But Cinergy's fuel bill could be going up. Scientists have linked carbon dioxide to global warming, and politicians increasingly are moving to cap or cut these emissions. In addition to power, Zimmer's round-the-clock fire spews out roughly 30,000 tons of carbon dioxide every day.
Indeed, the company's nine coal-fired plants inject a total of 64 million tons of carbon dioxide into the air every year, or 1% of all CO2 emissions in the U.S. So why is Cinergy CEO Jim Rogers -- a regular donor to President George W. Bush who has a mixed environmental record after 11 years at the helm -- beating the drum for mandatory limits on carbon dioxide?
COMING TO THE TABLE. The 57-year-old Kentuckian with bright white hair and a genial smile will tell you that he, like many executives in the sector, now thinks that the political momentum in Congress to limit so-called greenhouse gases is unstoppable, despite opposition from the Bush Administration. By favoring limits today, Rogers figures he can negotiate friendlier regulations.
"Something you hear a lot at conferences now is that you need credibility to be at the table," says Rogers. "And if you're not at the table, you'll become the menu."
By publicly acknowledging the likelihood of regulation, Cinergy joins BP, Chevron, and a growing list of other companies that emit lots of CO2 and are investing big sums to prepare for a "carbon-constrained" world. It's a tough balancing act for them all, and for Cinergy in particular. Up to 95% of its revenue comes from burning coal -- the cheapest, most plentiful, and also highest-polluting fossil fuel in the world.
LISTENING TO SCIENCE. But opposition to environmental legislation carries its own price. It comes in the form of bad PR, lawsuits, and unpopularity in Washington and in state capitals. That's not trivial for Cinergy. It agreed last spring to be taken over by Duke Energy in a $9 billion deal, and it still needs the blessing of regulators in Kentucky, Indiana, Ohio, North Carolina, and the Federal Energy Regulatory Commission. Cinergy is also fighting a 2004 lawsuit by eight states that accuse it of not doing all it could to lower CO2 emissions today.
Rogers began to change his mind on global warming in 2000, when he appointed Kevin Leahy to be his manager of environmental economics and finance. After studying the science and politics of climate change for five solid months, Leahy says, he decided it would need to be dealt with actively and quickly.
"The science didn't look like it would be refuted any time soon," says Leahy. "Trust me, we'd like nothing better than for research to come along that changed the scientific community's view of global warming. We'd be throwing a party. But the consensus is, it's real." And once consensus arrives on environmental issues, political action is never far behind, he adds.
FACING THE DEBATE. In the five years since then, Rogers has made climate change a major focus. In the last 12 months, he has testified before Congress to ask for "clear guidance" on carbon regulation and spoken at several environmental conferences on the issue. Cinergy's latest annual report, released last February, has global warming on its cover and spends the first 30 pages discussing its importance and the company's strategy regarding it. "To simply avoid this debate?s not an option," Rogers writes in his shareholder letter.
While regulation likely would be costly for Cinergy, company execs say it would be better than facing more lawsuits or confronting piecemeal legislation by state or local governments. "The goal is to give our shareholders a very clear understanding of what future costs will be," says Mary Kinkel, Cinergy's lobbyist.
Moreover, executives hope they can shape a policy to best fit Cinergy's own interests. That includes getting Congress to compel other industries, such as the oil and auto sectors, to share the burden of cutting carbon and making sure that any emission caps are as accommodating as possible.
FORGOTTEN DEAL. Cinergy itself hardly has a clean environmental image. In 1999, the Environmental Protection Agency sued after the company refused to fit some of its older plants with "scrubbers" that remove sulfur dioxide and ozone, pollutants that cause acid rain and smog.
In 2000, Cinergy agreed to pay $1.4 billion and make necessary upgrades. But since Bush took office in 2001, the settlement has fallen by the wayside.
Cinergy hasn't paid the money, and not all of the agreed-to improvements have yet taken place. "In general, Cinergy's stance has been to resist letting the EPA push cleanup programs to their limit," says Ken Waltzer, a Clean Air Strategy Specialist with the Ohio Environmental Council.
AIRING IT OUT. But carbon dioxide is different story. Since it's the main by-product of burning fossil fuel, it's released in far higher volumes. Unlike sulfur dioxide and ozone, no technology currently exists for "scrubbing" out CO2 emissions. That makes the potential liability far greater and much harder to get around.
In building new plants, Cinergy will try to balance rate costs with environmental efficiency, says Rogers. After its merger with Duke Energy is completed in mid-2006, the new company plans to build five power plants in the next 10 years. That includes a nuclear plant, a natural gas-fired facility, and a plant that would convert coal to a clean-burning gas that emits 14% less CO2 than a standard coal facility.
But the plans include two traditional coal plants as well. Rogers says coal is essential to keeping costs low and that the new facilities will allow Cinergy to shut down older, less-efficient plants and thus reduce overall emissions.
LOOKING AHEAD. By planning and preparing now, Rogers believes he'll position his company ahead of its competitors and make a positive contribution to the environment. In the utility sector, where plants take years to build and remain online for five or six decades, that has long-ranging consequences.
"Rather than all of a sudden having huge increases [when regulation hits], we need to smooth it out over the long term," says Rogers. "I want to make sure the decisions I make today on this C02 issue ensure that leaders of this company five decades from now will look back and say 'I'm really glad that guy positioned us that way'." Helm is a reporter for BusinessWeek Online in New York EDITED BY Edited By Michael Arndt