Mark Haverkos moved into a 20-year-old West Chester home five years ago and set about conserving energy and saving money on utility bills in any way he could.

“I’ve insulated, I’ve switched every bulb possible to the fluorescent lights, and the thermostat is to a place now where we have to use blankets when you sit on the couch to watch TV,” he told state regulators at a public hearing last spring.

“In those five years, not a single bill has ever gone down versus the prior years. So my efforts to conserve on energy aren’t doing me any good because I can’t keep up with Duke’s increases.”

Businesses and residents have seen rates rise since the energy giant acquired Cinergy Corp. in 2006. Prolonged power outages, especially those resulting from the windstorm in September 2008, have angered many. Electricity has grown more expensive compared to other Ohio providers, and response times to power outages have lagged. One small business owner who asked to remain anonymous asks, “I know Duke Energy is a business from North Carolina. Are they just in this area to make as much as they can?”

For Duke, the answer to that question is an emphatic no. But views on whether the region is better served by Duke than it was by Cinergy or its predecessor, CG&E, run the gamut.

Apper Flem, president of Recto Molded Products in Oakley, says Duke is helping his business cut its energy use and save significant money through a program that is poised to pay 10 percent of the $300,000 solar panel array he plans to purchase, and Duke is working with him to redo the plant’s lighting to save energy.

“Duke as a whole has some problems as every large company does, but the proactive programs that they’re doing for energy efficiency are impressive,” Flem notes.

Although Duke promised cost advantages as a result of its merger, Tristate residents and businesses pay a lot more for electricity under Duke than they did under Cinergy, both in real dollars and in comparison to some of its Ohio counterparts.

According to records from the Public Utilities Corp. of Ohio (PUCO), which sets rates, in the fiscal year ending June 30, 2008, Duke’s residential customers paid an average of 10.45 cents per kilowatt hour, which was higher than AEP/Columbus Southern (9.11 cents); AEP/Ohio Power (7.80 cents); Dayton Power & Light (9.18 cents); and Ohio Edison (9.99 cents). The only Ohio power company charging more was Cleveland Electric Illuminating Co. at 10.59 cents.

And it didn’t used to be that way. In the year ended June 30, 2005, the last full year that Cinergy was in charge, Greater Cincinnati residential customers were charged 7.29 cents per kilowatthour, less than AEP Columbus, Cleveland Electric and Ohio Edison. Only AEP/Ohio Power (6.62 cents) and Monongahela Power (6.73 cents) customers paid less.

The numbers are worse for Duke’s commercial users, whom Cinergy charged less for electricity in 2005 (5.74 cents per hour) than any Ohio utility except AEP/Ohio Power. In 2008, Duke’s rates spiked to 9.02 cents per hour, higher than AEP/Columbus Southern (7.42 cents), AEP/Ohio Power (6.60 cents) and Dayton Power & Light (7.60 cents).

Price pressures will be compounded by federal efforts to reduce carbon emissions associated with global warming. A cap-and-trade system on carbon emissions could mean our coal-fired electricity could become much more expensive. Duke announced in June plans to pursue building a new nuclear power plant in Piketon, Ohio, as part of a consortium. The estimated cost of the project is more than $10 billion, with 95 percent of the costs being paid by the development partners. While a nuclear power plant is cheaper to operate in the long run than coal-fired plants, the start-up costs are enormous and will be carried, in part, by the consumers through rates they pay.

And Duke has not been immune to the recession that’s pinching its customers. Its first quarter profits fell 25 percent compared to a year earlier. The company made $344 million, or 27 cents a share, with revenues flat at $3.3 billion. Analysts had expected a profit of 32 cents a share, but the company says the recession cut demand among industrial customers and that winter storms were a major expense.

In terms of response times to power outages, Duke’s are significantly faster than what’s required by Ohio but they’re slower than Cinergy, according to the PUCO statistics. In 2005, the average power outage for Cinergy customers was 82 minutes. In 2008, Duke’s average outage for its Ohio customers was 98 minutes. In 2007, which did not include the epic windstorm, it still took Duke 97 minutes on average.

The Sept. 14, 2008, windstorm knocked out power to 90 percent of Duke’s Tristate customers. Some waited more than a week to have power restored. When Duke sought to raise electric rates to offset the costs of repairs, a second storm erupted: Speaker after speaker at recent public hearings set up by the PUCO gave vent to their frustrations.

“Your request to pass $31 million worth of costs for windstorm damage to your customers exemplifies one more aspect of your ill-prepared response to this storm. You act like you have never encountered a windstorm before,” Carl Sanker of Liberty Township said.

Gwendolyn Gray of Cincinnati is disabled and on a fixed income. “The increases that Duke is requiring are going to determine whether I stay in my home or whether I move. Am I going to be able to purchase my medications? Am I going to be able to buy food?” she asked.

Belinda Ward of Batavia wants Duke to share the pain of the recession. “I think Duke needs to go without pay increases and profitability and everything,” she said. “And you know, if we can do it, so can you.”

