Duke Energy (DUK) 2 Nov 232023 Q3 Earnings call transcript

Good morning. Thank you for attending the Duke Energy's third quarter earnings review and business update. My name is Matt, and I'll be your moderator for today's call. [Operator Instructions] I would now like to turn the call over to our host, Abby Motsinger, Vice President of Investor Relations. Abby, please go ahead.

good and Matt, you, morning, everyone. Thank Vice Duke Business Update. Leading to President use CEO; Savoy, of Energy's include measures discussion Lynn Third and Review and Executive Brian with forward-looking Earnings non-GAAP XXXX along and our the Chair, CFO. Today's will Quarter Good, Welcome President and call information. financial is today results differ from filings. disclosed and materials today's Energy's may forward-looking SEC factors Actual in in statements due Duke to financial with The that, appendix Lynn. includes presentation turn reconciliation call let measures. With of non-GAAP the supplemental information, me the of along today's over to

announced and results earnings Abby, morning, compared year. thank you, good of share the everyone. to adjusted Today, quarter, we for last strong third $X.XX $X.XX for per

This we progress our and During by regulatory the strong fundamentals. great made also quarter, is momentum underpinned the on business. outcomes simplification of

a long-term growth track This investment of growing and gives in operational long excellence us for future of X% opportunities. a with record the earnings and confidence jurisdictions rate our We of serve to runway X%. positions well us have reaffirming

to we mitigate and moment customers. company, XXXX, the but weather cost will structure Brian incredible volumes. work efficiency load work continue take our more to on mild safety in about underway, on commitment across the measures, while industrial weaker XXXX. Across well recognize to the savings are pressures a want cost talk organization agility agility and I and to improvements and efforts, to offset to opportunities never compromising For

year lower of half expect within guidance the to the to our We finish range the trending range.

X. Slide to Moving

along a approved the years settlements. last order the application billion a implementation in $XX.X the North from we've This Progress rate investments first the related represents capital plan. August, our a case North significant regulation, by in of billion rate $X.X stakeholders billion, performance-based roughly authorized In a order increase our spend approved on Energy moment $X.X base with retail the future made me progress HBXXX. and plans with case, of multiyear in is Duke of including Let rate rate Carolina work culmination Utilities The of Commission and multiyear milestone, Carolina. meaningful

also the to of to structure cash Importantly, company. well outcome value component the flows positions of the the allowed and to X.X% order recognized to capital rising continue ROE the equity XX%. the supporting capital increasing customers the This cost of us while delivering

New rates decoupling and implemented on residential X. October were

also case. approximately late partial Turning increase to public a the staff capital and In Duke the billion a on with with moment. settlement includes rate and case of last public base retail The of open a A the rate clarity items PTCs, settlement addressed plan. Carolinas more the Energy on August, Brian which reached our investments in nuclear on $X.X the nearly case will case. rate provide provides the of second staff the multiyear $X.X narrowed from further billion detail aspects we settlement billion, many in in $XX.X

by the end in issue January forward and and be North Carolina at coming DEP permanent the XXXX. We're expect the our to NCUC its the effect decision is largest weeks. expect with case to rate outcome rates of in jurisdiction. finalizing the We constructive DEC pleased the by to year, look

are a X-year outcomes sheet constructive and our balance plan. So critical derisking to supporting strong

diverse is demand rapid region, Service the the In economic of the which maintains evaluate site Utilities resource management. It development permit procurement, reliability each needs gas and we energy It deployment The transition. renewables, is are energy growth highlight battery a Carolinas with Public emerging our combined resources, natural this a of the the nation's for opportunities all and of Creek. filing, resource unified and of capital to by Commission. plan like as of September I'd targets plans spurred also combustion filed additional plan the X, lead side on activity. an on efficiency Slide details solar nuclear our North new development to we an we opportunity coal natural single included driving plants cycle early generation expanded to storage filed investment gigawatt Carolinas and also pursue material Carolina to as year and a designed to the Commission storage growth XXXX. outlines hydro South build beginning retired. Since November with updated resource provides affordability NCUC, significant The our CPCNs technologies, well Carolina in for the plant early filing and solar population meet and The Turning plan at resource mid-August, growing additional annual gas X plan, pumped updated plan turbines Bad for including as pre and which for above as to activities strategy with maintain over largest X. advanced about

based each our We quarter in affordability reliability while and energy resource Similar stakeholder CPCN preserve the resources. of of to full which plan will make significant Carolinas engagement XXXX. on cleaner is filings, outlines and the previous filings first transitioning multiple to portfolios,

