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Five Viewpoints Regarding How to Balance "Affordable, Reliable and Clean"


Andrew Howard

Executive Director of Global Investment Research
Goldman Sachs

Donna Jones Baker

President and CEO
The Urban League of
Greater Cincinnati

Jim Plump

Executive Director
Jackson County (Indiana) Industrial Development Corporation

Jay Dietrich

Corporate Environmental Affairs Program Manager

Eric Haxthausen

Director of U.S. Climate Policy
The Nature Conservancy

A financial analyst. A community leader. An economic development expert. A large- business customer. An environmental issues leader. The participants in this virtual roundtable discussion represent just five of the stakeholder groups we serve. We asked them for their thoughts on our goals and approach to striking the right balance between affordable, reliable and clean energy. (Participants' answers edited for length.)

Q.How do "affordable," "reliable" and "clean" rank in importance to you and your stakeholders?

Howard: The investment community today largely views these attributes as trade-offs. This is not likely to be the case over the longer term, as increasing costs are applied to carbon emissions and clean power technologies advance. I expect the cost differential between low-carbon and fossil-fuel generation will narrow.

Baker: Individuals and families must have reliable and affordable energy. We must also do what we can to ensure that energy becomes progressively cleaner, to ensure a healthy environment for those who come after us.

Plump: For business and industry, reliability and affordability are key factors that help companies remain competitive in the marketplace. In recent years, however, the need for clean energy has clearly gained in importance.

Dietrich: IBM ranks all three equally, as these factors are very much interconnected. Reliable and affordable power is critical to the operation of our business and our competitiveness in the global marketplace. From an energy generation standpoint, we think the most important megawatt is the one that does not have to be generated; programs to reduce energy use through increased efficiency should receive priority.

Haxthausen: My focus at The Nature Conservancy is on reducing emissions of greenhouse gases. The electric power sector contributes the largest share of U.S. emissions. Cleaning up these emissions and replacing older generating facilities with new, clean sources of electricity are critical to solving the energy and environmental challenges of the 21st century.

Q.What is Duke Energy doing right in its quest to provide affordable, reliable and clean energy?

Dietrich: Duke’s aspiration to cut its 2006 carbon dioxide emissions in half by 2030 provides the company with an opportunity to establish a defined metric that drives commitments to increased energy efficiency and a diversified, cleaner generating portfolio.

Haxthausen: Commitments of this magnitude by major emitters will be needed if we are to stabilize the climate and avoid major long-term risks to the environment. Duke Energy’s efforts to reduce its own emissions are creating value for the environment and its customers. In addition, the company’s work with coalitions like the U.S. Climate Action Partnership is helping spur the government to adopt responsible and cost-effective policies to reduce emissions.

Baker: I think Duke really gets it right by investigating every possible source of energy, from nuclear, solar, wind and natural gas to the old standby – coal. All are important ingredients to ensuring affordable, reliable and clean energy.

Plump: In Indiana, Duke’s approach is measured not only in words, but actions as well. For example, the company has invested heavily in “cleaner coal” technology at its Edwardsport facility. Duke also contracted to purchase up to 100 megawatts of clean, renewable electricity from a wind farm in Benton County.

Q.How can Duke Energy improve?

Baker: Ask for help before you think you need it. Duke Energy faces a number of thorny issues that are regulatory, policy or operational in nature. Relying on external advisory groups and subject matter experts can help the company think through challenging questions and issues before they start making headlines.

Haxthausen: One area of potential concern to The Nature Conservancy is the use of biomass as a potential fuel. We encourage ADAGE, Duke Energy’s biomass-to-electricity joint venture with AREVA, to commit to using slash, mill residue, agricultural residuals and other waste at its generating stations – no sourcing from standing forests.1 We also encourage ADAGE to explore designing power stations to maximize efficiency.

Plump: When investing in new generation and infrastructure, Duke needs to ensure costs and associated rate adjustments still enable customers to remain competitive.

Howard: Increasingly, clean energy will become a prerequisite to business sustainability. Moving early in this direction will likely reduce the costs of adaptation – and penalties for non-adaptation – enabling a more efficient asset base.

1ADAGE uses wood debris from sustainably managed forest operations to generate electricity.

Q.What advice do you have for Duke Energy as we strive to balance the competing demands of customers, environmentalists and investors?

Haxthausen: Duke Energy is doing well at taking a middle path – balancing each of these needs and supporting forward-looking policies. I know from personal experience that Duke Energy is lobbying hard in Washington for policies that will keep rates low, but customers will need to understand that addressing climate change and building the path to a new energy future will have real costs. 

Plump: My advice: no surprises. Duke must continue educating its stakeholders about energy issues, implications of policy decisions, and the direction the company is headed.

Howard: Duke Energy’s focus should be on generating sustainable, long-term profitability, which requires the company to address competing pressures from different stakeholder groups, including investors, customers, regulators, local communities and employees. Duke should map the anticipated long-range demands of each of these groups, and then plot a strategic path that sufficiently addresses those issues that are considered “deal-breakers.”

Baker: Too often companies make important decisions based on how it might look in the next quarter. I would urge Duke Energy to think and act for the long term. Doing so will benefit customers, the environment and investors.

Q.How do you think the push for affordable, reliable and clean energy can help stimulate the economy?

Dietrich: Building the smart grid, investing in energy efficiency and diversifying our nation’s power generation fleet could all serve to encourage economic growth and create jobs.

Haxthausen: Changing the way we generate, deliver and use electricity will require significant investments in new technologies and equipment to replace outmoded systems. This means a host of new jobs in designing and constructing new facilities, renovating buildings to make them more energy efficient, and manufacturing energy-saving and clean-energy products.

Plump: We’re seeing it already in Indiana. For example, new investments in wind turbine component manufacturing and electric vehicles and batteries are helping create jobs.

Howard: Significant upgrades to the U.S. energy infrastructure could provide a platform for American companies to become the leaders in developing technologies used throughout the world. This would allow more of the value created by this transformation to remain in the U.S., rather than allow companies from other countries to build on their “early mover” advantage.

Baker: Thousands of new inventions and innovations resulted from the United States’ decision to put a man on the moon. Perhaps that’s what the energy sector and our nation needs: a similarly bold and ambitious plan to repower our country. I believe such a commitment would lead to significant economic growth and job creation.