was fortunate to work with strong individuals, well-educated, trained. We did education, such as you're going to do up in Charlotte here, user education. You'll get a little bit out of that. We added insulation.
We put in more efficient HVAC equipment. We replaced the lighting. We replaced some windows. We did load shedding. We tried everything, and all we achieved for those 30 years was basically to keep the demand flat. Now, in North Carolina, we're looking at major growth in our economy.
We hope.
We're looking at major growth in our economy, residential. I know that part of it because this is a wonderful state to live in. I fear that with only one leg to stand on with this stool, Duke will be at risk of not being able to meet customer demand during my grandchildren's lifetime and early on in that lifetime. This will surely have a chilling effect on commercial development and job creation. We haven't heard much about this today. I know that Duke Energy is offering free compact fluorescents. You're doing the Envision Charlotte program and other programs for weatherization, etc. It seems to me, isn't this too little, too late? The problems with traditional energy generation are all too clear. We've heard a little bit about that this morning. We're going to hear more, I'm sure.
Coal is dangerous to mine, expensive to transport, and dirty to burn. The waste ash is also becoming a concern for regulators and citizens and a major liability for us as shareholders. That's to be taken seriously. I know you do. Nuclear, we've heard a lot about nuclear, but I think two pieces might have been missed so far. We don't know what the cost is going to be to retire those plants. You may think you know, but until you and other utilities really try to decommission a nuclear plant, we don't know what that cost is going to be. I'll bet it's going to be a lot of money. The long-term cost of storage. What's the real net present value for my grandchildren and future generations on the storage of the waste fuel? Haven't heard about that yet. It's not factored into the cost equations.
Wouldn't it be prudent for Duke to adopt very aggressive alternative energy strategies, much more than 2%- 4%? Offshore wind has been proven reliable, cost-effective, and efficient, and acceptable to the public throughout Europe and Asia. Why not here? I don't believe that the people on the coast will be against it. Onshore wind has been proven reliable, cost-effective, and acceptable to the public out west. Why not here? Fortunately, we will see a few thousand megawatts onshore soon here, but not soon enough. North Carolina ranks 10th in the nation in terms of the percentage of electricity produced by solar, only 10th. Why are we not supporting policies like net metering and other policies to get us at least to the top fifth, where we really belong?
Obviously, more and more people are becoming concerned about the protection of the environment from harmful fossil fuels, nuclear waste, future accidents, and paying the cost of past accidents, climate change, the devastating effects that extreme weather will have on our day. In closing, I'd like to ask you, do you see a day when you can be a revolutionary and lead all of us, lead the board, lead the company? Do you see a day when we will be, when Duke Energy is recognized as the national leader in energy conservation and alternative energy production? In the long run, isn't such a strategy required to assure that our energy demands are met in a safe, reliable, and cost-effective manner? The risks to the company and the shareholders to ignore this are really too great.
I take your point. I take your challenge. I just want to let you know that we're an all-of-the-above company. We're not ruling out any source because of the future technology. Given the business you're in, just to highlight it, you mentioned that Envision Charlotte is really a tremendous effort where we're committed in five years, with 15 million square feet in downtown Charlotte, to reduce the total usage 20%. That will be a breakthrough. It will be the first city in the country that's been able to do that if we can achieve it. We are happening to be at a point in time where the technologies are coming together with the right kind of regulatory rules. We're going to be able to make investments that could fundamentally change people's use of electricity. We will take that challenge and make it happen. Thank you very much.
OK, thank you. I'd just like to close by saying really, thank you. Please consider trying to do three cities at once, for example, instead of one. Everything you're doing in those alternatives, demand reduction and alternatives, do it three times at once instead of one at a time.
Thank you.
Thank you.
I think you're saying I need a greater sense of urgency.
Yes, sir.
Thank you. Now, take your question, please.
Thank you. I'm Patricia Moore. I'm 72 years old. I've lived in Charlotte all my life. My husband and I raised four children here and are the proud grandparents of seven. I am, to use the quaint term, a homemaker. My family, my garden, my friends, my community are very important to me. Guess what? I'm now an activist. Two years ago.
Congratulations.
I think you've been an activist for a long time to raise that family.
We all do what we can. Two years ago, I made a public speech, the first of my life, to ask Duke Energy to stop the practice of mountaintop removal coal mining, which is literally, as Mickey so eloquently described, killing people in the mountains. Your answer? I was handcuffed, arrested, put in the wagon, and taken to jail. I'm back here today with a few questions for you.
We won't be handcuffing you or taking you to jail.
