Duke Saw Slowdown but Kept Mum, Critic Claims

The company did, however, take smaller charges -- also related to merchant energy -- that Stone viewed as conveniently timed. Specifically, Duke established reserves to cover the future demolition of power assets the company had apparently planned to destroy since inheriting them through an acquisition three years earlier.

"What makes establishing these reserves viable now?" Stone asked in an email to the SEC a week before the charges were booked. "Are we doing all this simply because it is to our benefit from an earnings standpoint now vs. other times?"

Lipe also saw problems with this particular charge, since the demolition work had apparently not even begun. The company itself adamantly insists that it did nothing to manage earnings.

"We do not manage earnings," Wheeless said. "That's just not how we do business here at Duke Energy."

Wheeless went on to say that Duke has never been contacted by the SEC about the earnings report in question. As a matter of policy, the SEC doesn't comment on any dealings with companies.

Disappearing Act

Duke itself didn't stay focused on the turbine issue for long. Talk of turbine cancellations -- so hot just days earlier -- abruptly ended when the company filed its third-quarter 2001 report. After that, Stone says, Duke set out to erase even leftover traces of the debate.

"My fellow forecasting teammates and I were told verbally to discard any of the information/scenarios that discussed the GE turbine initiative," Stone said. "It was like an issue that was talked about and then totally vanished."

But Duke had already laid out clear, if unexecuted, plans to cancel turbines ordered for the construction of power plants. And Stone had to wonder: Why would Duke be willing to pay a steep penalty to cancel the turbines unless not canceling them looked even more expensive in the end?