IBJNews

Duke Energy earnings hurt by mild weather

Back to TopCommentsE-mailPrintBookmark and Share

Duke Energy Corp., the nation's largest electric utility by market value, reported stronger-than-expected earnings for the third quarter, but company executives said the outlook for strong economic growth in the U.S. is dim.

The company said more customers signed up for service, which is a hopeful sign, but demand for electricity from homes and businesses has been weak. Jim Rogers, Duke's CEO, said in an interview that the company is operating under the expectation that electricity demand, excluding the effects of weather, will grow at a rate of less than 1 percent.

He said that with slow population growth in the U.S., the financial crisis in Europe, and diminished expectations of growth in China, "People look around and see there's no part of the world that can really juice growth."

"We are in a slow growth period," he said.

Still, Duke reported solid third quarter results Thursday, the company's first quarterly results since acquiring Progress Energy in late June to become the largest U.S. utility. The Charlotte, N.C.-based company serves 7 million customers in the Carolinas, Florida, Indiana, Kentucky and Ohio.

Duke reported earnings of $594 million, or 85 cents per share, on revenue of $6.72 billion. The company said it earned $1.47 per share when it excluded $457 million in deal-related costs, a $180 million increase in the costs it must pay to complete a new coal plant in Indiana and other unusual items.

Analysts surveyed by FactSet had expected Duke to earn an adjusted $1.44 per share on revenue of $6.79 billion.

Duke Energy Corp. shares rose 56 cents, to $63.50 each, in morning trading.

Andy Smith, an analyst at Edward Jones, welcomed the company's customer growth in both its Progress and Duke territories, and said he expects company results to improve in the coming months as it seeks to increase rates in the Carolinas and begins to realize savings from the merger.

"It looks like a pretty solid quarter," Smith said.

Duke was allowed to charge customers in the Carolinas higher rates in the quarter, which helped results. But milder weather in its service territory reduced demand for electricity to run air conditioners.

Sales of electricity to industrial customers declined 1.1 percent in the quarter. Duke CFO Lynn Good said its automotive customers were operating at full strength but its metals customers were pulling back. "The economy has been sluggish," she said in an interview.

Duke's commercial power division, which generates electricity and sells it into wholesale markets in the Midwest, suffered from lower wholesale power prices, especially in Ohio.

Duke also owns and manages power plants in Latin America. Those results suffered from unfavorable currency exchange rates.

The company said it remains on track to post full-year adjusted earnings of $4.20 to $4.35 per share.

A few major issues face the company in the coming months, however. The company is being investigated by the North Carolina Utilities Commission over the way it handled changes in executive leadership after the merger with Progress Energy. Jim Rogers was to cede the CEO job to former Progress chief Bill Johnson. Hours after the merger was completed, however, Johnson was ousted and Rogers was give the CEO job back.

Johnson was picked this week to run the Tennessee Valley Authority, a government-owned corporation that provides electricity to 9 million people in parts of 7 states in the Southeast, beginning in January.

Duke said it is working with the commission on a resolution to the commission's objections.

At the same time, the company is asking the commission to allow it to raise rates for customers in the Progress service territory by $359 million, the first such increase in 25 years. Hearings are set for March. Analysts worry that the controversy over the executive changes at the company will make the commission less inclined to grant Duke all of the rate increase it is requesting.

Also, the company's idled Crystal River nuclear plant in Florida, acquired in the Progress merger, is facing enormous costs to repair cracks in its most important structure. Investors are waiting for a decision by Duke over whether to repair the plant or shut it permanently.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

ADVERTISEMENT