Duke Energy Fourth-Quarter Profit Rises

Duke Energy Corp. reported profit rose 51 percent in the fourth quarter, the second period after its $17.8 billion takeover of Progress Energy Inc. made it the largest U.S. utility owner as cooler temperatures boosted earnings from its regulated units.

Net income was $435 million, or 62 cents a share, compared with $288 million, or 65 cents, a year earlier, Charlotte, North Carolina-based Duke said in a statement today. Excluding costs associated with the merger, charges for a coal gasification plant in Indiana, discontinued operations and financial contracts, per-share profit was 70 cents. That was more than the average of 16 analysts’ estimates compiled by Bloomberg.

The Progress purchase expanded Duke’s regulated sales of power to customers, a segment in which revenue almost doubled to $4.87 billion. Duke sees power demand increasing by less than 1 percent annually.

“It was a good start for the franchised electric and gas business,” Chief Financial Officer Lynn Good said today in a telephone interview. “We continue to have a very cautious outlook about load growth. For 2012, our load grew at slightly less than 1 percent and we think that’s a reasonable planning assumption.”

Rate Increases

Rate increases helped fourth-quarter results, Good said. Duke has requested rate increases for both of its utilities in North Carolina. The company expects new rates to be approved by year-end, regardless of pending legislation to replace the state’s utility regulators, Chairman and Chief Executive Officer Jim Rogers said in the interview.

The effects of a cooler weather added 3 cents a share to the company’s profit. In North Carolina, where Duke sells power to 3.2 million homes and businesses, the fourth quarter was the coolest in two years, according to the National Climatic Data Center. Weather-driven demand for heating rose about 9.5 percent from a year earlier, according to data compiled by Bloomberg.

Weather-driven heating demand also rose from a year earlier in Florida, Ohio, Indiana, and Kentucky, where Duke sells power to 3.9 million homes and businesses, according to data compiled by Bloomberg.

The earnings were released before regular trading began on U.S. markets. Duke rose 1.6 percent to $69.50 yesterday in New York. The shares have 11 buy and 12 hold ratings from analysts.

Crystal River

Costs related to the Feb. 5 decision to close the damaged Crystal River 3 nuclear reactor in Florida were recorded as goodwill in the purchase of Progress, Good said. Goodwill on Duke’s balance sheet was $16.4 billion at year-end, up from $3.85 billion a year earlier, according to today’s statement.

Duke had said it would record fourth-quarter costs of about $295 million for closing the plant. It has been shut down since 2009 by cracks in the concrete building that contains the reactor.

Duke’s renewable energy unit added 4 cents a share of profit.

Unfavorable exchange rates reduced profit for the quarter by 1 cent a share, Duke said.

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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