We analyzed and evaluated Duke Energy (DUK) versus Southern Company (SO) in August because those two utilities were the two largest investor-owned utilities in the US and two of the largest in the world. We were able to conclude that Duke Energy had a slightly higher dividend yield and dividend growth record than Southern and Duke Energy was a larger company than Southern. However, we concluded that Southern offered investors greater potential total returns going forward since Southern hasn’t made any blockbuster acquisitions since its 1945 formation while Duke has engaged in multiple transformative deals over the last 30 years. In recent years, Duke had acquired the Cincinnati multi-utility holding company Cinergy in 2006 and Progress Energy in 2012. In order to win approval to acquire Progress, Duke had to offer regulators $875M in concessions to seal the deal and has to deal with the complex intricacies of merging Progress Energy into Duke Energy.

Duke’s acquisition of Cinergy is important to note because that is how its current CEO James Rogers came to Duke. James Rogers was previously the Chairman and CEO of Cinergy for nearly 11.5 years before selling it to Duke in 2006. Prior to serving as Cinergy’s Chairman and CEO, Rogers was CEO of PSI Energy in Indiana from 1988-1994 before selling it to Cincinnati Gas & Electric to form Cinergy. James Rogers has been Duke’s CEO since its 2006 purchase of Cinergy and executed the spin-off of its gas business as Spectra Energy (SE) in 2007. Despite the fact that Jimmy Rogers has been rivaling Exelon’s (EXC) retired CEO John W. Rowe for the title of most media liveshots of a utility industry CEO, Duke’s EPS has been inconsistent since 2007. Despite earning plaudits from the media for embracing the Waxman-Markey cap and trade bill, Duke’s financial performance has been muddled in a mucky morass of mediocrity under the management of the Rogers regime. The fact that Duke’s EPS has been inconsistent since 2007 while Southern’s EPS has steadily inched forward during that time proves our thesis.

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