Ever since the late 1980s, James Rogers has been beating the drum for green energy as an answer to global warming, putting him in the vanguard of climate-change activists. But whats most remarkable is that Rogers happens to be the CEO of Duke Energy Corp., the huge electric and gas utility that ranks among the U.S.s biggest emitters of carbon dioxide.
Moreover, that dubious distinction is one the Charlotte, North Carolina, utility wont be relinquishing any time soon. It is the only power company in the U.S. that is simultaneously building two coal-burning plants, which are due to come online in 2012. And coal, although it is both abundant and cheap, is a notorious pollutant compared with natural gas or nuclear power.
What explains the apparent paradox between Rogerss green persona and Dukes seemingly retrograde strategy? A self-proclaimed pragmatist, he argues that a climate-friendly future will require a 40-year forced march. So how do new coal plants fit into this scenario?
Rogers frames the history of power generation as one big cleanup effort. When people were burning coal and wood in the fireplace and using kerosene lights, going to electricity automatically cleaned up the cities, he points out. Then the Clean Air Acts and subsequent amendments got utilities to clean up power plants. Now that coal plants built in the 1970s and 80s are reaching the end of their lives, Rogers says, the U.S. will have to build fewer but more-efficient coal and other types of power plants to carry consumers into the brave new world of alternative energy sources that he envisions arriving around 2050. (The coal plants under construction by Duke are efficient enough to qualify for a combined $258.5 million in clean-coal tax credits.)
In the meantime, Duke Energy must serve a big and growing marketplace. It supplies electricity to 4 million retail customers in the Carolinas and the Midwest, and distributes natural gas in Ohio and Kentucky. Dukes commercial unit operates power plants for municipalities, other utilities and industrial facilities. Its international division runs plants in Latin America. In addition, Duke has a portfolio of renewable-energy ventures wind, solar and biomass that now supply roughly 1,000 megawatts of the companys nearly 40,000 megawatts. In all, some 40 percent of Dukes power comes from noncarbon-producing sources, including water and nuclear energy.
Born in Birmingham, Alabama, Rogers, 63, graduated from Emory University with a degree in business and spent three years as a reporter for the Lexington Herald-Leader before going to law school at the University of Kentucky. After clerking for Kentuckys Supreme Court, he was named an assistant state attorney general and consumer advocate under thenDemocratic governor Julian Carroll. In 1977, Rogers moved to Washington, going back and forth between the Federal Energy Regulatory Commission, where he handled litigation, and Akin Gump Strauss Hauer & Feld, where he became a partner in 1983. Enron Corp. chief Kenneth Lay hired him away in 1985 to run Enrons gas pipeline business, but Rogers left in 1988 more than a decade before Enrons notorious bankruptcy to head Indiana utility PSI Energy. He oversaw PSIs 1994 merger with Cincinnati Gas & Electric Co., yielding Cinergy Corp., which he also ran. When Cinergy and Duke Energy merged in 2006, creating the U.S.s third-largest electric utility, Rogers became CEO, president and board chairman. He spoke with Senior Writer Frances Denmark during a visit to New York in late September.
Institutional Investor: What drives your interest in green energy?
Rogers: Im in the business of making billion-dollar decisions, and as a pragmatist, Im an advocate for advancing [green] issues, in part so that I can deliver on my job one: making energy as affordable, reliable and clean as possible. Whether its a coal plant at $3 billion or a nuclear plant at $12 billion to $14 billion, I can make more-informed decisions about huge investments that will last 50 years if I know the [environmental] rules, even though a cleaner carbon footprint in our generation facilities is going to translate into higher prices.
So where are energy prices headed?
As you look out over 20 to 30 years, youre going to see the real price of electricity rise. Its going to be driven by the need to spend more on an aging system. Were retiring depreciating plants and building new ones. The price is going to rise because we are modernizing the grid with two-way communication, and were looking at modernizing our meter system with two-way communication. [This saves energy by, for instance, letting a so-called smart meter temporarily shut off a refrigerator when a customer runs a dishwasher, to avoid a surge in demand.]