Duke Energy CEO Leads Utility Down Good Path

Duke Energy CEO Lynn Good aims to balance environmental concerns with cost and pragmatism.


Lynn Good, CEO of Charlotte, North Carolina–based Duke Energy Corp., the U.S.’s largest utility, is hardly a stranger to controversy. She spent the first part of her career at accounting firm Arthur Andersen, eventually becoming a partner — a dream job for the daughter of a high school principal and a teacher — only to see the firm flame out in 2002 after it was indicted by the Department of Justice for its role in Enron Corp.’s accounting scandal.

In February 2014, seven months after becoming CEO of Duke, Good learned that a drainage pipe under a storage pond at an old coal plant had broken, allowing deadly coal ash to flow into the Dan River, which lies on the border of North Carolina and Virginia. Soon Good was being attacked by environmentalists, regulators and the media. Having previously served as the energy company’s CFO, she wasn’t used to the spotlight. After the disaster she was constantly in the public eye and demonized as the face of corporate indifference in ads sponsored by environmentalists. The controversy culminated in a 60 Minutes profile in which Good was interviewed by veteran reporter Lesley Stahl.

Today the Dan River spill is largely behind Duke, which provides electricity to the Carolinas, Florida, Indiana, Kentucky and Ohio. Although the company’s move to cleaner energy started before the accident, Good has since been leading Duke’s transformation into renewable energy — though it’s still a small part of the overall mix — and away from coal. Duke has dramatically increased its natural-gas capabilities. Good, 56, who led the company’s renewable-energy projects in their initial development phase before becoming CFO, is guided by her belief that the largest U.S. electric power utility has to balance reliability, cost and the environment.

Duke’s energy profile has changed significantly. In 2008 it had no natural-gas generation in the Carolinas. Since then it has modernized its system by retiring coal and introducing gas. Now about 25 percent of the company’s generation in the Carolinas comes from gas.

The company has made significant investments to expand into natural gas and away from coal. In September 2015, Duke filed an application to develop the $5 billion Atlantic Coast Pipeline with Charlotte-based Piedmont Natural Gas and Richmond, Virginia–based Dominion to support what the companies believe is an increasing need for gas generation for electricity, as well as industry demand for infrastructure in eastern North Carolina. Earlier last year Duke said it would spend $1.1 billion to modernize plants in western North Carolina and replace a coal facility with gas. It has closed 40 coal units since 2011. Duke has spent $3 billion on commercial and regulated renewables since 2007 and plans to invest another $3 billion over the next five years.

Good says her childhood in Fairfield, Ohio, encouraged a strong work ethic. Her parents were born during the Depression, worked their way through college and became teachers. “My assignment,” she explains, “was to go to college, find something great to do and be passionate about it.” She studied systems analysis and accounting at Ohio’s Miami University and joined Arthur Andersen as an auditor after she graduated in 1981. When the firm collapsed, she was stunned. “There wasn’t much time for emotion when we were transitioning clients and staff,” she recalls. “But then the weight of it all hit me over a period of time. I had lost everything I had worked for.”


Good moved to Deloitte & Touche in May 2002 but soon wanted out of public accounting. She took a position with Cincinnati–based Cinergy Corp. the following year. After Duke purchased Cinergy in 2006, Good first became Treasurer and then headed its commercial business. Three years later she became CFO.

Senior Writer Julie Segal recently spoke with Duke’s CEO about her company’s move to cleaner energy and its role in the conversation investors are having about climate change, the environment and social responsibility.

Institutional Investor: What did you learn from the Dan River spill?

Good: It was a difficult situation. As I think back to those early days, it was a relatively small spill by industrial standards. The drinking water was never affected. The river was back to normal for recreation within a relatively short period of time. But that event triggered a much broader conversation. In 2014 that conversation was about coal and it was about whether or not ash that had been stored for decades could be stored safely anywhere. The conversation got much bigger than the spill. I was constantly challenged to try to stay ahead of where it was going next. I learned to seek advice and counsel so that I could get perspective on how big [the problem] was and how it was being interpreted or dealt with by customers, legislators, regulators and employees.

Is there a scene from the spill that really stands out for you and informs what you’re doing now?

I was on the site pretty quickly after the event occurred. Until you lay eyes on something, it’s often hard to get a full picture. We had industrial equipment everywhere. We had pumps. We had lights. We had cranes in place. We had a 24-hour operation. I was getting out of the car, and the head of fossil generation says: “Lynn, I’m sorry. We will fix this.” And you can see the human emotion on the faces of people that are out there, that this is extraordinarily important to them and they are giving every ounce of human effort to make it right.

You’ve said you don’t like the spotlight. But you’ve been the CEO of a company in the thick of things for some time. Do you find that exhilarating in some ways?

I think it’s important to keep it in perspective. The outside perspective of the media or what might be in social media or what’s in the newspaper — it’s important. You’re in the spotlight, and you have to care about getting that information as right as you can. But that’s only one small slice of the pie that you’re managing. You’re also overseeing internal resources, you’re managing short- and long-term decisions, and you’re managing the relationship of that event to others. That has to be balanced with all of the other things that are happening at the company.

