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 increased to $435 million, or 62 cents a share, from $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 64-cent 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

Higher rates 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 take effect 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.

Duke can begin collecting the higher rates six months after filing them, should North Carolina regulators take no action on the request, Rogers said today on a conference call with financial analysts.

The company would prefer a negotiated settlement and talks are underway on its request to raise rates by $387 million at the Progress Energy Carolina unit, he said.

Per-share profit this year will be ‘reasonably consistent’’ with 2012, Good said on the call. The company plans to announce a forecast range Feb. 28, when it holds an investor meeting in New York, she said.

Tax Drop

An unexpected drop in corporate tax boosted per-share profit 7 cents more than expected, Nathan Judge, a London-based analyst for Atlantic Equities LLP, said today in an interview. Excluding items, Duke beat his projection by 6 cents, he said.

Judge rates the shares at neutral, equivalent to hold, and owns none. The reason for the lower tax rate wasn’t clear in the company’s statement, he said.

Duke fell 1 percent to $68.82 at the close in New York. The shares have 11 buy and 12 hold ratings from analysts.

Per-share results declined because of dilution from the all-stock purchase of Progress.

Higher energy demand from cooler weather added 3 cents a share to profit, Duke said. 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. Duke sells power to 3.9 million homes and businesses in those four states, according to data compiled by Bloomberg.

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 because of 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.

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