Bill Johnson is poised to become the CEO of the nation's biggest electric utility. That will make him one of the nation's biggest polluters_and a key voice in the intensifying debates about how to clean up the nation's electric power industry.
Johnson, 57, is the CEO of Progress Energy, an electric utility based in North Carolina that has agreed to be acquired by Duke Energy. Later this year, if regulators approve the deal, Johnson will become CEO of the combined company.
Together, the companies will serve 7.1 million electric customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky.
The combined company will produce more electric power than any other utility in the country, and more than half of that with coal. Coal is responsible for 37 percent of the nation's greenhouse gases and nearly all of the emissions of mercury and other pollutants produced by the electric power industry.
Regulators are proposing to tighten a whole suite of clean air and clean water regulations in the coming months. The Obama Administration has proposed a clean energy standard that would move the country toward 80 percent clean energy by 2035.
Individual states, too, have issued renewable power mandates.
All this is forcing utilities to change the way they produce and deliver power for the first time in decades, and leading to enormous cash outlays.
Meanwhile, utility revenues are falling because power prices are low and people and businesses are using less electricity.
Johnson, a lawyer who joined Progress's legal team in 1992, argues that although his industry needs to get cleaner, it needs to do so slowly. That will help keep power prices from rising too fast and slowing economic activity.
Johnson sat down with The Associated Press in New York to talk about the merger and the issues facing his industry.
Q: Why did you agree to be acquired by Duke Energy?
A: If we look at the capital expenditures in front of us and if we want to be a player in new nuclear construction, which we think is important, we're just not big enough to do that efficiently. So what I was looking for, and the board was looking for, was how can we do this more efficiently? Instead of building four new nuclear plants to serve the Carolinas can we build three? The other thing we'll get out of this merger is purchasing power. Instead of buying 10 tons of coal we'll buy 30. Million that is. A big thought behind this combination is customer impact. Because you can see over the next decade rising energy prices.
Q: Why? How is the electric power industry changing?
A: Here's where we are in the evolution of the electric business. What has happened, especially over the last 50 years, is that we've had incremental change. We've been expanding the system. Nuclear was a change, but really what we've been doing is building on what we've had. That infrastructure is now old and inefficient in many cases. We are at a transformational state, instead of an incremental stage. I've got to raise a lot more capital because I'm not refurbishing I'm rebuilding, I'm renewing. I'm doing new technologies.
Q: What do you think of Obama's clean energy plan?
A: I'm generally in favor of a cleaner energy portfolio for the country. That's the right direction, I think the industry is trying to move there, some faster than others. Now of course the devil's always in the details, so what does the clean energy standard mean? If the policy is we're going to move in a clean direction and you're going to get credit for everything you do that's incrementally cleaner than what you are currently doing, I'm supportive of that. But the more complex it is, the harder it is to do, the less in favor of it we'll be. Clean to me is cleaner than what you are doing today, and that's the way the industry ought to be moving.
Q: Does nuclear power have a future at Progress and Duke, and in this country?
A: Today, 20 percent of our electricity comes from nuclear and 70 percent of our clean energy comes from nuclear. If we are going to tackle some of the environmental issues related to burning fossil fuels, nuclear's going to have to play a part. But there's another reason we have to continue. China, India, other countries are going to proceed with this and it's in our national interest to be part of the group that continues with nuclear. We are the best operators of nuclear reactors in the world at the moment and we help set a standard — I would hate to see us cede that position to anyone else. It will continue to be important and it will grow, although the Japan events will have some short term impact.
Q: Even with all of the new electric gadgets out there, are customers really using less power?
A: Nationwide, for the first time since World War II, in 2009, there was a reduction in customer demand across the country. And it didn't come back in 2010. In 2010 there was great weather for the utilities, it was cold and it was hot. So there was demand, but when you took the weather piece out of it, demand was down nationwide 4 percent. What we don't know is if people have changed their usage. Is there more conservation? Is that having an impact? Or, is it consumer confidence? You'd expect to see lower demand on the industrial and commercial side, as part of the normal cycle. But this is really the first time you've seen it in the residential sector on a sustained basis.
Q: Will you be comfortable in the role of the CEO of the biggest company in your industry?
A: Oh yeah, I'm quite comfortable with it. I grew up on my feet, trying cases. I'm pretty adept in speaking forums and I'm a pretty quick thinker. The things that matter in business don't change based on the size of the platform. But a couple of things do change. You are the biggest player so your impact on policy changes. I'm going to have to take a higher profile. It'll be a little different but I'd say I'm looking forward to it.