Investors are increasingly interested in climate change, sustainability, governance and other social responsibility issues. How does Duke fit in?

Duke has had, and continues to have, a very keen focus on stakeholder outreach. These issues of climate and even governance matters are complicated ones. It requires sitting down and sharing perspectives, trying to get to a common view of where we’re trying to go and what options will be available to get there. Duke is a company that has made huge strides in these areas.

Can you talk about carbon emissions?

Our carbon emissions are down more than 22 percent since 2005. We have been moving down a very aggressive path and modernizing. We’ve retired half of our coal fleet. We’ve introduced natural gas and natural-gas infrastructure to support baseload generation. We are the third-largest nuclear operator in the U.S. with baseload carbon-free generation. And we also have invested more than $5 billion in renewables in North Carolina, in South Carolina and really throughout the U.S., as we have built not only solar but wind, beginning in 2007.

It’s a priority. I understand the interest of investors and seeing what a company’s objectives are moving forward. I think our track record demonstrates that we are moving in that direction.

We are, of course, always balancing environment with reliability.

Does there have to be a balance?

Yes. Our customers count on 24-7 uninterrupted power. Our customers also care about affordability, whether it’s a low-income customer who has a limited set of resources and the power bill is in the same stack as the food bill, or an industrial customer who is trying to compete with overseas opportunities and advantaged labor costs in certain markets. Energy can really be a differentiator here in the U.S. The solutions to complex problems are not simple and are not solved overnight. I’m asking how we keep moving in a direction that balances all of these things: meeting the needs of our customers, producing cleaner power and maintaining the reliability that everyone counts on.

Tell us about your conversations with institutional investors, such as endowments, that are under pressure to divest from fossil fuel companies.

It’s much like the one we’re having right now. They want to understand what our vision is of the future, how we think about clean energy and where we’re making our investments, how we balance affordability and reliability and the environment. We’ve found that institutional investors appreciate that there isn’t a silver bullet. We certainly can’t close every plant we have and build completely new and find a balance with those three priorities. I think it’s generally a good discussion about the steps we’re taking to achieve a longer-term vision.

Are there any personal stories about that balance that stand out for you?

Yes, at our annual meetings, we have an opportunity to engage with a lot of different stakeholders. Recently, one stakeholder said, “I think every coal plant should be closed tomorrow, and I think you should replace every one of them with renewables.” And then sitting right next to that stakeholder was a customer on a fixed income, who said, “I cannot afford one more dollar for my power because of my circumstances.” So we are at the intersection of those two statements.

Please talk about the challenges involved with nuclear power.

Well, first, the benefits. Duke has had a long history of nuclear power, and it’s really been an innovator and a leader over decades. If you look at the price of power in the Carolinas, we are well below the national average. And one of the reasons is nuclear generation. Our communities here in the Carolinas are very supportive of nuclear. They understand the economic development benefits, the clean-energy element, and I think they have confidence around our and the industry’s safety track record.

As a company, as an industry, we want to keep nuclear in the mix for as long as we possibly can, because it runs all the time and it produces no carbon emissions. But new nuclear is extraordinarily difficult. It’s very expensive. It takes seven or eight years to build. We have had a license application pending at the Nuclear Regulatory Commission for eight years and expect perhaps to hear from them this year.

How can you plan around that?

Exactly, that’s an eight-year license cycle and a seven-to-eight year build cycle. Even if you started the day you got it, it’s end to end, 15 years. And the price tag is in the range of $15 billion for a new plant. Given the changes in technology and political sentiments that could occur in that time frame, as well as stakeholders being as active as they are, it is a tough decision to build new nuclear. There are only four units under construction in the U.S. right now. There are over 20 under construction in China. I think it needs to be part of the clean energy conversation, but there’s still a lot of work to do.

Though nuclear energy might be an outlier, aren’t most of your investments implemented far into the future?

Yes, I always need to be planning for circumstances in 2020, 2025 and 2030. Think about technological innovation. We cannot conclude we’ve innovated everything today. I need to keep my options open for investment as technology continues to develop. I can’t create great obsolescence risk for my customers. Whether it’s a solar panel, whether it’s a smart meter, whether it’s a communication device, every one of those are going to have innovations between now and 2025.

Tell us about your R&D priorities, particularly in clean energy.

We are one of the largest investors in storage, exploring technology for renewables — large-scale portable devices that could help during service interruptions and even smaller storage solutions for customers’ homes. We are focused on storage because it represents a potential solution for some of the issues that hamstring renewable energy: the wind doesn’t always blow, for example, so you need to store this energy for a calm day.

We’re also looking at technologies around the grid — the wires connecting a generating station and a customer. We need more resiliency, better communication techniques and better information for customers. We spend a lot of time on renewables and how to make them more efficient. We’re exploring how to get more energy out of them, where to place them and how the inconsistency of renewables’ energy output fits with the rest of our system.

Follow Julie Segal on Twitter at @julie_segal.

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