Duke Energy Claims Cincinnati Taxes Too High: Meanwhile, CEO's Benefits Included $363,573 For 'Personal Use' Of Company Aircraft



Time To Park Duke Energy's Aircraft?

 CINCINNATI (TDB) -- Duke Energy -- whose Cincinnati-area customers pay some of the state's highest electric rates -- is fighting to lower its property tax bills by $40 million across SW Ohio.  Meanwhile, its CEO's compensation package rose to $6.93 million, including what the most recent proxy statement calls $363,573 for "personal use of airplane."  Two other execs got $28,305 for personal use of the plane.  While the utility contends local taxes are too high, the high life seems to go on.  Or maybe the high-flying travel habits of the corporate brass are landing hard on the taxpayers.  Duke's corporate policy requires CEO James E. Rogers to fly on company aircraft for business purposes.  It's all about security, the company says.  But Rogers also gets to use the plane as a perk on private trips.  He can also hop aboard for flights to boards of directors meetings at companies like Fifth Third Bank, where he sat as a director until recently.  Duke's policy looks to fly in the face of the example being set by House Speaker-designate John Boehner, one of the utility's 1.6 million Ohio residential customers.  Boehner said last week he's going to fly on commercial airlines between DC and his SW Ohio home in Cincinnati's northern suburbs.  He won't be using the government aircraft that Nancy Pelosi -- and before her, Dennis Hastert -- used to shuttle House Speaker's around the country.  Republican Boehner will be third in line for the presidency, but he said commercial airliners are safe enough to outweigh any and all security concerns.  Said Boehner:

"I've talked to our security folks about the security involved in my new role.  Over the last 20 years I've flown back and forth to my district on commercial aircraft and will continue to do that."

Duke Energy sees things differently.  The 8-K on file with the Securities and Exchange Commission discloses that the Charlotte, N.C.-based gas and electricity utility is worried about security for its CEO James E. Rogers.  Here's what it says:

"For security reasons, Mr. Rogers is required by the Company to use the Company's aircraft, whenever feasible, for his business travel.  Mr. Rogers is also permitted to use the Company's aircraft for personal travel within North America; however, Mr. Rogers will be required to pay for the cost of personal travel on the Company's aircraft in accordance with the Company's policies, except he is not required to pay for the cost of travel to his annual examination or to meetings of the board of directors to other companies on whose board Mr. Rogers serves.  Mr. Rogers is responsible for any income taxes  resulting from such aircraft usage.  However, to the extent Mr. Rogers incurs expenses associated with his spouse accompanying him on business travel, Mr. Rogers is entitled to reimbursement for those expenses, including payment of a tax gross-up."

The proxy statement includes details that show Rogers got $363,573 in 2009 in "other compensation" for personal use of Duke Energy's aircraft.  [The 2010 data isn't out yet.]  That other compensation comes from the IRS determining that the trips are imputed income.  Imputed income isn't cash, it's often a benefit that isn't paid in cash.  A footnote on page 71 of Duke's proxy statement says:  "Officers are permitted to invite their spouse or other guests to accompany them on business trips when space is available; however, in such events the officer is impute income in accordance with IRS guidelines.  The additional cost . . . is the amount of the IRS-specified tax deduction disallowance, if any, plus any additional carbon credits purchases with respect to the executive officers personal travel."

Meanwhile, Janine Migden-Ostrander, Ohio's consumers counsel, has noted that Duke's residential electric rates are about the highest in the state.  She said the company should refund some of the proceeds from the $40 million tax battle -- but only if Duke succeeds.  Rogers use of the plane, so far, has not been a public issue.   Here's Midgen-Ostrander on Duke's rates for consumers:

"If Duke Energy presses forward to reduce its property taxes paid to schools and local governments, the utility should be required to refund to customers any portion of the taxes that are currently included in its rates. My office - as the residential utility consumer advocate - will take appropriate measures to argue that these refunds occur. At this time, Duke's residential electric rates are among the highest in the state, surpassing those high rates paid in northern Ohio. With residential consumers continuing to struggle and stretch their budgets, a break for customers is only fair if Duke should persist with its plan to reduce its property taxes."

Cincinnati Bell Chairman Phillip Cox: Is His College Degree A Total Fabrication?

CINCINNATI (TDB) -- A spokesman for Xavier University says the private Jesuit school in Cincinnati has no record of awarding a diploma to Phillip R. Cox, a prominent Ohio business leader who claims to be a graduate with a bachelor of science degree. Cox is a trustee on the University of Cincinnati board. He is also chairman of the board of Cincinnati Bell Inc., an Internet and telephone company with about 3,000 employees in Ohio, Kentucky and Indiana. There's more on Cincinnati Bell at Yahoo Business. He also serves on the boards of Timken, Duke Energy and Diebold, and was on the Cleveland Federal Reserve Bank's board until 2006 when his term ended.

Cox was appointed to the University of Cincinnati board of trustees by former GOP Gov. Bob Taft in 1999. Cox's term expires in 2008. A brief official biography of Cox appears on the state university's Web site and notes he is a "1968 graduate of Xavier University."

However, Xavier University spokesperson Deb Del Valle told The Daily Bellwether this week that Xavier officials have been unable to find any records showing that Cox received a diploma awarding a degree. She said Xavier has fielded inquiries about Cox's history at Xavier in the past. She said he attended the school, but is not a graduate.

"We cannot say that he has a degree from Xavier. The registrar has searched and there is no record that he is a graduate. This has came up before,'' Del Valle said.

Last May, Cox was questioned in a court deposition (Warren County Common Pleas Court, Case No. 06 CV 66932) and testified he had a degree from Xavier University. Here is an excerpt:

Q, And you went to college in the Cincinnati area as well?

A. Xavier University.

Q. And what year did you graduate from Xavier University, with what degree?

A. 1969. [Editor's Note: The University of Cincinnati bio linked above said Cox graduate from XU in 1968.]

Q. With what degree?

A. Political science, BS.

Q. Was that a bachelor's degree?

A. BS.

Q. A bachelor of science. And did you go on to a graduate level program?

A. No, I did not.

During the deposition, Cox was asked if he had ever made claims about his past that were misleading. He said material was circulating that purported to show he was a fabricator.

Q. It is accusing you of making a practice of lying about your credentials. Do you see that in paragraph 2?

A. Yeah, I see it. Yeah.

Q. You deny that allegation.

A. I deny it, yes.

Q. You would say that you've never been in the Secret Service?

A. Same answer I gave you before, right.

Q. But you would disagree that you ever claimed that you did, correct?

A. Never claimed it.

A. You ever claimed to have a master's degree in psychology?

A. No. I said I had a degree in psychology -- psychology and political science.

Q. And did you ever claim to have a law degree from the University of Michigan?

A. No. I have a degree from the University of Michigan for a course taken there; plaque's on my wall.

Q. What course was that?

A. It was an industry course for financial planning.

The deposition's cover sheet shows it was taken May 31, 2007 at Five Seasons County Club.