Thank you. You stated this morning that Duke Energy is planning to phase out mountaintop removal coal mining. Am I correct that the coal is a dollar cheaper? The mountaintop removal coal mining is a dollar cheaper than regular coal? If so, is that considered to be reason enough?
I'm not sure. I can't remember.
You're not sure?
I can't remember the exact dollar difference between coal from mountaintop removal versus other coal. Remember, 70% of our electricity comes from coal. The majority of our coal is really vaulted in the Illinois Basin, and it doesn't come from mountaintop removal. It's only here in the Carolinas where we buy from the Central, that we take coal from mountaintop.
I would appreciate your knowing next year if I come back what the difference is, and if it's more than $1.
Oh, I know it's more than $1, but I don't know the exact number. I'm sorry.
Thank you. This is to add to the other question about the 3% renewables by 2030. Is that true? By 2030, you plan to have 3% of our energy delivered by renewables?
Again, recognizing that you know, you get solar power when the sun shines. You get wind power when the wind blows. People demand electricity 24/7. We're leading the country in trying to integrate solar energy into our system. We've invested over $42 million to put 10 megawatts in, and we're learning how to use it. You can't snap your fingers and do all this stuff overnight. We're probably one of the leading companies in the country in experimenting with energy efficiency and with investments in solar, both in our regulated business as well as our commercial business.
Thank you. It is my understanding that cold and cloudy Germany is way ahead of us. I think we can learn from them.
Thank you so much. Let me ask you to do one other thing because I think you've asked me more than several questions, which I appreciate.
Please. OK.
Because there's only one. You ought to study Germany because the story isn't a happy story. Their cost per kilowatt is almost $0.40. They've built so much wind that they're having to shut down their coal and nuclear, their cheapest sources of power at night. Cycling down a nuclear plant is not a good answer. I would ask you to really study Germany because a lot of people use it as an example in the U.S. Actually, it's a very bad example for a country that became overdependent on both solar and wind and are actually now reducing the subsidies because of the operational problems.
Yeah, I would be OK with closing down the coal and nuclear.
OK.
Thank you.
Thank you.
Thank you.
I'm going to move over here. Yes, sir.
Yes. Good morning, Mr. Rogers. My name is Bill Gupton. I'm a shareholder. It was referenced earlier in your report to the North Carolina Utilities Commission, the Hagar exhibit that projected your energy capacity mix. I want to point out a couple of things on that. The first is when you are projecting a 3% renewable capacity, I mean, that includes everything that falls under the broad category of renewables, such as solar, wind, biomass, and other forms of energy. It seems like that is a very small percentage as compared to an almost 30% continued reliance on coal during that time.
Yeah, I think those numbers, if I remember correct, are not capacity, but actually kilowatt hours. The reason the renewables are smaller, I think, is just because it's intermittent power. I think that's right.
I'll give you a copy.
I'll have to say that it is capacity.
That's from the utility.
Yeah, the one is one's capacity, the other's energy.
Energy mix, yes. One is 2%. The other is 3% in 2030.
Another good reason she's here.
Yes.
You're correct. On capacity, it's 2%. On renewables for energy, it's roughly 3%.
Roughly 3%, with coal still dropping from around 35% to about 30% in 2030. 29%, I think, is your latest number.
That's energy.
Yeah.
Not capacity.
Yeah. I think there's some new information that's emerging about the wind potential, especially along the Atlantic coast. The National Renewable Energy Laboratory has reported that the offshore wind potential of North Carolina is far and away greater than any other state on the Atlantic seaboard. In fact, the U.S. Department of Energy estimates that there's the potential of North Carolina by 2030 to produce and install 10 gigawatts of offshore potential. Europe has moved into this area since 1991. They are projecting 150 gigawatts by 2030. I really think that this is an area that Duke Energy needs to pursue more aggressively and really take a hard look at. The devastation of the economy in the eastern part of North Carolina by developing that offshore area, I think, that would produce a significant number of jobs and also be a very cost-effective investment for shareholders.
The other area I want to bring to your attention is that I believe that Duke Energy owes it to its shareholders to make sure that, as you've said, that we're pursuing the cleanest, most reliable, most economical energy sources. I hope that that is taking a hard look at avoiding continuing a carbon-based source. One of my concerns is the use of woody biomass, the burning of old trees, as a source of energy. The general description of biomass often includes things like municipal solid waste, construction and demolition waste, and industrial waste. Here in Mecklenburg County, there's a plan, and I believe that Duke Energy is in negotiation. It's been reported discussions to purchase the energy and the renewable energy credits for the Reventure Gasification Incinerator. That incinerator is planned to be built within a mile of an elementary school.
