Surprises, protest greet utility

ST. PETERSBURG, FLORIDA - Progress Energy Inc.'s recent annual shareholders meetings have been pretty humdrum affairs.

By those modest standards, the company's recent shareholders meeting at the Hilton St. Petersburg Bayfront Hotel verged on real entertainment.

A curious shareholder put chairman and chief executive Bob McGehee on the spot by asking if Progress might be interested in taking over TECO Energy Inc. of Tampa.

McGehee also responded to calls from environmentalists for Progress to take more aggressive steps to reduce power plant emissions.

And for good measure, there was a giant inflatable rat glaring at shareholders across the street from the hotel's main entrance, part of a protest by the AFL-CIO against Progress' use of a nonunion contractor that had used undocumented workers at the company's Crystal River power complex.

During the meeting's question-and-answer session, shareholder David Griggs of Sarasota asked McGehee "if you and our board have ever considered the synergies available by merging with TECO."

McGehee, who seemed surprised by the question, said, "I think maybe it'd be more appropriate to talk to the TECO board."

Then he provided the standard nonanswer issued by most CEOs when confronted by a question about merger and acquisition plans.

"We are always looking at opportunities that can help grow our business and improve our company and our stock," McGehee said.

Wall Street analysts have been skeptical about a potential marriage of Progress and TECO, given both companies' need to cut debt and their heavy reliance on a federal tax credit for the manufacture of coal-based synthetic fuel, which is to expire in 2007.

The Progress chairman acknowledged two utility merger pacts have been announced within the past six months but said, "For us to go over to TECO and say, "You want to merge?' - it just doesn't work like that."

The merger announcements were the definitive agreement in December between Exelon Corp. of Chicago and Public Service Enterprise Group Inc. of Newark, N.J., and Charlotte, N.C., utility Duke Energy Corp.'s agreement on Monday to take over Cinergy Corp. of Cincinnati.

In response to a previous challenge from environmentalists to reduce Progress' power-plant emissions, McGehee told the roughly 80 shareholders, "I am committed to being a constructive partner," noting the company will issue a report in March about the company's environmental protection measures.

Stephen Smith, executive director of the Southern Alliance for Clean Energy in Knoxville, Tenn., said after the meeting he hopes Progress will take a leading role in reducing emissions that contribute to global warming, adding that he has been heartened by recent environmental measures announced by other utilities, such as Cinergy and American Electric Power Corp. of Columbus, Ohio.

Smith also commended Progress' investments in North Carolina to reduce power plant emissions under the state's 2002 Clean Smokestacks legislation.

But he noted that the company's carbon-dioxide emissions have risen sharply from a decade ago, and that unlike Tampa Electric Co., Progress doesn't offer its Florida customers the option of buying a portion of their electricity from renewable sources.

McGehee also contended with questions about Progress' use of a Texas contractor at its Crystal River complex, which includes an 838- megawatt nuclear reactor.

In March, U.S. Immigration and Customs Enforcement agents arrested six workers at the Crystal River complex for various immigration violations.

At least three, who were employed by Progress contractor Brock Specialty Services, used fake Social Security numbers to get their jobs. One of them worked inside the nuclear plant in the presence of an escort.

McGehee said the incident didn't result in a security breach, adding that the company has beefed up background checks on contracted workers, which include verifying Social Security numbers.

He also argued that "what this issue is really about is a protest by unions" regarding the company's use of nonunion contractors. He said Progress will continue to use union and nonunion workers to ensure "high performance, safety and low cost."

The meeting came a day after Progress met with officials from the U.S. Nuclear Regulatory Commission to review the Crystal River complex's annual safety assessment.

The NRC determined that none of the undocumented workers were allowed unescorted into areas that require security clearances, NRC spokesman Roger Hannah said.

But such assurances didn't sit well with union representatives, who expressed concerns about plant security and argued that Brock paid its employees substandard wages and provided no benefits.

Brock officials couldn't be immediately reached for comment.

Michael Jeske, secretary-treasurer of the Florida Gulf Coast Building and Construction Trades Council, said "The contractor exploits workers, which makes them a rat employer."

Union employees set up a 15-foot-tall, cigar-chomping inflatable rat on First Street S facing the Hilton's main entrance with "Progress Energy" emblazoned across its chest.

Another rat was parked on Fourth Avenue S by a side entrance to the Hilton and one was on the sidewalk in front of Progress Energy Florida's headquarters on Central Avenue.