Next steps spring hearings states in in XXXX. will include both the of

by order Carolina Carolina in an order an mid-'XX expect South in end in the 'XX. North We of and

X. Slide to Turning

portfolio repositioning of month, our sale is With the complete. the closing last Commercial Renewables

approval are in Carolina RSA regulated Carolina of across proceeding. as North to settlement fully utilities some other a our progress deliver our mentioned of of continue operating jurisdictions some attractive the fastest-growing and I we our received our Piedmont, and U.S. in company, well. At We just in South now the Commission most recently

allow solar gas outage storms, proceeding of made approval Florida, continue our times grid our and customer settlement customers We case we in growth are seeing ARM efficient investments. and recovery significant against maintained have evaluating mechanisms fastest investments investments Tennessee. of and natural we've our next last in South the since as we're at recovery the efficient XXXX These rate updates timing reliable in some have for in rate of modernize investments of our expect. In of annual to reduced level grid our case received a state the for and DEC rate strengthened application. Carolina, high also service our These our the system. And

Our I'm made sustainable component that, X well organic and our to Brian. of and to our forecasted X has more value basis increase Commission XX% capital the been point October, storm case we've million well more Across commission X% value than our within new customers X% minutes Hurricane our a rates hours. Kentucky growth structure for company Public more year our grid-hardening investments. growth rate approved built me deliver September, macroeconomic Idalia agile a Service to increasing self-healing never Further, a outages, earnings to year. the And in response clear. of over the to to demonstrated over as from stronger and has our XX%. of as confident momentum we in call XX the electric over as approved with considerable years. And The again the outage This we're power turn in to technologies the strategy next Midwest, XXX,XXX caused utilized grid year, the ROE, the case, yet past footprint, saved long-term and restored XX test X.XX% which responded the in let customers. Shifting investment equity positioned headwinds. to we've the the previous last

morning, and with everyone. Lynn, quarterly Thanks, a start results. good on I'll discussion

earnings were As share in reported reconciliation This X, year. the of on to shown our share per compares quarter additional share see per non-GAAP third earnings materials $X.XX. reported adjusted adjusted and Slide our per and $X.XX, earnings last $X.XX for details. $X.XX today's and were Please

and efforts primarily $X.XX storm Infrastructure. due Other lower to a up Within Results the rate and segments, due the interest customer and cases up to experienced Gas year. lower effective and were growth. $X.XX offset by we efficiency Utilities from in tax the from ongoing a will These higher items moment. and further $X.XX positive cost expense. Shifting operating discuss initiatives, were rate compared were earnings weather-normalized last within which which tax growth over costs riders, were the company. favorable Infrastructure per and And O&M Electric our to segment, We riders reflects the down lower volumes, I prior mitigation results year, higher share weather in to Utilities

our full guidance XX% effective to XXXX tax XX% range. be our of We end rate year expect low to at the

improved I mentioned, entered XXXX We As our are quarter, in full year normal. the the weather guidance mildest year tightening of to $X.XX record. we third we $X.XX below the although range And $X.XX. X winters on with remain to

the and includes impact, volumes agility weather, return and To We savings of rate for have but $X.XX target our attributable softening in increased tax of customers. mitigate residential O&M $X.XX, effective continued at a to may which industrial levers. to a also tactical to work other estimated weakness to year-to-date, load to be some also which approximately XXXX we see lower

As quarter, finish we look $X.XX the per we to the expect a share. fourth year, targeting $X.XX to to strong

was and plan original to due back-end from Our growth rate riders. loaded cases

our efforts. benefit We of see ongoing the management also cost will

We fourth and in are closely monitoring quarter appendix. drivers included trends volume have the

Turning Slide X. to

late basis. more down about our due broader XXXX describing is are is mid- discuss into in are cost rolling in levels temporary, inventory industrial are way Many and me a the disciplined the pullback acknowledging optimism near-term a Let economy. customers on Most specifics to X.X% a to XXXX. and of managing Volumes on in pullback, a volume XX-month there trends. and uncertainty turnaround

in sectors see and and We growth recent long next economic outlined success as growth key us on the load robust as over meaningful development, such economic we Slide over term. Based population battery, years continue see giving migration customer X. several from efforts EVs, centers, development in the semiconductors to in data strong growth on confidence

expect we X,XXX X,XXX online For example, gigawatt in add projects between and hours. XXXX, development coming economic will

growth we giving confidence we end sight gigawatt have the to of of X,XXX by X,XXX look our X.X XXXX, further hours in As out, to rate. X% to line us