I really think that Duke Energy owes it to its shareholders and to the community to take a look at that and see if that's the type of business model that you want to continue. My question for you today is, would you have someone consider to look into this new data regarding the potential for offshore wind and look into this business purchase regarding Reventure Gasification Incinerator?
I'll do that. Let you know, we looked at a project on offshore, and we tried to pursue it. We got a lot of pushback from the Army Corps of Engineers. At the end of the day, we were working hard with the North Carolina legislature to make this project work. The decision was made not to pursue it because of the cost structure and the long lead times associated with getting approval to build it. Again, we will continue to look at it. Thank you so much.
We would love to work with you on that. Thank you.
OK, thank you. Let me remind everybody, I should have done it earlier. We got two minutes, and I have a clock up here for y'all to talk. Please do your best to stay within it.
OK, I think it's probably afternoon now. Good afternoon.
It is afternoon, 12:01 P.M.
Good morning, my name is Ula Reeves. I'm with the Southern Alliance for Clean Energy, and we are shareholders. We have been for many years. I apologize, I don't have that number with me. I appreciate this opportunity to share our thoughts with the board of directors. As investors in this company, we're particularly interested in the enormous potential benefits, as other folks have mentioned, from the increased investments and lower risk energy options. I was a bit disappointed to see that energy efficiency wasn't more emphasized in your highlights of the company's achievements. We feel that with the creation of Save-A-Lot in 2009, the company moved into a regional leadership position on energy efficiency programs. There continue to be huge untapped opportunities there that would really increase shareholder value, help customers save money and energy, satisfy energy demand without further contribution to environmental pollution problems, and higher risk investments.
In the initial two years of Save-A-Lot, from June 2009 to December 2010, the company saved 625 gigawatt hours of electricity and 735 megawatts of capacity. In 2010, these savings are more than 1% of retail sales. You mentioned to somebody earlier that if you can get a good return, then it's a good investment. Duke has already guaranteed a 15% return on allowed profit. We feel, as the company seeks approval of a merger with Progress Energy, that there's an important culture of success here on efficiency that needs to be shared, adopted, and significantly increased. A bigger energy efficiency program, by Duke's own analysis, holds the promise of being the least cost option to meet energy needs throughout the expanded territory that the merger would provide for.
Even if the efficiency program costs were to double or triple, they would still cost less and be more effective at mitigating the impact of fuel price variability or higher CO2 prices than other fossil fuel-based or peak load power sources. Duke has not really offered a clear explanation as to why the obstacles to aggressively developing demand side resources are greater than the development of supply side resources, such as nuclear power. As other folks have mentioned, in the wake of Fukushima, we know that there are huge potential cost increases that we could be facing here for both new and old facilities. Both nuclear and demand side management have relatively low annual expenses compared to fossil fuel generation, which makes them both vulnerable to construction or capital cost increases. Even a substantial capital cost increase in energy efficiency is dramatically less costly than the equivalent nuclear.
The large investments in energy efficiency really are less sensitive to price volatility. Decreasing the company's susceptibility to price volatility means increasing the attractiveness of investing in the company and increases the competitive opportunities for the company. The question that we pose is, you know, given all things being equal that I've just laid out, which option gives customers and investors really the assurance that future price risks are being mitigated and help attract economic development?
You know, I share your aspiration with respect to energy efficiency. We view energy efficiency as the first option. The most environmentally benign power plant you can build is the one you don't build. We have led the way in the country at trying to get the right regulatory regime in place to compensate us properly. We're trying to deploy new technologies that are going to fundamentally transform the use of electricity and create significant productivity gains in the use of electricity. We're with you. Our biggest impediment has generally been two things. One is getting the regulators to get it structured in a way that makes us economically indifferent as to whether we build a nuclear plant or we invest in energy efficiency. That is our challenge. Not every state is bought into that, I might add. I understand your message. Thank you for being here.
Your aspiration is mine.
I hope so. I hope to see you show it off more next year for other folks and help progress along the lines as you guys look to couples.
Thank you. Are you suggesting they need help? Yes, ma'am, please.
OK. I'm Sally Neidel, biologist and an author, and a confirmed customer of Duke Energy. I'm here by proxy for my brother, Jim Stenhouse, who's a shareholder. I had a question about water use and just a couple of remarks to make to you and to the shareholders about that leading up to my question. I'm concerned in particular about the consumption of the water by the proposed nuclear units on the Broad River. Duke Energy and its shareholders, I think, face serious financial and public relations risks from the use of so much water. Already, North Carolina's public electric production sector has one of the largest rates of water withdrawals in the nation, over 9 billion gallons every day, about 80% of our state's total water withdrawal. I understand that the Broad River units will consume 35 to 40 million gallons per day by evaporative loss.