Johnna Reeder, a Duke spokeswoman, offered an impressive array of statistics to counter the sentiment that the grass was greener under Cinergy’s feet:
  • She says Duke Energy Ohio had more than 4,100 employees, including 1,300 downtown, while Duke Energy Kentucky had 340 workers in March, the most recent time figures. That’s an increase over the number Cinergy employed in 2005. According to a May 10, 2005,Cincinnati Enquirer story, Cinergy had about 4,000 employees in Ohio and Kentucky then.
  • Duke Energy has abided by terms of its merger agreement by increasing its philanthropic contributions since taking over. It donated about $4 million in the Ohio and Kentucky service area in 2008, including foundation grants, employee matching gifts, volunteer grants, corporate grants and sponsorships.
  • Duke workers will complete 150 volunteer projects with thousands of employee hours donated this year.
Of the merger with Cinergy, Reeder says: “With operations in five states, serving 4 million customers, we were able to bring together the best of both worlds / best practices from each company (through the merger)— in terms of safety for our employees and our customers, product and service offerings, energy efficiency tools, reliability for our customers and advanced technology.”

With regard to the windstorm and Duke’s response: “The region experienced the worst storm in our company’s 150-year history last September. We were able to restore power to more than a million customers within nine days.”

The company tries to strike a balance between adequate staffing for major emergencies and keeping rates as low as possible, she notes. Would Cinergy have done better?

“Duke Energy has greater capability to respond to an outage situation than the former Cinergy due to the additional qualified resources that we have in Duke Energy North Carolina and Duke Energy South Carolina,” Reeder attests.

Dr. Alan R. Schriber, chairman of the PUCO, rose to Duke’s defense regarding response to the storm outages. “That big windstorm threw every utility in Ohio for a loop. I’m not sure it would have been any different if it had been Duke or Cinergy,” he says. “It probably worked a little better than it might have because they were able to move people in from North Carolina.”

Schriber, who has served as the PUCO chairman since 1999, has not noticed a change for the better or worse in the quality of service. “In general, the quality of service has been at least as good if not better than most of the companies in Ohio,” he says.

One Duke employee, a 35-year veteran who asked his name be withheld to avoid being disciplined, says Duke’s policies and staffing have meant longer waits to fix outages and conduct other maintenance and repairs. When Cinergy was in charge, linemen (electric power transmission workers) would usually be put in three-person crews, “two in the bucket and one on the ground,” he says. The jobs were done safely and quickly, with four hands negotiating live wires and other equipment, and the ground worker handing off equipment.

Duke sends out more two-person crews to save money, the lineman says, and will add a worker for jobs that require it for safety reasons. “It’s really advantageous to have the third person, but they don’t want that,” he says. “If a lineman balks at being sent out in a pair instead of a trio, he’s questioned by management.”

Repairs are also slower because of a change in policy that sets up service calls individually instead of grouping them geographically, the lineman adds. “It’s night and day from years ago. They gave you a bunch of calls, and you would go out and fix them. Now, you go to a staging area, come back and get another call. You’re back and forth.”

Also, he continues, less of the equipment that the linemen need is stored at multiple district offices that are easy to reach. Instead, they often have to drive to the main warehouse in Blue Ash no matter where the job is assigned.

The lineman sees cheaper equipment being used that breaks down more easily. Years ago, he installed a lot more three-phase transformers, many of which are still in working order 30 years later. Today, Duke buys more single-phase transformers that have to be installed three to a location and are more apt to wear out quickly. “They built our system like a Cadillac. Now, they’re building them like Yugos,” he says.

Doris McCarter, director of the PUCO’s Service Monitoring and Enforcement Department, points out that Duke’s response times fall well below those required by the state, which secured a commitment from Duke for service response not to decline by more than 20 percent through 2010. “Duke is a very good performance company in this state. Its performance overall has remained high,” she notes.

Reeder says Duke has energy-saving programs and a major system upgrade in its long-term plans for the Tristate. The company is installing Smart Grid technology that will provide two-way communication links between the company and its customers. Advanced meters and automated equipment will provide real-time energy-use data to customers and lay the groundwork for new energy efficiency programs, the use of more renewable energy and new ways to help customers conserve energy, save money and reduce their carbon footprint, she says.The system will enable remote meter reading and service connects and disconnects. It will also enable new flexible billing and payment options, including customer-selected billing dates.

Reeder adds that Duke’s size will give it a seat at the table as national leaders debate energy policy. “That means working with our lawmakers to set the right price on carbon so that the utility, transportation and industrial sectors can transition to new technologies that will allow them to slow, stop and reverse their carbon dioxide emissions, without punishing customers or states such as Ohio and Kentucky that rely on coal.”

On top of whatever surprises Mother Nature has in store in the coming years, Duke also faces a major reworking of downtown power lines and its West End power substation, which sits right next to the Brent Spence Bridge and in the path of a new bridge or connecting ramps. A new span bridge just west of the Brent Spence, which carries Interstates 71 and 75 across the Ohio River, is estimated by Duke to cost at least $22.5 million to reroute four major power lines and move the substation. The cost balloons to an estimated $87 million if the so-called Queensgate bridge option, built further west of the Brent Spence but still requiring moving the substation, is chosen instead and lines are buried under the river or attached to the bridge in a conduit. The location of the bridge is still under discussion, and Duke is lobbying for the $22.5 million option.

Business owners who lost production during the wind- and ice storm power outages can’t so easily petition their customers to make up the difference in higher prices. Market forces see to that. Workers who lost wages aren’t likely to make up the difference through a raise from the same bosses who lost money.

Duke’s customers expect a partnership with the company, which in the end is a public service provider regulated by our elected representatives. They expect more for the ever-rising prices they pay for their energy and, so far under Duke’s leadership, have seen longer waits to restore power and rate hikes in excess of other providers. Whether Duke reverses that trend is something the public and the press will watch closely.