Sustainability means different things to different people. To me, it comes down to enduring business success and responsible stewardship. We’ll do this by understanding stakeholders’ needs, running our business with excellence and adapting to an ever-changing industry.
Duke Energy is the largest electric utility in the U.S. Although our size is a strength, it’s not a guarantee that we will continue to be successful. We must be responsible, creative and driven to demonstrate that big can also mean agile, flexible and innovative.
Lighting the way, the theme for this year’s publication, signifies our ongoing commitment to our stakeholders. It means we will strive for leadership, excellence and integrity in everything we do. And it reflects our desire to approach the future in a way that strengthens relationships, anticipates change and seizes new opportunities.
Beginning in 1904, our company’s founders constructed hydroelectric power plants in an effort to create new opportunities for economic growth in the Carolinas.
This mission to advance our communities continues today. We work with local officials to attract businesses and jobs, including more than $2.9 billion in capital investment and more than 13,700 new jobs to our six-state region in 2013.
Our charitable giving – including funding from The Duke Energy Foundation, company donations, employee and retiree gifts, and the value of volunteer hours – totaled about $73 million last year.
Improving our customers’ experience with Duke Energy is just as important as helping our communities prosper. Now more than ever, customers want more – more control of their energy use, more opportunities to save and more ways to interact with us. We’ve responded with technologies and enhanced energy efficiency programs that aim to strengthen our role as a trusted energy partner.
One way we’re helping customers thrive is by modernizing the power grid. We recently installed our 1 millionth smart meter in Ohio. This technology helps customers use energy more efficiently, and paves the way for us to introduce new products and services. Smart meters and other digital grid technologies also help improve power reliability by reducing the frequency and duration of outages.
Beyond the meter, we’re giving customers options to save through energy efficiency initiatives, like our appliance recycling program. In 2013, we helped our customers recycle more than 25,000 inefficient refrigerators and freezers. With each recycled appliance, customers can save up to $150 a year on their energy bills.
Customers are also seeing the benefits of our 2012 merger with Progress Energy. Through reduced fuel costs and jointly dispatching our power plants, we’ve already achieved more than 25 percent of the guaranteed $687 million in savings for our Carolinas customers.
In 2013, we completed a decade-long, $9 billion program to modernize our generation fleet. These investments improved our fuel diversity and enabled us to retire more than 3,800 megawatts of older coal-fired units. That number will grow to nearly 6,300 megawatts – roughly 25 percent of our coal capacity – by 2018.
We’ve also invested $7.5 billion in recent years to add environmental controls to our power plants. Our fleet modernization – along with lower natural gas prices – enabled us to cut our U.S. carbon emissions by 20 percent and reduce our carbon emissions intensity by 19 percent since 2005. We’ve also decreased our U.S. emissions of sulfur dioxide by 84 percent and nitrogen oxides by 63 percent during the same period.
Beyond cleaner energy from fossil fuels, Duke Energy is committed to promoting and using cost-effective renewable energy options. Solar power, for instance, complements our nuclear and fossil-fueled baseload plants that meet our customers’ energy needs when the sun isn’t shining.
Solar energy is an important part of the energy future, and we want to encourage its development in ways that are fair to all customers. That’s why, in 2013, we created a new organization to develop renewable energy projects for our regulated utilities.
This work is in addition to projects spearheaded by Duke Energy Renewables, which has invested $3 billion since 2007 to build utility-scale wind and solar farms in 12 states.
Cleaner energy is important, but safety is our top priority. I’m proud of our 28,000 employees for their safety performance last year. However, we didn’t meet our most important goal: zero employee and contractor fatalities. Tragically, one employee and two contractors lost their lives in work-related vehicle and on-site accidents in 2013. And earlier this year another two veteran employees died while working in the field.
These tragedies are reminders that many of our teammates work in hazardous environments. Regardless, we must do better; injury or death is not a cost of doing business. As a company, we’re committed to a healthy and injury-free workplace. We will continue to investigate and learn from all safety incidents, and we’ll make changes to help each employee return home safely at the end of the day.
While we have made many meaningful improvements to our environmental footprint in recent years, our commitment to sustainability means we must do a better job of safely managing our coal ash ponds. In February 2014, ash from one of our North Carolina basins was accidentally released into the Dan River. We worked around the clock to permanently stop the leak. Duke Energy, along with various state and federal agencies, continues to closely monitor the river. Drinking water remained safe and river water quality has returned to pre-event levels.
In the weeks that followed the incident, we initiated a near-term engineering review of all our ash basins to detect and address potential risks. Moving forward, we will work with our state and federal stakeholders as we update our long-term, comprehensive ash management strategy – a plan that protects the environment and lays the groundwork for continued safe, reliable and cost-effective electricity for our customers.
The Road Ahead
Now more than ever, we must operate with a great sense of focus and urgency.
In the end, we believe responsible, forward-looking actions will lead to continued long-term success for Duke Energy.
We know we will be measured by financial results as well as by our ability to keep our prices competitive, restore power after a storm and reduce our environmental footprint – just to name a few. Balancing these competing priorities is a challenge, and often requires difficult trade-offs. Regardless, we remain focused on the road ahead to benefit our customers, communities, employees and investors.
Lynn J. Good
Vice Chairman, President and Chief Executive Officer
Vice Chairman, President and Chief Executive Officer
April 4, 2014