I think right now, most of the public is unaware of how much nuclear plants impact our state's water in terms of the evaporative loss, in terms of loss of aquatic habitat, and releases of radioactivity. As you said, water is the new oil because of growing water shortages due to population growth and climate change. I think soon the people in our state will find even the current losses of water and habitat to nuclear plants unacceptable, which I think will be a public relations risk. In addition to that, 70% of biologists think that we're in the midst of a mass extinction. The loss of aquatic habitat, I think, will also become more objectionable to the public as we go along. Another looming risk to Duke Energy from the Broad River plants is reliability.
We're likely to experience extended periods of drought and periods when water is too warm to cool the plants. This happened here two summers ago, and it's happened in France to several plants. We're wondering how will North Carolina consumers have to choose between electricity and water as water sources wane, or having to pay for plants that are sitting idle. The increasing water shortage also poses a high financial risk to Duke Energy because nuclear plants usually stay online long enough to pay for the high construction costs. We're wondering if the Broad River really has enough water to keep those plants supplied with enough water for cooling. That's one of my questions. Does the Broad River, will it be able to keep those plants operable?
That's a very good question. We're doing a lot of work with respect to our Cherokee County plant. I think we recognize that we need to, and we're working on in some detail, trying to create the ability to make it work. We're looking at creating a reservoir so we have the capability to use the water, get the cooling right, and to deal with it in an appropriate way. At the end of the day, we still have to get permits with respect to water usage and all. We're in that process, and we're doing our very best to do it in a way that makes sense. Thank you very much.
OK. I did have another question about efficiency too, but I think that's already been addressed.
Thank you.
Thank you.
I'll come back, John, to you, please.
Good morning. I am the Reverend Robin Tanner. I serve as the Minister of the Piedmont Unitarian Universalist Church. I am here by proxy on behalf of Nancy Pearson. I promise to be succinct, sir. Despite popular belief, they do teach us brevity in seminary.
I want to go to your church.
We can arrange that later. As a clergyperson, I believe we are called to protect and speak for all the members in our community, particularly those so often without a voice. The proposed Lee Nuclear Station is a risky business endeavor that places our community in jeopardy. It most benefits large business while placing the burden upon those already living on the margins of society. Given that the projected cost of the station will likely exceed $10 billion and not provide services until 2021, the economic risk of the station falls not only upon Duke Energy, but upon those living in poverty and on fixed incomes, as well as the elderly and the working poor who will face annual rate hikes impacting their bills. As Jesus said, the poor will always be among you.
Surely, they will continue to be if our decisions are motivated by financial consideration without taking into account the moral and ethical implications upon our community. Duke Energy has been an integral part of the Charlotte community and should choose a conscientious approach that recognizes those voices not here in this room, the voices of the working poor, the struggling Charlottes, and the underemployed faithful North Carolinians. Duke's commitment is to all its customers, for the poor will always be with us. We've been here before, sir. The Cherokee Nuclear Power Plant stands as a reminder of the risk before us. It is an injustice to ask those in our community barely scraping the barrel to shoulder this burden through rate hikes covering risky investments. There are other options, including renewable energy, that would create jobs here in North Carolina. Mr.
Rogers, why in the face of looming economic struggles across our country are we risking the welfare of those most vulnerable in our city and state?
That's a very eloquent statement and question. Today, our rates in North Carolina are about 30% to 35% cheaper than the national rates. Part of the reason that they're cheaper is those who came before us made the tough decisions in the 1960s, 1970s, and 1980s to build nuclear plants then. While the prices went up in the 1970s and 1980s, they subsequently came down. Today, we are benefiting from the tough decisions that were made by those who came before us. You have to look at this over a 50-year period. My view is that we're very concerned. One of the reasons that our rates are so low, that's a benefit to the poor or the underemployed in our community. We also have a number of programs we do to address those. We're very mindful of those on fixed income, low income, underemployed in terms of the operation.
That's why our rates are so low. This is a decision that looks out over 50 years and says, what will the impact be 50 years from now? At the end of the day, our economy is so dependent on electricity. Within the average home, there are 25 appliances. Think about what life would be without it. Today, there are 1.6 billion people in the world who have no access to electricity. We're blessed in this country to have access to electricity at such low prices. Our challenge is to make sure, going forward, we're able to continue to provide low-cost electricity for those in our communities. Thank you for your comments.
Thank you.
Yes, Rogers. My name is Phil Brown. I was originally a shareholder of the Synergy IPO. I was telling you this, I think, before the meeting. We made the trip down from Ohio to see Charlotte. I just had a quick comment and a question.
Welcome.
As you did, yeah.
Welcome to Charlotte.
