Monday, March 9, 2009
(Cont'd from above)...

Jim:       Mr. Rogers welcome to Mad Money...

Rogers:    I am delighted to be here Jim. Thank you so much for asking me to join you today.

Jim:       Alright, Mr. Rogers, if I am a customer of Duke Energy… and I am very pro-environmental… do I have any idea whether I can afford to give to my favorite environmental causes if I use Duke Energy 3 years from now?

Rogers:     I think one of the key things that we are trying to do is to get a transition to a low carbon rural. To minimize the impact on our consumers, and to smooth out the impact on them, as we deal with what is inevitable, and that is carbon legislation in this country.

Jim:        If I were a big buyer of bonds… an institutional buyer of bonds, and I read the plan of cap-n-trade, and you guys needed money to roll over your debt, I would not buy your bonds because I fear that you would be put out of business.

Rogers:     Well, that would be wrong. For a couple of reasons, last year we went to market and raised $4.5B, that is $1.5B more than any other company in our sector. We have a very strong balance sheet.. We operate in states that understand what the mission is, and that is affordable, reliable clean electricity 24 by 7. And we are going to be able to do that. My mission is to minimize the cost impact on our consumers.

Jim:        Now, is it true, we had the Dominion folks last week… that some people saw this revolution ahead of others, and that you guys were not ahead of the bubble?

Rogers:     I would say that, I don’t know if we were behind or ahead, but let me just quickly tell what we have done. And you make the judgment about this.

Jim:        We will let our viewers, because you have become hotter than I am… which is saying something my friend.

Rogers:     No, not at all, but let me give you the story. You talked about the wind, you talk about energy efficiency and we are leading the country with our save-a-watt proposal that will change the investment paradigm for energy efficiency for utility companies. We are investing in solar, we have got a proposed nuclear plant in Cherokee county, 2200- mega-watts, and we are in the first wave of plants to be approved by the NRC, so we are leading there. We are also building two coal plants, which has gotten all the headlines. But here is the reality about that, the coal gasification plant will be the cleanest coal plant in the country. It will be the largest coal gasification plant in the world. We are going to do destructization there, its leading the way to the new technologies that will allow us to use coal, our most abundant resource in America. Our plant in North Carolina, Cliffside, is going to allow us to retire 1000 megawatts of old, not retrofitted plants, and the bottom line there is that our socks nocks mercury, our pollutant footprint, will be smaller and the carbon intensity of our business today, we are number 9 out of the large power companies in America, which means that 8 companies have greater carbon intensity than we do. We will reduce it 10% by building these two coal plants. So my judgment is that we are ahead of the curve because we are modernizing our fleet with more efficient plants, we are investing in renewables, we are investing in energy efficiency. And the other, and probably most important thing is, that we are trying to shape the legislation in a way to minimize the impact on our consumers.

Jim:        Why didn’t… we have a big glut of natural gas in this country… why didn’t you do Cliffside with natural gas?

Rogers:     One because I believe having been in the gas industry, and having run the pipeline companies in the past, I believe that in time gas prices will be driven up. We have a over capacity of L&G today, around the world, gas prices are at low levels but I remember that just a year ago when they were $11 and $12. It is my believe long term, one of the reasons that our rates our lower than virtually most utilities in the country is that 96% of our electricity comes from nuclear and coal, not gas. Gas prices are more volatile, yes they have a less of a carbon footprint than coal, but at the end of the day it will be more expensive to take carbon out of gas than it will out of coal. So from my standpoint, depending on gas runs a great risk for our consumers long term. The better place to be is to be with nuclear and clean coal.

Jim:        On our show we have done a series of I think pretty decent technology work with a lot of the public companies, and no one, even the CEO of Foster Wheeler, who I think builds the best coal boilers, fluid coal… believes that there is such a thing right now as clean coal, maybe cleaner coal but he, I think that he would tell you, that even with his modern technology they are not there yet.

Rogers:     We are not there yet, and frankly, we are probably 15 years away from being able to commercialize. But the way that I look at it, and Jim, a way to think about it is simply this. If I look between now and 2050, virtually every power plant that I own today will be retired and replaces. So during that period of time, I can reduce the carbon footprint of my generation fleet as these technologies evolve. The important thing is selecting the right technologies in the right sequence. And today the only power source that we have that can provide power 24 by 7 with zero greenhouse gas is nuclear.

Jim:        Okay, one last question… and I know that we all have to run… you said 2050 would be fine… if you had to put a date about wear Obama believes it should be, would it be closer to 2050 or 2015?

Rogers:     I think at the end of the day he believes that he thinks we should reduce omissions 80% by 2050. He understands the long term nature of this. What I worry about is how the transition occurs, and people having unrealistic expectations as to what can get done by 2015. And quite frankly, there is a lot of people that think we can do this just with renewables, just with energy efficiency, we can’t and have a strong growing economy.

Jim:        Excellent, thank you for pointing that out. Jim Rogers, the Duke CEO, thank you so much for coming back on the show.

Rogers:     Thank you.

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