Posted: 9:18
a.m. Wednesday, May 7, 2014
Duke Energy posts loss on coal fleet
Associated Press
Duke
Energy lost $97 million in the first quarter because it reduced the value of a
fleet of coal-fired power plants in the Midwest that it is trying to
sell.
The
company’s regulated utility operations, however, performed better than expected
because of higher rates and stronger demand for power.
Duke
reported Wednesday that it lost 14 cents per share on revenue of $6.62 billion
in the first three months of the year. Last year, the company earned $634
million, or 89 cents per share, on revenue of $5.9 billion.
Adjusted
to remove the $1.4 billion write-down of the coal plants, Duke earned $1.17 per
share in the latest quarter. That’s up from last year’s adjusted $1.02 per
share and higher than the $1.12 expected, on average, by analysts surveyed by
FactSet.
In
a good sign for the economy in Duke’s service territory, demand for power rose
in the quarter even after adjusting for the effect of a brutally cold winter.
“We’re
seeing this economic recovery deepen and broaden a bit,” said Duke CFO Steve
Young in an interview Wednesday. “It’s started to get into median income
households and small businesses.”
Electricity
sales rose 7.1 percent in the quarter, and 2.6 percent when the effect of
weather was removed.
Duke
also benefited from higher rates that regulators have allowed the company to
charge customers.
Duke
Energy Corp., based in Charlotte, is the nation’s
largest electric utility by market value and number of customers. It serves 7.2
million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky.
Duke
announced in February that it would seek to sell its fleet of power plants in
the Midwest that sell power into wholesale markets,
instead of directly to customers. Electricity prices in wholesale markets have
been extremely volatile and generally low in recent years mainly because of low
natural gas prices.
Duke
CEO Lynn Good said in an interview Wednesday that Duke was working to deliver
steady and strong results for shareholders, and the volatility and low returns
of the Midwestern fleet was hindering that effort.
Because
wholesale power prices are expected to continue to be low, Duke is unlikely to
sell the plants for as much as they were initially valued by the company so it
had to write down their value.
In
February, a pipe at the bottom of a pond that held waste from a Duke coal plant
in North Carolina burst and spilled
toxic ash into the Dan River. Good said cleanup efforts cost the company
$15 million in the quarter. She said while there will be more costs to come,
she does not expect them to be large enough to materially affect overall
results.
Duke
shares closed at $73.07 per share on Tuesday. Its shares are up almost 6
percent so far this year.
|