Yeah.
A little more pollution in the air here, not pollution, but pollen.
Yeah.
Less pollution because we use 50% nuclear.
My comment was, I have to tell you, I was appalled at the black eye that Duke got in November with the Indiana utility operation. I'm not going to go into that any further. My real question, though, was, as you mentioned in the annual report on A Path in Ohio, page 8, I'd like to get an update on what's happening on that because, as you know, Dayton Power & Light was just bought out. There's an opportunity there, it seems to me, for the expansion over and above the CG&E area for potentially more customers for Duke.
I think an important thing, you know, we have a hybrid system in Ohio. We're in the process of negotiating a new contract with the state regulatory commission and all our customers. We have created a separate company that goes out and tries to capture new customers, not just in our area, but in some of the surrounding areas. We're very focused on that. We're very focused on getting the rules right because at the moment in Ohio, the rules are not fair. At the end of the day, it's going to undermine the economic viability of the state as it will increasingly become an importer of power and lose the benefits of building new plants, creating jobs, and a tax base for the state. I understand the problems in the state. I understand our need to step out and pick up other customers that we've lost through switching.
We're prepared to do that. Now, I could read into your question that we should next acquire AP because they're a little north of us.
I didn't mean that.
OK.
I know what you're saying, yeah.
Thank you very much. Thanks for coming down from Cincinnati. I was just up there last week at the Freedom Center. I saw the double rainbow. I had not seen a double rainbow in a long time. Yes, ma'am.
Mr. Rogers, I think you must be a wonderful grandfather because you are so patient. I have two grandchildren, so I know.
I have eight grandchildren.
My name is Susan Corbett. I am the Chair of the South Carolina Sierra Club. I'm here by proxy. They actually took my proxy letter when I went to registration. If you need the name, I'll be happy to get it and give it to you.
Not to worry.
I want to try and touch on some things that haven't been brought up. I know we were short on time. I want to talk a little bit about stockholders. I have some words of caution. I think that when we saw what happened to TEPCO, TEPCO was the largest utility in the world. It is the largest utility in the world. They watched, and everybody that had any kind of portfolio had TEPCO stock. We have seen what's happened there. We have watched a major utility go pretty much bottom up. Yesterday in The Wall Street Journal, you probably saw the two articles.
One of them is called "Too Big to Fail Moves to Japan." Another one was talking about what's going to happen to TEPCO in all of this disaster because basically what happened in a matter of minutes, really, a profitable investment went to a now up to $49 billion liability. There are all kinds of discussions about how they're going to reconcile. There are talks of nationalizing the company, loans, and propping up taxpayer money. I think that this is a caution to stockholders who invest in nuclear stocks. I mean, it's one of the only—I like to consider—I call nuclear an extreme technology. It's extremely safe until it isn't. Then it's extremely expensive and extremely disastrous. It's like a moonshot. You just hope and pray that it's going to go along. It's the only technology I can think of going from being an investment to a liability.
I'm worried that with the merger of Duke Energy and Progress Energy, we're not approaching another too big to fail kind of scenario here. I think that that's something we should think about and worry about. Also, I hope that you're aware that with the acquisition of Progress Energy—and I have the NRC report with me—you now own four of the six lowest safety rating reactors in the country, according to the NRC, with Oconee and H.B. Robinson. They're both on the lowest safety tier. They've had the most infractions, technical and managerial infractions. They're a little bit of a concern. Scientific studies show that nuclear safety is, if you graph it on a curve, it's like a bathtub curve. The times when it's most risky is at the very beginning of the reactor life.
They go along pretty fine most of the time until the very end, and then they start aging. With new reactors and those old ones, you're going to have both extremes of the high-risk nuclear life cycle. I'm also concerned about QUIP. We allowed our legislature to push through a QUIP law in South Carolina in 2008 to pay for V.C. Summer. We have had three rate hikes in three years to pay for that.
You should move over to Duke territory.
My grandchildren are in Durham, so I'm actually thinking about it. You know, QUIP is, you know, if you could give the money back if you default, that might be something worth considering. You know that's not going to happen. Also, I don't think that rate payers know that you're going to actually sell off about 20% of this to Jacksonville, right? The rate payers are going to bear the construction work in progress upfront, but Jacksonville is not. They'll be the beneficiary of the end product of that. I'm also concerned about this AP1000 Westinghouse design. I know that you know about this. Actually, 11,500 individuals have signed on the petition to slow down this approval because there are a lot of questions about the robustness of the containment.
