The paragraph is the opening for Duke Energy's Third Quarter 2024 Earnings Call, introduced by the operator, Felicia, and handed over to Abby Motsinger, the Vice President of Investor Relations. Abby introduces the call's key speakers: Lynn Good, Chair and CEO; Harry Sideris, President; and Brian Savoy, CFO. The discussion will involve non-GAAP financial measures and forward-looking information, with a warning that actual results may differ due to disclosed factors. Lynn Good acknowledges the challenging hurricane season, highlighting three consecutive hurricanes—Debby, Helene, and Milton—that caused significant damage to communities. She expresses sympathy for those affected and praises the company's employees and partners for their swift response in restoration efforts. Harry will elaborate on restoration efforts, while Brian will discuss cost estimates and recovery plans.

The paragraph outlines the efforts of customer care representatives, corporate responders, community relations managers, and state leaders in keeping customers and policymakers informed during challenging times. The author expresses gratitude to state leaders like Governors Cooper, DeSantis, and McMaster for their partnership during emergencies. There's an acknowledgment of positive feedback from regulators and policymakers for the company's response efforts. The focus then shifts to quarterly financial results, noting adjusted earnings per share of $1.62 for the third quarter, down from $1.94 the previous year. The impact of weak weather in early 2023, mitigation efforts, and expenses related to Hurricanes Debby, Helene, and Milton are discussed. Preliminary cost assessments are in progress, and while hurricane costs are largely managed, lost revenues have no recovery mechanism. The company reaffirms its 2024 guidance, anticipating being on the lower end of the range.

The paragraph discusses the company's response to a severe storm season and their commitment to ongoing growth. They are implementing mitigation measures and controlled spending without compromising safety or customer service. Looking forward to 2025 and beyond, they are confident in their long-term outlook, largely due to favorable regulatory outcomes and growth in key areas, reaffirming a 5% to 7% EPS growth rate through 2028. Harry Sideris then details the company's response to recent hurricanes, including Debby and Helene, which caused significant damage across their service areas. They mobilized over 20,000 resources to restore over 5.5 million outages, demonstrating effective preparedness and recovery efforts.

The paragraph details Duke Energy's response to the significant power outages caused by hurricanes Helene and Milton, affecting areas in North Carolina, South Carolina, and Florida. Despite the extensive damage, Duke Energy restored the majority of power quickly due to strategic preparation, constant communication, and dedicated efforts of their 27,000 employees. Notable efforts included workers braving tough conditions to restore power to critical locations. Key to their effective response were substantial investments in grid-hardening technologies, such as underground lines and upgrades to infrastructure, which helped prevent further outages and reduced downtime significantly.

The company plans to invest heavily in infrastructure, with half of its $73 billion capital plan over the next five years allocated to grid improvements. They received approval for resource plans in the Carolinas, allowing them to proceed with investments while ensuring reliability and affordability. In Indiana, an updated resource plan was filed, balancing service reliability and customer affordability with diverse generation resources. The company plans to file for a certificate for new gas generation in 2025. In Florida, a settlement on a multi-year rate plan was approved, facilitating cost recovery for grid and renewable investments. A settlement was also reached in North Carolina regarding natural gas rates, focusing on safety and service reliability.

The paragraph discusses financial updates and impacts for a company. It mentions an expected order in January 2025 and approvals for $80 billion in rate-based investments across eight rate cases since 2023. The company has multi-year rate plans through 2026 to manage customer rate impacts and support infrastructure investments, reflecting rising capital costs and demands for clean energy. Financially, in the third quarter, reported and adjusted earnings per share were $1.60 and $1.62, respectively, down from last year's $1.59 and $1.94. Electric Utilities and Infrastructure saw a $0.09 drop due to unexpected hurricane restoration costs and lost revenue from storm impacts. Gas Utilities and Infrastructure dropped $0.04 due to higher interest and depreciation expenses. The other segment was down $0.19 because of a planned higher tax rate. The company has projected storm-related costs for the year between $2.4 billion and $2.9 billion, with $750 million recognized in the third quarter.

The paragraph discusses financial strategies and projections for a utility company. It mentions the deferral and recovery of costs related to capital projects, with specific plans for cost recovery in Florida and the Carolinas. The company expects higher fourth-quarter adjusted earnings per share due to rate increases and higher sales volumes, and anticipates operating and maintenance costs to decrease. They reaffirm their 2024 guidance range but expect to trend towards the lower end due to storm impacts. The paragraph also highlights increased customer growth in the Carolinas and Florida, as well as strong economic development leading to new data center agreements, which support their increased forecast for additional energy load by 2028.