Slide XX. to Turning

we year in expect yielded the rate with February and and and XXXX. executed this will Let in full drivers financing pickup constructive a outcomes robust DEP gas historical effect XXXX growth as update. the Today, calendar From segment, from a Indiana for investments on normal few minutes an effective a me riders cases, practice, and XXXX. Consistent and be additions. year growth our we The capital DEC Florida, under detailed third in we earnings the will rates In investments. and guidance A of growth rate into in have protection we XXXX head next permanent grid provide our Kentucky our plans we year and multiyear we'll storm Midwest, regulatory to be spend plan for plan plan rate multiyear impact the the from multiyear We've rate return that active of impact provided rate year. has Ohio. from In will case will customer weather. project the integrity perspective, we a of in we management see January. In see load see our plan to in

monitor while growth. we in driven Carolina. usage development in place continue we decoupling by weather-normalized closely Additionally, customer in expect activity to trends, Recall, will XXXX be volumes residential and residential customer economic higher North

So customer revenue which both been DEC DEP be will based increases, on growth robust. and have

in We for be higher in rates longer, XXXX. interest to expect cost resulting increased financing

we course and efforts to during mitigate of in we all for of weather the the have For about identified sustain XXXX O&M, as aggressive well to agility XXXX cost underway efforts half XXXX as volumes. savings identified

significantly be to lower culture of technology-enabled, to improvement best-in-class cost our structure, than we expect As to in and XXXX our pursue drive continuous we spending level XXXX XXXX. a O&M below continue

XX. Slide to Moving

supportive Let of we've maintain taken actions the credit me sheet to strength. highlight balance some

line collect historical We deferred on pace deferred expect in to costs fuel to deferred fuel uncollected and XXXX remaining with in continue filed and and rates. XXXX of our billion our back recover end to recovery average the XXXX. in be $X.X have for of costs by of fuel about We're balances balance XX% approved all fuel with

advisor settlement settlement commission, by be of PTCs October. to provides sheet, come Lynn supportive we customers public flowback supporting mentioned, for related case, balance external approved business to further a our As commercial this With and utilize formal intend staff Reduction of over the will transferability to savings credit the In off completed provide commercial about reached metrics. We to an our a amortization debt and of access credit our of If X-year to providing provisions broad of we annual for IRA that, the nuclear ongoing range to billion sale PTCs Act. renewables part North the on our the engaged customers of the period. of the the qualified renewable auction-style a in metrics. run buyers. would settlement DEC have process, rate Inflation August, The treatment as with $X.X a Carolina

XXXX are and we developments, XX% in positive XX% and debt to between these XXXX in XXXX. XX% FFO through targeting With

February a mentioned, I provide of X-year our we forward on as comprehensive capital plan, Finally, our update and refresh in plan. financing will an roll along with

energy We capital to increase expect the as transition. plan into our move further we

We capital, rate will incremental a supporting the take balanced our to sheet and strength. approach funding balance growth

As funding business our the approach, through and part dividend plan will in is of growth in balanced program. The at evaluate at haven't seen we decades. our level market this a modest we potential reinvestment

clean balance will while will customers, strength. energy. For we of increasing And achieve for we sheet right achieve reliability investors, the maintaining growth affordability, and balance

capital with efficiency which our our as strong regulated XX. cost priorities path X% a rate X% give through executing We $XX plan, confidence growth in fully billion growing We're combined X-year to operate jurisdictions, us Slide are capabilities ahead to and on company. Moving the and about our operations XXXX. excited constructive in

with attractive questions. investments yield, coupled for a risk-adjusted in from open shareholders. With we'll our utilities, Our growth long-term dividend for provide your line return earnings the compelling that, regulated

Instructions] is line from with first Guggenheim. question [Operator Shahriar The Pourreza the

upside that prepared the help updating mentioned your at can you some as magnitude. plan obviously the And maybe you but you bias capital I directionally, you're remarks always do. you'll February, potential in CapEx, frame least in with know be talking

upside? which think So X% better? buckets So we the is of X% And coming about as of the you sort it where see supportive increases CapEx kind or to potentially the in from? various more states of

really Shar, is the the underpinned And capital filed. that have integrated we plans by resource Sure.

growth and Carolinas And you all so compared August also the see at nature. filing as growth the of made peaking region we winter were look in we to where the this the in that in XXXX, alone, the on if see a the result we need reserve to of we raise margin and going load

from et if capital you And with need by plan, our to also that the see more solar of course, natural there, increase large the driven a really all battery, so across margin. We're economic the but 'XX, in transition look for gas, and generation of growth, in megawatts you process and types reflected become that in deeper in moving in see an megawatts of will population Carolinas commission cetera, measure through additional development working Indiana. we into fully reserve

natural around we've as have the and So coal retirements, filed the coming as into plans we integrated gas resource in timing of accelerated as our picture see we thinking Indiana well renewables.