I know that you know that one of the designs to save money is they're going to stick more spent fuel in the field. It's a denser spent fuel pool. That's one of the major problems of Fukushima. Those
are big questions, and we feel like they're rushing forward. You talked earlier about this philosophy of continuous learning in the industry, and we think that's laudable. Every time there is an accident, there should be this continuous learning. We feel like now with Fukushima, which is arguably the largest commercial disaster in the nuclear industry, there should be a really good period of examining what's going on there and looking at existing reactors and looking at this AP1000 design, which has got some internal and external people questioning the design. Finally, I want to talk about your energy efficiency. I think I'm proud to say I think Spherical blew ahead of you. We had our booths like you had up front with your little box that had the light bulbs in it, but you don't have an LED light out there.
If you watch the little meter going around with your incandescent versus your CFL, if you put an LED bulb in there, it doesn't move. LEDs are really the thing of the future, and we should be going that way. I think that the thing that you're going to have to, we're going to have to say it, America is addicted to cheap energy in the same way that we are addicted to cheap oil, and it's coming to an end. We're all going to have to pay more. If we don't want to pay more, then we're going to have to conserve, and we're going to have to be efficient and learn those practices that our grandparents knew: to waste not, want not. We've gotten away from that. Finally, I can't leave without just mentioning this pesky issue of nuclear waste.
You know, Yucca Mountain is not going to open because it did not meet the geologic criteria for long-term storage of nuclear waste. There is a very nice granite formation outside of Asheville called Sandy Mush, and I want the people of North Carolina to know that that is on the DOE list for a possible site for long-term repository of spent fuel. The more nuclear waste you make here, you may end up keeping it.
Thank you very much for your comment. Thank you for being here. I would make one observation: we are pausing with 104 nuclear units in this country and taking a look at the operation. We're looking at auxiliary power. We're looking at whether or not we ought to accelerate the movement of spent fuel from the pools into the dry gas storage. We're looking at whether there are seismic issues that we need to address in three or four other areas. I think that as a consequence of what happened in Japan, we'll be even better now.
You said yesterday in your article that it's going to raise costs, though. Every time you increase safety, it adds to the price, right?
It does. I mean, that's kind of life. The AP1000, I learned just the other day from Dhiaa, has just been approved. He's Dhiaa Jamil, the head of our nuclear operation. The NRC has taken a look at it, reviewed it completely, and found it to be an acceptable technology to be used in the U.S. Today in China, four AP1000s are being built. Today around the world, 61 nuclear reactors are being built, and none are being built in the U.S. Thank you very much. I'm not letting anybody else get in this line.
I sat down. I really admire your stamina. My name is Carol Cottrell, and I'm a shareholder. I've had the opportunity in the past to work in a manufacturing operation that had a cogeneration plant that was beneficial to the community and to the company. After I retired, I was elected to a community-owned utility district, Sacramento Municipal Utility District, or SMUD, and so I'm fairly familiar with the electrical business. A couple of comments. First, I'm really impressed with the diversity of energy sources that you have and the way you're looking at the future. So much so that I bought some of your stock.
I'm more. The yield was 5.8%.
I checked that yesterday, by the way. I didn't do it this morning before I came. The couple of things that haven't been talked about to my satisfaction are maybe old hats for many people, but one is cogeneration and how you are aggressively seeking that to increase the number of employers who can benefit and bring jobs to the community. Secondly, how you look at natural gas as a long-term source. I've been, for years with SMUD Board, disappointed at the lack of recognition of the availability of natural gas and the long-term cost protection that I think it provides, and I didn't see much emphasis on that area with your discussions.
I think natural gas to me, I guess I've experienced, I've been involved in natural gas for all my career. I remember in the 1970s sitting in curtailment proceedings where they were saying we should give gas to this person or, but not to this industry. I sat in a period where it was against the law from 1978 to 1985 to burn natural gas to generate electricity. In the last 10 years, the price of natural gas has been above $10 four times. It's been incredibly volatile. The shale gas, I'm not sure it's real or a mirage. There are huge environmental issues associated with it.
I'm very careful not to get hooked on any single thing because, you know, who would have guessed we'd have in 2007 when EIA said there were zero shale gas, and then all of a sudden it was 600 TCF, and then it was 800 TCF. It almost seems too good to be true that they could find so much so fast. My only caution is, and we've been very careful and conservative with respect to natural gas, the jury's out. The EPA is studying it. I just read the other day in New York, they stopped the shale gas drilling because of the risk to the water supply. As we've talked about all these different ways to produce electricity, they all have risks, they all have rewards, and I appreciate the good work you do with SMUD because they're really a leader.
They used to have a bill, and I'll share this with you, and we've run so far over time, it doesn't matter now. They used to put on their bill, if your energy was less than your neighbor, they put a smiley face. If your energy was higher than a comparable neighbor, they put a frowning face. The customers got so upset that they demanded that SMUD take those off the bill. It did change their behavior.
