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New Duke CFO outlines priorities

Longtime Duke Energy executive Steve Young, named Tuesday as the utility’s chief financial officer, says he will continue to focus on hitting earnings targets, growing Duke’s dividend and buffing its balance sheet and credit ratings.

That’s going well so far, he said, as Duke’s 2012 merger with Progress Energy invested the company more heavily in less-risky regulated businesses.

Young, 55, replaces Lynn Good, who was named Duke’s chief executive in June. Young has served as Duke’s vice president, controller and chief accounting officer since 2005. He joined Duke Power in 1980 as a financial assistant.

In an interview, Young noted other milestones: proposed rate settlements in both Carolinas; and an agreement in Florida that would resolve cost issues around the retired Crystal River nuclear plant and canceled contract for a nuclear plant in Levy County.

Good has said Duke would like to move to a pay-as-you-go model for new power plants and other infrastructure, whose costs in most cases are now billed to customers only once they’re in service.

“The idea here is to avoid some of the financing costs, and it can ultimately decrease the costs of the facility,” Young said. “But it does require some upfront contributions from customers.”

North Carolina allows utilities to recover construction-in-progress costs only through complex, general rate cases before the state Utilities Commission. Duke would like a mechanism where costs are recovered automatically, without commission review, for projects deemed prudent.

Young said Duke has no timeline for asking regulators or North Carolina legislators to allow such payments.

Customers in Florida reacted angrily last week when Duke canceled the contract for the Levy County nuclear plant, claiming they had been billed hundreds of millions of dollars for a plant that might never be built. Duke will continue to seek a federal license for the plant.

Young called it “the smart move at this time.”

“This is one of the facts of life with building generation – it takes long lead times, and during those lead times changes can occur in the consumption of electricity, the general economy or natural gas pricing, and we have to have the flexibility to make the right decisions based upon those changes,” he said.

With Duke potentially close to wrapping up a string of Carolinas rate hikes, Young wouldn’t predict how long a break customers will get before the company asks for more increases.

New environmental standards, especially those requiring control of carbon dioxide emissions, will be a key driver of costs, he said.

Carbon regulation “looms large if it moves particularly into regulation of existing coal plants,” Young said. “We understand the carbon dioxide regulations for future coal plants. For existing plants, that would be potentially significant.”

Young may earn up to $1.68 million in his new job, including base pay and incentive targets, according to securities filings. He will continue to serve as Duke’s controller until a successor is named.

He earned a bachelor’s in business administration from UNC Chapel Hill and has completed the Wharton Advanced Management Program. He’s led a number of key functions for the company, including system planning and operating, rates and regulatory affairs, and served as CFO of Duke Power.

Henderson: 704-358-5051;Twitter: @bhender
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