Duke to Rely on Cost-Cutting to Achieve Target, CFO Says
Duke Energy Corp. (DUK), the largest U.S. utility owner, expects to rely on cost-cutting to achieve its profit targets because slow growth in electricity use may be “the new normal,” Chief Financial Officer Lynne Good said.
Third-quarter power use by Duke’s 7.1 million customers in five states was 0.3 percent lower than a year earlier after adjusting for weather, Good said today on a quarterly earnings conference call. Weather-adjusted power use over the past 12 months rose 0.4 percent, she said.
“One percent or less is a good planning assumption,” Good said today in response to an analyst’s question. “That, at least for the near term, is the new normal we’re working with.”
Duke has forecast power deliveries will rise less than 1 percent this year, while forecasting increased per-share profit of 4 percent to 6 percent a year. Household power use by Duke customers is falling because of a weak economy and improved energy conservation, Good said on today’s call. Industrial use was lower in the past quarter by metal manufacturing, chemicals and textiles, she said.
Duke’s third-quarter profit increased to $594 million, or 85 cents a share, from $472 million, or $1.06, a year earlier, the company said in a statement today. Excluding costs from the merger and construction of an Indiana power plant, per-share profit was 3 cents more than the average of 15 analysts’ estimates compiled by Bloomberg. Sales rose 70 percent to $6.72 billion.
Duke fell 0.6 percent to $62.56 at the close in New York. The shares have six buy, one sell and 16 hold ratings from analysts.
Duke, based in Charlotte, North Carolina, last month asked North Carolina utility regulators to raise rates by $359 million a year to cover the cost of new power plants and other improvements. It intends to ask for a rate increase for its Duke Energy Carolinas customers next year, also to cover improvements, Chief Executive Officer Jim Rogers said on today’s call.
To contact the reporter on this story: Jim Polson in New York at email@example.com
To contact the editor responsible for this story: Susan Warren at firstname.lastname@example.org