Q: Jim, tell us a bit about what you’re doing for your corporate hometown of Charlotte.
I’ve been in Charlotte more than five years now, and one of the first things I did was catalogue the companies there. I realized we had a unique combination of energy-related companies in the community. We hosted the first meeting to bring all these people together and try to identify whether we had something special and unique. What we discovered is we are 250 companies and now 27,000 employees. So we worked to create this concept of an energy hub. Most important, we’ve been able to create almost 5,000 jobs.
Michael Porter, the professor from Harvard Business School, has written about clusters. In Minneapolis, you have medical devices. Houston is one for oil and gas. The whole logic behind the cluster concept is that you put companies together and they compete and cooperate, and it makes each of them much stronger, and it feeds on itself. That’s the kind of dynamic we’ve tried to create in Charlotte.
Q: The energy business depends a lot of government policy. Where is federal energy policy going, and how will that affect businesses in Charlotte?
The growth in energy companies is really driven by the demand for electricity, and that is driven by growth in the economy. Part of that is the development of new appliances. Electric vehicles or E-buses are another. But equally important is that the industry is driven by policy both at the state and federal level.
Q: Are you disappointed about the failure of Congress to adopt a cap-and-trade system for carbon emissions?
To me, that is the only approach to address the carbon issue that allows us to successfully reduce emissions in a way that is fair and allows us to transition to a [less carbon-intensive] world. Unfortunately, the people who invented it have demonized it — the Republicans. When they created it, they called it the greatest use of market forces to solve the problems of the world.
I don’t think anything is going to happen on energy policy for the next year and a half. The economy is in such deep trouble. Congress and the president are going to be focused on it, though there are limits to what they can actually do to rebuild confidence . . . and create jobs. That’s the reality of where we are today.
I do think we have a challenge post-2012 as to whether any tax credits for renewables will continue. That’s kind of an open question. We’re in that business. We spent $1.7 billion and have roughly 1,000 megawatts of wind. We’re on the way to adding another 600 megawatts of wind, and this huge demand has been driven by the expectation that there might not be a tax-credit extension in 2013. So all of a sudden, we have this rush to build.
Q: You’ve been a utility executive for two decades. What is the future of the industry?
When we did our first merger, in 1993, there were 100 utilities. Today there are only 58. So 42 utilities have been eliminated. If you put that into context, you’ve seen significant consolidation in our industry. This is the third merger or combination that I’ve done. I’m responsible for some of this. But I think because it’s happened over the past 18 years, you didn’t recognize what was happening until you look back and say, “Oh my goodness.”
When we close this merger with Progress, we’ll be the largest utility in the United States by any way you want to measure it. You have to have the platform and largest balance sheet in the industry. That is so critical when you think about the challenges in front of us: modernizing our grid, investing in efficiency, and investing in renewables. In the most capital-intensive industry in the United States, having the strongest balance sheet is the key to succeeding with the challenges we have in front of us.
Q: Because of its reliance on coal plants, Duke Energy is one of the nation’s three biggest emitters of carbon dioxide. Yet you vowed in 2007 to cut the company’s greenhouse gas emissions by 50 percent by 2030. How is that going?
We have to remake our system. As we start to build nuclear at the end of this decade and the beginning of next, that is going to reduce our kilowatt-hour carbon intensity. The important thing is that when you know you’re going to tear down the old and build the new, why not build one with as small a footprint as possible?
This is like the consolidation trend in our industry. No one sees it now. But I think the new appliance standards and new technologies are going to have a dampening impact, more than experts say, on the demand for electricity in the future. I think this is one of those things that, 10 years from now, we’ll look back and say “Oh my goodness” and see that we have dramatically reduced the demand per capita.
Q: What are you doing about this in Charlotte?
We made a commitment to the Clinton global initiative to reduce all the emissions by buildings by 20 percent. It will be the first city in the country to reduce overall emissions by 20 percent through a combination of behavioral changes and technology.
We moved into a new building. We worked hard to make it a LEED platinum building. Moving into a building that’s LEED platinum is walking the talk. While politicians are chattering, we’re moving forward to reduce our footprint.
Q: Will prices rise for consumers?
I think it’s inevitable. The real price of electricity is going to rise over the next two or three decades to reflect the fact that the real price today is the same as it was 50 years ago.
By definition, if you’re using 50-year-old coal plants, you’re going to have to shut them down or retrofit them, and that’s going to raise rates.
Q: President Obama recently threw out new ozone rules proposed by the Environmental Protection Agency, saying they would hurt jobs. Environmental groups were angry. What do you feel?
To be totally honest, I have mixed feelings. We have been moving to address this issue for more than a decade. Everyone has known we were moving in this direction. The Bush administration moved in this direction. This is a more aggressive move, but we kind of knew this was coming.
On the other hand, I can see how this can be viewed as hurting the economy. But you can make the argument that compliance could create jobs. I haven’t seen the analysis that says one way or the other what the results would be. So I haven’t reached a conclusion on whether this is a good call or a bad call.
Q: You have to raise $37 million or more for the Democratic National Convention next year. How’s that going?
I’m standing on street corners with a tin can and trying to collect some money. I don’t know if I’m going to find 370 friends to give me $100,000 each. It’s a year out, and all I can say is we’re making progress.
Q: Charlotte’s unemployment rate is north of 9 percent. Is this a showcase for Democrats?
It’s a city that’s reinvented itself, that is on its way to the 21st century. You can go to downtown Charlotte and feel it.