The paragraph discusses an increase in energy demand, emphasizing a cautious approach to economic development forecasts amidst a slower industrial rebound, with recovery expected in 2025. Extreme weather impacts recent volume figures, but long-term growth is anticipated to reach or exceed the upper range of a 1.5% to 2% CAGR through 2028, especially with large projects starting in 2027 and 2028. Key 2025 growth drivers include regulatory outcomes, new rate plans across various regions, and sales growth from economic development and migration in the Electric segment, as well as growth from rate cases and customer additions in the Gas segment. Updated earnings guidance and growth expectations will be provided in 2025.

The paragraph outlines the company's financial strategy and progress in supporting its growth during the energy transition. It anticipates increased capital needs due to customer growth and generation investments. They've achieved favorable regulatory outcomes and improved cash flow, partly by monetizing $200 million in energy tax credits. By the end of 2023, they aim to return to normal deferred fuel levels. The company has completed most of its planned equity issuances and intends to recover storm costs through established mechanisms, predicting a temporary credit impact in 2024 with a 14% FFO to debt target in 2025. Both Moody's and S&P report no long-term credit concerns due to storm impacts. Their commitment to maintaining strong credit ratings and balance sheet remains a priority as they pursue growth.

The company maintains strong business fundamentals and is well-positioned to meet its long-term growth target of 5% to 7% through 2028, offering a compelling risk-adjusted return for shareholders. In the Q&A session, Shar Pourreza from Guggenheim Partners asks about the company's credit situation and tax credit monetization. Brian Savoy responds, mentioning that storm costs will temporarily impact credit in 2024, but these will be mitigated through recovery mechanisms in 2025. He expects to handle $2.5 billion in storm costs, with projections for 2024's financial performance remaining strong.

The paragraph discusses the successful monetization of $200 million in tax credits, with plans to reach the upper end of their target range soon. The company is meeting or exceeding expectations across various credit-positive initiatives, including rate cases, fuel recovery, and tax credit monetization, contributing to a strong 2025 credit outlook. Lynn Good mentions that agencies are comfortable with their plan, and they've successfully collected storm costs in Florida and the Carolinas. Brian Savoy notes that without storms, their metrics would be at 14% instead of the high 13% range. Shar Pourreza inquires about the load environment, noting that Duke Energy's growth figures (1.5% to 2%) haven't been revised like some peers, despite other companies updating their forecasts due to economic trends.

In the discussion, Brian Savoy and Lynn Good address a question from Shar Pourreza about expected load growth and potential accretive opportunities. Brian highlights that their compound annual growth rate (CAGR) for load growth is trending toward the higher end of their 1.5% to 2% long-term range, with economic development opportunities expanding and a significant pipeline, including 2 gigawatts signed in the quarter. Lynn adds that they expect acceleration in 2027 and 2028, noting that projects currently under discussion will manifest in these years, with potential growth above the current range. The discussion also emphasizes maintaining a conservative approach by factoring in potential project delays. They aim to provide updates on these trends in February.

In the paragraph, James Ward, speaking on behalf of Julien Dumoulin-Smith from Jefferies, asks about the monetization of tax credits following a hurricane's impact that affected their finances. He inquires about the potential size, discount rates, and impact on their financial ratios by year-end and into next year. Brian Savoy responds, stating the tax credit market is robust, with attractive discounts in the mid-90s or slightly higher. He notes that many taxpayers are eager to purchase high-quality credits to reduce their tax bills, which benefits credit sellers.

The paragraph discusses the financial strategies and projections of the company, highlighting the completion of $200 million in transactions with a target range of $300 million to $500 million for the year. The company expects this to contribute 40 to 60 basis points to the funds from operations (FFO) to debt ratio, largely driven by nuclear and solar tax credits. It anticipates these credits will positively impact FFO for several years. The nuclear production tax credits (PTCs) are expected to be monetized immediately, with a plan to amortize them to customers over four years. This approach is designed to enhance the company's credit while also offering cost benefits to customers, supporting future growth.

The paragraph is part of a discussion involving James Ward, Lynn Good, Brian Savoy, and Nick Campanella about the financial strategies and plans related to amortization and capital investments in North Carolina and South Carolina. Lynn Good mentions that the North Carolina method is being used as a planning assumption for the Carolinas, while credits in South Carolina are deferred for future consideration. Brian Savoy addresses Nick Campanella's question regarding future capital needs, indicating that there is a $500 million annual equity plan in the current five-year financing plan, and suggesting that future capital plans will be larger, with specific details to be discussed in February.

