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Growing Electricity Sales, Higher Rates Push Up Duke Energy Profits

Duke Energy is building a new headquarters on South Tryon Street in Charlotte. It's part of an office consolidation that the company says will reduce office space by 60%.
David Boraks
Duke Energy is building a new headquarters on South Tryon Street in Charlotte. It's part of an office consolidation that the company says will reduce office space by 60%.

Duke Energy earned a profit of $765 million during the second quarter of 2021, boosted by higher electric rates and growth in energy usage — including by people who are still working at home during the pandemic. That was a rebound from a loss in the same quarter a year ago.

Chief Financial Officer Steve Young said customers are using 6.5% more electricity than they were a year ago now that most businesses are back open following last year’s shutdown. Residential electricity usage fell slightly as people returned to the office, but remains above pre-pandemic levels, Young told analysts on a conference call Thursday morning.

"Many people continue to work from home on at least a part-time basis," Young said. "In fact, this quarter's results are more than 4% above the second quarter of 2019, highlighting the continued strength of the residential class."

Duke estimates that about 15% of workers continue to work from home, which is contributing to growing electricity sales.

Duke revenues were up 16% in the second quarter, compared with a year earlier.

Meanwhile, Duke also has followed through on a pledge to cut expenses, reducing office space by 60% as it shifts to a hybrid workplace for its own employees. Young said that will save $25 million to $30 million a year.

Duke's second-quarter profit translates into 96 cents a share, or $1.15 a share excluding one-time expenses. That beat the average Wall Street estimate of $1.12 as reported by Zacks Investment Research.

Those one-time expenses were related to last year's cancellation of the Atlantic Coast Pipeline project as well as reductions in office space and employee expenses. The company has said it has used various tactics over the past year to rein in expenses, including a hiring freeze and cutting overtime and contractors. Altogether, Duke reported after-tax savings of $135 million during the quarter because of the "workplace and workforce realignment."

Meanwhile, Duke is continuing to battle with a Florida hedge fund and shareholder that wants to break up the company. Elliott Management said in May it wants to split Duke into three separate companies based on geography — the Carolinas, Florida and the Midwest. Elliott argues that Duke's Florida and Midwest utilities are "undermanaged and undervalued" and that the company would be worth more in pieces than combined.

CEO Lynn Good told analysts Thursday that "we regularly engage with our shareholders" and that Duke has been in discussions with Elliott for more than a year.

"(We are) comprehensively reviewing all of the ideas, engaging advisers when we need to and discussing with our board all of these ideas," Good said. "And it's not appropriate for me to comment any further on the specifics.

"But I would confirm to you that we will remain open to constructive engagement. We'll evaluate all proposals, act on those we believe deliver value to our stakeholders. And I would also say that we remain focused on the serving of customers, maintaining our assets, advancing the strategic priorities around our clean energy transition. And that remains unchanged as well," she added.

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David Boraks previously covered climate change and the environment for WFAE. See more at www.wfae.org/climate-news. He also has covered housing and homelessness, energy and the environment, transportation and business.