SMUD is nationally and internationally recognized for doing things to reduce the impact on the community. We did look at Duke Energy in the past to find and learn things.
Thank you. Okay, John, go to work on me.
Okay, Mr. Chairman, I'm here from Southwestern Indiana, which is in the center, Evansville, Indiana, which isn't part of the Duke Energy service territory, but which is in the center of the largest concentration of coal-fired capacity, at least in North America, if not in the world. As a result, our people are sick. They're sick regularly. They have things, in fact, I thought it was interesting that you mentioned a while ago that, let me get this quote exact, at the time of year when the pollution count is high, breathing and talking is a challenge. It's that way every day.
Pollen count.
It's not pollen count in Southwest Indiana. It's fine particles. It's everything else that's connected with the burning of coal and the mining of coal. One of the plants that's in my area is Gibson, which at one time was the largest plant in North America. It became the third largest plant in North America, and now I understand the Bowen plant in Georgia is actually larger, so it's only the second largest plant in the United States. Of course, we know about Edwardsport. You're increasing the capacity there, and although it will have relatively less emissions, it's still going to have significant emissions.
That plant was sold to the people of Indiana as a clean coal plant because it was going to capture and sequester carbon dioxide, which has now apparently gone out of the picture because I think, as you understand, that would add 50% to the capital cost of building the project to use CCS on that project. In fact, when we met in the middle of December of 2010, I asked you specifically if you thought the Indiana ratepayers should pay for carbon capture and sequestration on that, and you said, I'm meeting with the president on Wednesday, and I fully expect the federal government to pick up that tab. Now we've seen the cost grow on Edwardsport from what was originally announced, I think, at $1.2 billion to almost $3 billion without carbon capture and sequestration, and if that did add another 50%, it would be $4.5 billion.
It's clear to me that the Edwardsport plant is in serious jeopardy, no matter what the Indiana Utility Regulatory Commission decides about whether or not there was mismanagement, malfeasance, and yes, even fraud, that we feel is apparent due to the information we've received during discovery and various emails between Duke Energy and the Indiana Utility Regulatory Commission have revealed. In fact, on November 3, you were under oath before the Indiana Utility Regulatory Commission in a meeting in Indianapolis, and you very loudly proclaimed, I was videotaping it, I went back and looked at that, and you very loudly proclaimed, your voice went up, there has been no ex parte communications.
Yet, when it was revealed that you had had breakfast with Chairman Hardy of the IURC, a private breakfast to talk about the plant, you started backtracking a little bit, and you sent out a press release, or at least the Indiana office sent out a press release that denied that there was any ex parte communication because under oath, that would be perjury if it was proven that that was considered ex parte communication.
What's your question, John?
Now, since I feel that you were less than truthful to the commission, that it really should be your honorable duty to resign just to save this company because it's going to be so embarrassed if that should come to pass and to show the ratepayers, this is my last dividend check, show the ratepayers good faith on this, I'm going to do just what it is, make this trash.
What's your question?
I haven't had a comment.
Let me just make this. First, you had several inaccurate comments. First, when I was asked by the commission, and I said there was no inappropriate ex parte communications, which is correct. The conversations that we had were perfectly appropriate because they were heads-up comments. The other point is that this plant is a $2.88 billion. We have filed to put a cap on the cost increase if you've read our recent litigation position. Most importantly, it will be the world's cleanest coal plant. We never committed to do CCS there. We only designed it to do between 20% and maybe 40% CCS if we could get government funding because this would be the only site in the country, and actually the only coal gasification plant in the U.S. and maybe the world where they could actually experiment with CCS where the geology was good in the general area.
I think that we've had some tough challenges there. We've tried to face them in a straight-up way. My hope is at the end of the day, the commission approves this because under our analysis, we need the power. Secondly, this is the cheapest option at this point in time. I'm sorry, Beck, you probably didn't own many shares of stock if you tear up your dividend, I fight that.
Yes, ma'am. My name is Cynthia Brown, and I am here with a proxy from Zee Thomas, who has 239 shares. I want to congratulate you on your stamina as well. I'm about to pass out, so I can imagine that given that you convened the meeting, you probably are exhausted as well. I started not to speak because I feel like two of the questions I wanted to ask have already been asked, but it would be remiss of me if I did not stand here on behalf of the people that I've worked with for the past 29 years across the state of North Carolina, working-class and low-income people across this state upon whose back I feel like the building of new nuclear power plants will rest if this construction work in progress, this quick legislation passes.
