Thu November 8, 2012
Progress Merger Boosts Duke Earnings, But Challenges Ahead
Duke Energy says earnings in the third quarter rose 26%, primarily because it was the first full quarter to include Progress Energy. That figure slightly exceeded analyst expectations, but questions remain about challenges Duke Energy faces going forward.
The list includes:
- The ongoing cost of merging with Progress and paying severance to some 1100 employees, including ousted CEO Bill Johnson.
- The ongoing investigation over that ouster by state regulators.
- More cost overruns at Duke's controversial new coal-fired plant in Indiana.
- A damaged nuclear plant in Florida that could cost billions to repair.
And, says Duke Energy CFO Lynn Good, people are using less electricity.
"Average usage for residential customers continues to trend modestly lower, as a result of the challenging economy and energy efficiency efforts," Good told analysts on Duke's earnings call Thursday morning.
Good says earnings would have been worse without the higher rates Duke was allowed to charge in the Carolinas last quarter.
Duke Energy CEO Jim Rogers told analysts he'd like to see North Carolina lawmakers give utilities the ability to adjust electric rates automatically, rather than have to make the case to regulators each time. That led into a question from another analyst on the call about what North Carolina's new Republican Governor and Republican-controlled legislature might mean for Duke.
"Pat McCrory will do a good job of pulling talent from around the state into Raleigh to really create a world-class administration," said Rogers. "We're very happy that he's been elected and proud of the fact he's from Charlotte and he was our mayor for 14 years."
Rogers didn't mention that McCrory also worked at Duke Energy for 28 years before retiring to run for governor.
During his first six months in office, Governor-elect McCrory will have three vacancies to fill on the seven member utilities commission that regulates Duke Energy.
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