Duke Energy earned $634 million on $5.9 billion in revenues in the first quarter as colder winter weather and higher customer rates in the Carolinas boosted profits.
Ten months after its July 2012 merger with Progress Energy, Duke reported earnings of 89 cents a share compared with 66 cents a year earlier. Adjusted for merger costs and other special charges, earnings were $1.02 a share, 2 cents below Wall Street analysts’ expectations and down from $1.13 a year earlier.
CEO Jim Rogers called the results “consistent with our internal plan” and in line with the company’s guidance of $4.20 to $4.45 a share for 2013. Duke expects a stronger second half of 2013 as it nets merger savings and new customer rates take effect in the Carolinas and Ohio.
Chief Financial Officer Lynn Good said the 50,000 new customers Duke has gained across its six-state territory could reflect a housing rebound. But Rogers added that lingering high unemployment illustrates an overall anemic economic recovery.
Duke says a leap-year effect in 2012 skewed growth comparisons to this year. Adjusted for weather, its volume for the first quarter was down about 0.5 percent in all sectors. Factoring in the additional day in 2012, it was up about 0.5 percent.
Duke’s regulated businesses were helped by weather that, in the Carolinas, was 41 percent colder than a year earlier. Higher rates approved in 2012 also lifted profits. Total sales in the Carolinas rose 14 percent.
The N.C. Supreme Court sent Duke Energy Carolinas’ most recent rate increase, 7.2 percent granted in early 2012, back to the N.C. Utilities Commission for another look.
Rogers said he expects the commission to more fully document the rate increase’s impacts on customers, as the court ordered. He does not think Duke’s allowed return on equity, or profit margin, of 10.5 percent will shrink.
“We continue to believe that the settlement agreement approved by the Utilities Commission is fair and balanced,” he told analysts in a conference call.
A rate increase settlement between Duke Energy Progress, which serves Eastern North Carolina and Asheville, and consumer advocates is before the commission now. Hearings on Duke Energy Carolinas’ latest rate increases are set for July.
After a tumultuous 2012, which included two investigations and settlements of the Progress merger, Duke expects to spend the year maximizing savings from the merger and improving the performance of former Progress nuclear plants.
Its new Edwardsport coal-gasification plant in Indiana, which had about $1 billion in cost overruns, is expected to go into service by late May. The Sutton gas-fired plant near Wilmington will start up by the end of the year.
In October, the Florida Public Service Commission will begin hearings into Duke’s decision to retire the crippled Crystal River nuclear plant. The commission will also review a mediator’s recommendation that Duke settle insurance claims over the plant for $530 million.
Duke will file cost estimates for dismantling the plant with the Nuclear Regulatory Commission in November. It has $600 million in a decommissioning fund, an amount Duke believes will be adequate. Duke told Florida regulators this week that it will lay off or transfer 585 Crystal River workers.
Duke’s international division fell 6 cents a share compared with a year earlier. Duke attributed the downturn to lower sales and higher costs of purchased power in Brazil.
Commercial power, or unregulated businesses, fell 3 cents a share on lower earnings from Duke’s power plants in the Midwest.
Henderson: 704-358-5051 Twitter: @bhender
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