Duke Profit Doubles as Cooler Weather Boosts Heat Demand

Duke Energy Corp., the largest U.S. utility owner, said first-quarter profit more than doubled as cooler winter temperatures boosted demand for heating.

Net income increased to $634 million million, or 89 cents a share, from $295 million, or 66 cents, a year earlier, Charlotte, North Carolina-based Duke said in a statement today. Per-share profit was $1.02 excluding merger-related costs and quarterly adjustments to the value of hedges, one cent less than the average of 13 analysts’ estimates compiled by Bloomberg.

The company expects electricity use to rise less than 1 percent this year, excluding the effect of weather. It’s seeking higher rates to boost results in regions including North Carolina, its most important market.

“We’re where we expected to be in the first quarter,” Chief Financial Officer Lynn Good said today in a phone interview. “We’re going to have a stronger back half because of pending rate requests.”

The company has rate-case requests of more than $590 million pending in North Carolina.

Duke, which bought Progress Energy July 1, sells power to about 7.2 million customers in six states. Adding Progress Energy’s 3.1 million customers in North Carolina, South Carolina and Florida added 35 cents to per-share profit, according to today’s statement. Colder weather boosted profit by 10 cents as sales rose 62 percent to $5.9 billion.

Heating Demand

Demand for heating more than quadrupled from a year earlier in North Carolina as the average temperature fell 12 percent to 43 degrees Fahrenheit (6 degrees Celsius), according to the National Climatic Data Center.

Duke’s board is seeking a replacement for Chairman and Chief Executive Officer Jim Rogers who agreed to step down by year-end as part of a settlement ending state investigations of the Progress takeover. Duke’s board reinstated Rogers hours after the deal closed, ousting former Progress CEO Bill Johnson, who had been promised the top job at the combined company.

Succession Plan

“The leadership development committee met yesterday,” Rogers said today in the telephone interview with Good. “They’re in the process of reviewing both internal and external candidates.” Rogers said he didn’t know whether the committee has reached a short list of potential hires.

“CEO succession is top-of-mind for a lot of investors,” Andrew L. Smith, a Houston-based analyst for Drexel Hamilton LLC who rates Duke a hold and doesn’t own the shares, said in an interview before results were released. “I’d expect some discussion on the earnings call of how timing of that will play out.”

The results were announced before regular trading began on U.S. markets. Duke fell 0.2 percent to $74.78 yesterday in New York. The shares have seven buy, 16 hold and one sell rating from analysts.

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