Falling Earnings And A Coal Ash Settlement: Upbeat News For Duke Energy?

Feb 18, 2015

Duke Energy saw earnings fall last year, and it expects lower earnings than analysts have projected next year. Still, many on the company’s earnings call Wednesday were upbeat.


Duke reports it earned about $1.9 billion in 2014 net income, down from 2013’s about $2.7 billion.

The biggest hit came from its international business—power plants it owns mostly in Central and South America, which generated $400 million in 2013. Last year, it made $55 million on the business.

Analyst Paul Patterson at Glenrock Associates says many factors contributed.

“Things like the price of oil, Brazilian currency, hydro conditions—all those things can have an impact on a company as large and as complex as Duke,” Patterson says.

Duke also predicted it will earn slightly less money this year than analysts have previously predicted.

Despite the drop in income, Patterson had a more upbeat overall takeaway about the company’s finances.

“Basically, they’re executing on their plan to grow the business,” he says.

The company expects its utility business, including in the Carolinas, to keep growing, as more businesses expand, and more people move in and use more power. As it does so, it expects to grow 4 to 6 percent a year—a trend analysts like to see.

A coal ash settlement in the works

Duke Energy also set aside $100 million to settle a federal criminal investigation, which began after a coal ash spill last year contaminated more than 70 miles of the Dan River. On the earnings call, CEO Lynn Good said the company could approach the court with a deal in the next few days. Subpoenas in the case suggest that prosecutors were looking not only at the spill, but also at the relationship between Duke and state regulators going back for many years.

Duke still has outstanding litigation from environmental groups about its storage of coal ash at the Dan River and its other 13 coal plants around the state, as well as an investigation the state environment agency is conducting along with the U.S. Environmental Protection Agency.