Duke Energy reported financial results for the third quarter on Friday. Here are five takeaways.
1. Irma hurt profits
Profits in the quarter fell to $954 million from $1.18 billion a year earlier, as the Charlotte-based utility’s results took a hit from Hurricane Irma.
The massive storm, which slammed into southern Florida in September, knocked out power to more than 1.5 million customers across that state and the Carolinas, Duke said. The outages resulted in lost revenue and, in Florida alone, estimated restoration costs of almost half a billion dollars, the company said.
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The slumping results caused Duke to lower its projected adjusted diluted earnings for 2017 to a range of $4.50 to $4.60 per share, compared with $4.50 to $4.70 previously. Cooler weather also hurt profits in the recent quarter, the company said.
“The hallmark of this quarter was resilience,” CEO Lynn Good said in a statement. “In the face of unfavorable weather and the destructive force of Hurricane Irma, we continued to deliver on our financial commitments for the year through focused cost control.”
Earnings per share were $1.36, compared with $1.70 a year earlier. Duke said factors included a charge related to the cancellation of a Florida nuclear project, as well as costs from Duke’s acquisition last year of Charlotte-based Piedmont Natural Gas.
Adjusted earnings, which don’t count those costs, were $1.59. That surpassed consensus expectations of analysts for $1.56, according to Zacks Investment Research. But revenues of $6.48 billion fell about $263 million below estimates, Zacks said.
Duke pointed to lower income tax expense and higher retail revenues from increased pricing as helping to offset negative factors in the quarter.
Ongoing cost-management efforts also helped, Duke said, and Good reiterated on Friday the focus on managing costs.
In March, Duke announced plans to slash about $100 million in expenses this year to offset lower financial results from warm winter weather, a move it said could result in job cuts or other steps. Under a previously announced plan, Duke is also seeking to keep operating and maintenance costs flat through 2020.
2. Pipeline approved
In a major development for Duke, the Federal Energy Regulatory Commission last month approved the proposed Atlantic Coast Pipeline, a $5.5 billion project expected to run from West Virginia to eastern North Carolina.
Duke, part owner of the pipeline, has said natural gas from the project will result in increased savings and reliability for customers and stimulate economic development in eastern North Carolina. Environmentalists have continued to raise concerns about the pipeline, including about effects on waterways and climate change.
Duke has said it expects construction to start before the end of the year. Good said Friday that the company continues working to obtain remaining permits from state agencies.
3. Rate request pending
In a separate issue, Duke also continues waiting for a ruling from the North Carolina Utilities Commission on a proposed increase in base rates for Charlotte-area electricity customers. In August, Duke requested an average increase of 13.6 percent across all customer classes in a territory including central and western portions of the state; residential customers would see bills rise by 16.7 percent.
The commission has scheduled three public hearings for customer feedback in January, including one in Charlotte. That one is set for 6:30 p.m. Jan. 30 in Mecklenburg County Courthouse, 832 E. Fourth St.
Duke has generated criticism for the increase because the utility is seeking the higher rates partly to cover the high costs for closing its coal ash sites around the state.
“We believe that these costs are squarely within the law,” Good told analysts Friday on a conference call. “We believe we have a very strong case that we’ll put forward on cost-recovery for ash.”
4. Tax plan lauded
Part of Friday’s call was focused on new tax-overhaul legislation unveiled Thursday by U.S. House Republicans. Among other changes, the plan calls for cutting the corporate tax rate to 20 percent from 35 percent.
Good highlighted a particular aspect of the plan she says would retain Duke’s ability to deduct interest payments on debt it takes on to finance its business. Good called it a “positive first step” but added that, like other companies, it continues to review the legislation.
5. Upgrades in South Carolina
Also Friday, Duke announced a plan to invest $3 billion over roughly the next 10 years to modernize and strengthen its energy infrastructure in South Carolina.
Enhancements will include making the energy grid more reliable and secure against storms and cyber attacks, Duke said.
The move comes after Duke in April announced a similar $13 billion initiative in North Carolina.