The two questions I have have to do with, first, again, the rationale for putting the weight on the backs of people who are most vulnerable. The second has to do with, given the projected timeline for bringing those new power plants online, if in that period of time those plants don't happen, what is the mechanism that is in place to ensure that folks who have then contributed to those resources get those resources back?
Two good questions, and let me quickly answer. It's important to note that we don't start collecting CWIP until after the state commission has found that we need the plants and that this is the best viable option. It has been proven that by having a tracking of CWIP, it actually reduces the cost to consumers and it smooths out the cost impact on consumers over time. It is, to me, a really critical component of the regulatory regime to protect consumers as we build new plants. The very important point here is we're going to have to retire and replace our entire fleet. The issue is, what do we build? Prices are going to go up in every event, and that's why we put so much emphasis on energy efficiency to get consumers prepared for the inevitable. I don't want them to be surprised.
I understand the struggles they have every day, and we want to make sure we do it in a way that works for them. Thank you. Yes, sir.
Good afternoon. My name is Grant Smith. I'm with the Citizens Action Coalition of Indiana. Our endowment fund holds Duke stock. If nothing else, we always bring good people to the table. You know that. Yeah, you know, we would probably dispute your perspective on QUIP. We had that pretty spirited argument between you and Mike Mullet at our last meeting in the fall of last year, I believe it was. What we're dealing with and what we see every day is cost and risk, and what appears to be maybe cheaper than solar, maybe cheaper than wind, ultimately becomes more expensive because strictly with nuclear power plants, the price that you estimate at the beginning is generally not the price that you end up with just about inevitably.
We've seen that with new coal plants as well, that the kilowatt-hour price is much higher at the end than it has been at the beginning. We know that QUIP has huge impacts on people. I just wanted to point out to you and your board, I don't know if you saw it or read the transcripts, but in Kokomo at the field hearing that the Utility Regulatory Commission held in Indiana, the first witness was from the Rochester Foundry. His bill, their bill just for Edwardsport is $30,000 a month now, only for Edwardsport. They said if it goes up to $2.88 billion, it'd be $100,000. They're concerned about their competitiveness. In terms of QUIP, I'm not going to get into details, but we would dispute what we're saying.
My question is, if there were no QUIP and there were no loan guarantees, and given the resources we have available to us, which resources would you invest in if you did not have those incentives?
The important thing is we would still try to have a balanced portfolio. We'd still build nuclear. I mean, we've built nuclear in the 1960s, 1970s, and 1980s without quip, and it really increased the cost for consumers, and it almost put us in bankruptcy. It put us on the ragged edge of having adequate cash to meet payroll. The bottom line is it's fair both to customers and investors to get it right. I know you're not suggesting that we need to just turn the lights out and go live in a cave. We need these lights. We drive our economy on these lights. We recognize that we have to provide electricity, and there's a direct link between prosperity and access to electricity. Even in Indiana, our rates are lower than the national average.
As we try to convert that fleet and modernize it going forward, thank you for your question. We'll go and be debating a lot in the next year, and I look forward to it. Thank you for coming down to Charlotte.
Thank you.
Thank you. Yes, sir.
Mr. Rogers, thank you for taking so much time. I just have a few questions regarding the statements that are given out. I am on the DRIP program, which I enjoy very much, and I'm also on the EPP, which I enjoy very much. I would like you to print the cost basis of the investment on the monthly DRIP statements. Otherwise, I have to calculate it by myself.
Okay, that's a good suggestion.
Print the unrealized capital gains or loss on the monthly DRIP statement.
Thank you.
That's two good suggestions, and we'll look into that and see if it makes sense. I have a feeling I know your question.
Good afternoon, Mr. Chairman. I see the one subject on the agenda, and I am the annual Chairman of a meeting. All the past years, I've noticed the committee selecting a topic for the exhibit, labor and management, who's put them up? Our hosts who are staffing them have been lobbied as well and read out to the curb. For me, to you, compliment to all of them the way the meeting is run.
Well done.
Thank you very much. I think if I remember right, don't you suggest often that we ought to change the name back to Duke Power?
If no one else, it has been my suggestion for many years. Fellow shareholders, I keep Mr. Manley up and the board of directors and yourself to consider Duke Energy. That's our business. Do regard and appreciate the minority business, but predominant business hydro, fossil, nuclear, conservation. It's power. It's power.
Thank you so much. I want to thank all of y'all for this very long meeting. We had rules to go for two minutes, and everybody was so articulate and had such good questions. I just want to thank all of y'all for being here. It's a great investment, and I would urge you to consider investing more and keep your dividend check because it's critical to many families in order to live today with respect to the tough economic times that we live in. Thank y'all very much.