Duke Energy to consolidate operations (Houston targeted)

Houston Business Journal ^ | 12/18/2002 | Monica Perin

[Willie Green]

For education and discussion only. Not for commercial use.

Duke Energy Corp., headquartered in Charlotte, N.C., confirmed Wednesday that it plans to make major a announcement by week's end about the further reorganization and consolidation of its energy marketing and trading business, as well as other operational areas.

Many Duke employees in Houston are expecting to be laid off, following the 1,500 or more layoffs that have already occurred companywide. Rumors were flying this week regarding the future of the company in Houston, where Duke Energy North America, also known as DENA, is headquartered.

But company spokesman Bryant Kenny said Wednesday he couldn't confirm trading layoffs because "all the details and the numbers haven't been finalized yet."

But, he said, the company will be consolidating its marketing and trading operations in Houston, moving some people and activities from trading offices in Salt Lake City, Utah, and Calgary, Canada.

Headquartered in Houston are Duke Energy Marketing and Trading, Duke Energy Gas Transmission and Duke Energy International. Duke Energy North America's headquarters at 5400 Westheimer contains a 21,600-square-foot state-of-the-art trading floor that was inaugurated in June 2001, as well as secure control centers that remotely operate the company's independent power generation plants and gas pipelines throughout the country. These latter facilities would be difficult and costly to relocate or rebuild elsewhere.

Duke Power, the company's regulated power business, is based in Charlotte, and that division is expected to undergo downsizing as well.

Duke recently appointed a new CEO for DENA, Rob Ladd, who reports to the president and chief operating officer of the company, Fred Fowler. Ladd, a Rice University graduate, is based in Houston. Fowler, a former Houston-based PanEnergy executive, has his office in Charlotte.

"Houston is our largest trading presence," Kenny says. "We will continue to trade around our assets. We are committed to maintaining our trading operations in Houston."

But, he added, some "new leadership" will be announced, along with other measures to "improve efficiencies."

"Specific numbers and structure will be announced Thursday," Kenny said.

Before all the upheaval in the merchant energy sector began early this year, Duke had more than 250 energy traders in Houston, plus more in Salt Lake City and Calgary.

Kenny said the company's management has been talking to employees today. Other sources said employees in Houston were told each of them will be handed an envelope on Friday that will tell them their future at the company. Employees said several senior executives in accounting in Houston were let go earlier this week.

Meanwhile, an online real estate trade publication, "Real Estate Alert," reported Wednesday that Duke Energy is "quietly seeking a buyer" for its 614,000-square-foot Houston office building — along with a 20-year lease for presumably smaller space in the building. The trade pub reports that the company has retained Dresdner Kleinwort Wasserstein as its advisor. The building reportedly could fetch up to $75 million.

Kenny said he was aware of this story but could not confirm it.

[Willie Green]

With the collapse of energy trading after the Enron scandal, perhaps Houston should take advantage of the "skilled" labor that's available and legalize casino gambling.

[Lessismore]

as well as secure control centers that remotely operate the company's independent power generation plants and gas pipelines throughout the country. These latter facilities would be difficult and costly to relocate or rebuild elsewhere.

But they must also exist elsewhere for disaster recovery reasons. And Houston, being flood and hurricane prone, is a very poor place to have them anyway.