In the paragraph, Lynn Good and Nick Campanella discuss Duke Energy's financing plans, emphasizing a balanced approach to capital expansion with a 30% to 50% equity assumption for new investments. The conversation then shifts to Duke's interest in new nuclear energy, particularly small modular reactors (SMRs). Harry Sideris highlights the potential benefits of SMRs, including economic development and interest from large tech companies. He also notes that any future decisions will consider technology maturity, supply chain risks, and cost overrun protections, in alignment with North and South Carolina's approved plans.

The paragraph discusses the financial impact of recent hurricanes on the company's earnings. Brian Savoy explains that while the company typically plans for storms, the historic storm season caused unexpected restoration costs and lost revenue due to widespread power outages affecting 5.5 million customers. These factors are expected to impact the company's balance sheet in 2024, with increased O&M expenses and lower revenues, particularly affecting the third and fourth quarters. Lynn Good emphasizes the efforts to mitigate these impacts and highlights that storm expenses are a significant factor in falling below financial targets.

The paragraph discusses a conversation between Durgesh Chopra and Lynn Good regarding the company's growth projections. Lynn reaffirms the 5% to 7% EPS growth target, with the potential to reach the higher end of that range towards the end of the plan, particularly in 2027 and 2028. This optimism is linked to increased capital and advancements in the energy transition. Lynn expresses confidence in achieving these targets due to the company's consistent delivery of constructive regulatory outcomes. Following this discussion, Anthony Crowdell from Mizuho asks a related question about potential EPS growth towards the end of the decade.

In the conversation, Anthony Crowdell asks Lynn Good about the company's plans to widen their credit cushion beyond the current 150 basis points by utilizing load growth and enhanced earnings growth. Lynn Good responds by mentioning that the company is considering these strategies and is also planning for contingencies related to storms, as part of their annual planning for 2024. When Anthony asks about quantifying mitigation measures for the fourth quarter, Lynn indicates that specific quantification hasn't been done yet due to the recent impact of Hurricane Milton, but they are working towards quantification and aim for operational and maintenance (O&M) expenses to be lower than in 2023. The discussion then shifts to an inquiry about the company's plans for 2 gigawatts of incremental data center growth, although no specific details are provided in this segment of the dialogue.

The paragraph discusses the confidentiality surrounding a 2-gigawatt project, with no specific customer information disclosed, including Microsoft's land acquisition in North Carolina. Brian Savoy mentions that customer agreements are in the negotiation phase and detailed contracts will emerge over the next year. He highlights the attractiveness of the Carolinas' energy, which is over half carbon-free nuclear, making it appealing to data centers. Additionally, Lynn Good is set to address how election results might influence their resource mix, including coal plant retirements or renewable energy additions, and comment on potential impacts on industries and load growth in their region.

The paragraph discusses the reaction to election results and future collaboration with the administration of President Trump, emphasizing the focus on the U.S. economy and the role of the energy industry in delivering affordable and reliable power. Specific states mentioned include the Carolinas, Indiana, and Florida, where infrastructure investments are aimed at supporting economic development. The utility company is eager to work with both federal and state administrations, including new governors in Indiana and North Carolina, to drive growth. Additionally, Brian Savoy from the company discusses financial details related to energy tax credits, indicating that these credits could lead to significant debt improvement through sales, ranging from $300 million to $500 million per year. The conversation concludes with responses to analyst questions on the topic.

In the paragraph, John Miller asks Harry Sideris about updates in their Indiana Integrated Resource Plan (IRP) and its potential opportunities. Sideris explains that the plan involves transitioning the Cayuga plant to gas, adding storage and solar, and diversifying fuel supply in Indiana, with broad stakeholder support. The company plans to file the Certificate of Public Convenience and Necessity (CPCN) for the Cayuga plant next year. Miller also inquires about the Carolinas IRP after a North Carolina order deferred some natural gas plans. Sideris mentions their IRPs in North and South Carolina were approved, allowing them to advance near-term actions without significant changes expected to the upcoming resource plans. They also anticipate responses on CPCNs for gas generation at Person County by year's end.

In the paragraph, the operator concludes a call by passing it back to Lynn Good, who expresses gratitude to the participants and mentions looking forward to the EEI Financial Conference. Lynn also thanks the participants for their questions and investment in Duke Energy, and the operator ends the call.

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