In the third quarter earnings review and business update call for Duke Energy, CEO Lynn Good and CFO Brian Savoy discussed the company's strong results, regulatory progress, and simplification efforts. They also highlighted the company's strong fundamentals, operational excellence, and growth opportunities, reaffirming their long-term earnings growth rate of 5% to 7%. They mentioned their focus on cost structure to offset mild weather and weaker industrial volumes for 2023.

The Company has been working hard to mitigate pressures in 2023 and expects to finish the year within their guidance range. They have made significant progress in North Carolina, with the approval of their Duke Energy Progress rate case application and related settlements. This includes a retail rate base increase of $1.6 billion and future capital investments of $3.5 billion. The Duke Energy Carolinas rate case also reached a partial settlement, providing clarity on a retail rate base increase of $2.6 billion and capital investments of $4.6 billion. A second settlement addressed nuclear PTCs.

Duke Energy expects the NCUC to make a decision on the DEC rate case by the end of the year and for permanent rates to be in effect by January 2024. They are pleased with the outcome at DEP and are focused on finalizing the DEC rate case. Their updated Carolinas resource plan, which includes a diverse mix of resources, has been filed with the Public Service Commission of South Carolina and the North Carolina Utilities Commission. The plan aims to meet the growing energy needs of the region and includes annual solar procurement and the development of advanced technologies. Duke Energy has also filed pre-CPCNs for a combined cycle plant and combustion turbines and plans to make full CPCN filings in the first quarter of 2024.

The Carolinas resource plan, which was developed with input from stakeholders, focuses on affordability and reliability while transitioning to cleaner energy sources. The plan will undergo hearings in both states in spring 2024, with expected orders by mid-2024. The company has completed its portfolio repositioning and is now fully regulated. Progress has been made in North Carolina, South Carolina, Tennessee, and Florida, with investments in grid modernization and solar. These investments have resulted in improved storm response and reduced outage times for customers.

The company experienced a 9.75% return on equity and increased the equity component of its capital structure in the Midwest. They have built momentum and have a clear long-term growth strategy, despite facing macroeconomic challenges. Quarterly results showed a decrease in earnings per share compared to last year, but this was offset by positive factors such as rate cases and riders, favorable weather, and lower operating expenses. The Gas Utilities and Infrastructure segment saw an increase in earnings, while the Other segment was up primarily due to a lower effective tax rate. The company expects its effective tax rate to be at the low end of its guidance range for 2023.

The company is adjusting its full year 2023 guidance range due to mild weather and weak volumes. They are implementing strategies to mitigate the impact and expect a strong finish to the year. Volumes are down 1.2% on a rolling 12-month basis, but there is optimism for a turnaround in the future. The company is seeing strong customer growth from population migration and economic development efforts, particularly in sectors such as battery, EVs, semiconductors, and data centers. These efforts are expected to add 1,000 to 2,000 gigawatt hours in 2024.

The company is confident in a 0.5 to 1% growth rate with line of sight to 7,000 to 9,000 gigawatt hours by the end of 2027. They will provide 2024 earnings guidance and detailed capital and financing plans in February. The company expects growth from various regulatory outcomes and investments in different regions. They also anticipate higher interest rates and are implementing cost-saving measures to mitigate potential challenges.

In summary, the company is focused on improving their cost structure and expects their operating and maintenance costs to decrease in 2024. They have taken several credit supportive actions, including collecting deferred fuel balances and selling their commercial renewables business to reduce debt. They have also reached a settlement on the treatment of nuclear PTCs and plan to utilize transferability provisions to further support their credit metrics. The company is targeting a strong FFO to debt ratio in the coming years and will provide an update on their financing plan and capital plan in February. They plan to take a balanced approach to funding their growth and maintaining their balance sheet strength.

The company plans to evaluate funding through their dividend reinvestment plan and at the market program as part of a balanced approach. They anticipate strong growth potential in their business and aim to achieve affordability, reliability, and clean energy for customers, while also maintaining a strong balance sheet for investors. They are executing on their priorities and have confidence in their 5% to 7% growth rate through 2027. They will provide an update on their capital plan in February, with a potential upside bias and increases coming from their integrated resource plans and load growth in the Carolinas.

The company is seeing an increase in the need for additional megawatts in the Carolinas, driven by population growth, economic development, and reserve margin. They are also transitioning to natural gas and renewables in Indiana and will be updating their multi-rate plan in Florida. The gas business is also seeing growth and capital spending for integrity management. The company plans to provide an update on their growth in February and may consider equity funding for spending above the current base plan. It is unclear if every dollar of incremental CapEx will be funded with a 50-50 debt equity structure.

Lynn Good discusses the company's balanced approach and how it relates to their balance sheet strength. She mentions potential equity options and upcoming decisions that could impact cash flow. She also addresses concerns about the balance sheet and their plans for strengthening it.

The company has taken steps to strengthen its balance sheet and has deferred fuel collection and implemented multiyear rate plans, which are expected to have a positive impact on credit. The company is targeting a minimum of 14% growth and is monitoring sales trends, which have been weak due to various factors such as weather, supply chain issues, and reduced production from customers.

The speaker expresses optimism about a rebound in the industrial sector in 2024 and 2025. They also mention that the impact of the return to work trend has been mostly worked through and that they will enter a decoupled environment in 2024. Customer growth is expected to drive revenue, and there is confidence in long-term growth due to strong economic development. The expansion of a Toyota battery plant in North Carolina is mentioned as an example. The speaker is joined by Brian, who adds that North Carolina residential has contributed to weakness this year, but decoupling will mitigate risk and volatility. Florida has seen strong growth in the residential sector due to population migration. They also expect industrial load in the Carolinas to turn around next year.

The speaker confirms that the company's confidence in achieving 5-7% growth in EPS in 2024 is supported by the modernized rate structure in the Carolinas and the transparency of their integrated resource plans. This structure allows them to set prices and match capital expenditures with returns, while still delivering value to customers. The speaker also mentions the continued growth in Florida as a positive factor.

The company has strong capital in Florida and plans to update their multiyear rate plan for grid and solar. They are also investing in the Midwest for both generation and grid. The CEO is confident in the company's growth and believes they have a good balance between benefits for customers and investors. When it comes to O&M, the company has identified $300 million in cost initiatives, with 75% of that being sustainable into 2024. They have also developed mitigation plans for weak weather and volume in 2023, with 50% of those being sustainable into 2024. The company will continue to look for cost savings ideas to drive O&M lower.

The speaker believes that the company's productivity and efficiency will continue to improve, leading to lower costs in the future. A question is asked about the equity content of incremental CapEx and the speaker clarifies that it will be between 30% to 50%. Another question is asked about the North Carolina resource plan and the speaker explains that it was developed through a stakeholder process and considers various viewpoints on renewables, batteries, natural gas, and nuclear energy.

The speaker believes that their company has presented a well-balanced strategy that prioritizes reliability, affordability, and clean energy. They are confident that this strategy will be closely evaluated by the commission and are committed to keeping stakeholders informed. They also confirm that they are on track to meet their target of making 50% of their business agility savings sustainable. The call ends with the speaker thanking participants and inviting them to continue the conversation at an upcoming conference.

This summary was generated with AI and may contain some inaccuracies.