Duke Energy CEO seeks green cred

Jason Sandford

Jason Sandford is a reporter, writer, blogger and photographer interested in all things Asheville.

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Here’s a fascinating Forbes.com profile of James Rogers, the CEO of Duke Energy, who is racing to establish his “green” credentials. Note the Asheville mention down near the bottom:

With politics in the air, James Rogers is racing to limit carbon emissions at Duke Energy–before the greenies beat him to it.

This time next year, expect a greener White House. No matter who the next President is, utilities will likely have to start paying for their CO 2 emissions– whether via a tax on greenhouse gases (unlikely) or a cap-and-trade system. When it comes to strict limits on emissions, there’s little daylight between McCain, Obama and Clinton.

That puts guys like Duke Energy (nyse: DUK – news – people ) Chief Executive James E. Rogers in a tough spot. Sure, he has big plans for the Charlotte, N.C. utility: 500,000 solar panels on rooftops in its five-state territory, a $1 billion communications network to optimize the flow of electricity through the grid. To establish his green credentials, he’s even proposed a national 0.1-cent-per-kilowatt-hour tax on electricity that would pour billions of dollars into clean energy research. “That’s where the guys in Silicon Valley really love me,” boasts Rogers, 60, a Kentucky-bred lawyer whose accent waxes thicker and more syrupy as he gets excited.

But Rogers is also a confessed sinner. In speeches he points out Duke is the nation’s third-largest corporate emitter of carbon dioxide (after American Electric Power (nyse: AEP – news – people ) and Southern Co.). This dirty fact Rogers can’t easily change. Duke operates in the resource-poor Carolinas and built some of the world’s biggest coal plants in the 1960s and 1970s, when people were more concerned about cheap, secure energy supplies than co 2 levels. At 8.5 cents per kwh, Duke’s average residential rate is half what Con Ed gets in New York City.

Now Rogers faces a potentially crippling threat–a “stroke-of-the-pen risk,” he calls it–if Congress imposes the wrong kind of controls on global-warming gases. Whoever the new Oval Office occupant, if utilities are required to buy credits for all their co 2 emissions in a government-run auction, instead of being granted credits covering their current output, most experts predict the price will hit around $30 a ton. That would jack up utility rates by 30% in the Carolinas, Rogers says.

He’s looking for a way out. Rogers is hoping to add a few nuclear plants to existing sites while he waits for more affordable technologies to remove the 100 million tons or so of CO 2 (that would be 27 million tons of carbon) his power plants send up the stack each year. He puts his dilemma succinctly: “The question is, how can I change my business model to make money in a low-carbon world?”

To prove his good intentions Rogers has made repeated pilgrimages to Silicon Valley, where he’s met with people like Kleiner Perkins venture capitalist John Doerr and Larry Brilliant of Google.org, the search giant’s do-gooder arm. “It’s like he’s in a 12-step program,” Brilliant says of Rogers. “You can’t help but sympathize with someone who’s like an addict who wants to get clean.”

But not even plastering the Outer Banks with windmills could meet demand growth of 1.6% a year in Duke’s largest market, the Carolinas. So Duke will spend $23 billion over the next five years building new coal and gas plants and maintaining and upgrading Duke’s network. It will break ground this summer on a $2 billion coal gasification plant in Indiana, and by 2012 it hopes to begin work on a $6 billion-plus nuclear plant in Cherokee County, S.C.

The 600-megawatt Indiana plant will convert coal into turbine-ready gas while stripping out pollutants nitrogen and sulfur. It won’t capture CO 2 unless Duke adds expensive additional machinery. To meet demand in the Carolinas Rogers proposed building two 800-megawatt pulverized-coal generators. Environmentalists howled and state regulators ultimately held him to one, extracting a promise to make the project ostensibly carbon neutral by shutting down 800 megawatts of older coal plants by 2018.

Rogers has his hands full fending off environmentalists like Stephen A. Smith of the Southern Alliance for Clean Energy, an Asheville, N.C. watchdog group that subjected Rogers to a nine-hour cross-examination last fall during hearings over the new coal plants. One way to keep them at bay is to preach conservation. Rogers has dusted off an idea from the 1970s that would allow a utility to earn money off the megawatts its customers don’t use. Rogers calls these Save-A-Watts and wants Duke to get a return on monitoring equipment and controls in its customers’ premises calculated not from the capital cost of that gear but from the capital it would otherwise have spent to add generating plants.

Smith calls the program “the most audacious, overreaching revenue stream I have ever seen.” But Rogers counters that, at about 4 cents a kwh, conservation is the cheapest zero-emission “power plant” Duke can find. Unlike other programs, where utilities subsidize energy-saving items like fluorescent lightbulbs and hope that customers actually use less electricity, Duke would get paid only if an independent entity verifies the savings.