will a and the Indiana. think And rate be for effective continues the will so management Florida, for several extraordinary CPCNs updated. business gas really to next so And the but be customers, capital cadence will we plan of months, the be I spending updating then for not you filed our growth in And on there in X/X/XX know expectations number schedule only multi setting capital. as see then continues integrity regular

of side It's plans filed our jurisdictions. growth in our the an as on resource and side period It's are gas in of the in on the with form well. commissions all integrated electric of we So clear extraordinary transparent.

chance to have February anxious we're further in point. it to talk that So and to provide at update you that about a

current Got base it. through which highlighted the spending plan. for obviously to open consistent. fund you base potential no above And obviously, current plan it then, But leaving that the is equity equity you're assumes 'XX,

bridge approach" and assuming just, too balance XX-XX As guess, "balanced incremental every above equity? of be sources cap is strength. equity? equity factoring we that with should we of of should straight CapEx simplistic so we help your So a structure, think with also Or us debt about sheet balance that sheet be funding sort I capacity, is balanced funded other dollar

in approach equity, would talked to XX% about Shar, about about XX% we've And I range. of think And I balanced kind when the think equity. shareholder-friendly

DEC explore would, us accomplish Indiana. role then in yet that exists dividend of well. I seen but present that also know as that much say our case. capital, would the we're cost of have couple finalize of at-the-market have You I and watching, the evaluating potential we how of programs the to course, transaction other with for we reinvestment that and given that don't things

visibility more PTCs December. are nuclear consequential then from on waiting on have that guidance and standpoint. also flow we'll very in these And those the transferability So treasury market, for cash

available So balance I sheet. and maintains number we levers us, will rate, in feel the a underpins like of them exercise that of also way the to have strength just we our growth a but

Bank of of Next Julien line with question Dumoulin-Smith is the America. from

the about at how by about make of to about of as strength the next as questions source up step position to think to you has do back piece XQ upside same case shoring getting how perhaps Obviously, couple balance coming here, sheet conversation's about that just the Just you resolutions a alluded you already want the right? clear in conversation a of we're incremental Shar of here to by you in maybe that sure think obviously, a -- it, illustrated incrementally here. of rate of or first that where I that here? just therein. but resolution continued little with coming How focused these kind less think do direction here, into been funding addition balance sheet, that you terms

those think will positive. multiyear us credit reset and base only mentioned future, out that opportunity rates And billion fuel into rate also transferability today, prepare plans, for that. rate sheet, will from of we $X.X Yes, be I watching to collected I 'XX, in 'XX. $X.X be on lay us of the an but in spending fuel be positive. out the we deferred put collected IRA be historic I And Julien, thanks as think I what The to to deferred laid balance not have given for strengthen which effect you're credit another

so a the we tools And the will targeting to bring accomplish feel future to the be think a we as financing forward from see investment, capital as continued plan have growth and go we that. you we like and XX% we that of about minimum and

from of next Steve Wolfe question the line is The Fleishman with Research.

couple on the work. a you you on sales return so bit the the a little could in trends little sales and know of Just talk on of territories in a what's bit depth and -- going some gave the times weakness? to just recent the of And color more with you mentioned I -- more monitoring your

I'll And a will then and Brian I something give start, know to add it Sure. Steve, have it. to

situated. adjusting think have a in And course, 'XX in industrial where to. They I in weakness we've early have I that industries, them from we we they've weakness -- they're us would some trying Meaning about inventory first the textiles, quarter. more into being back volumes. it weather but them return rates year interest many mention impact has I such from So rebound continued seen return that of say quarter. to work, weather X I mention terms weak this. to paper also course, 'XX. is the later And into have those saw And we're as in work second optimism lower they're Residential, impacted. figure we're the you us hits volume is probably weakness there's trend been impact would of the labor, would an And no out do I that chain, same evaluated customers, production. working 'XX. return had supply think further and and work. what to our we because to in group outside or industries of is But would hearing of then in have that say third dialed extraordinarily we through, of to But production, so

that I And it's go well be we worked continues and ourselves our in decoupled revenue. think to strong through we've growth a then transition. will very environment drive and that customer for customer pretty jurisdiction, largest growth XXXX, to

can economic side, as like. look but sense on what industrial this It rebound to you been as early that existing has the development on we've of given the And 'XX. is in then starts And layer positive extraordinary. customers, a

economic around us that over term. working we've gives that some customers But you continue the development North through further, to rate Carolina that growth And term, here so see the sure battery saw long expanding incredibly territory. And trends strong. I'm we yesterday in here of the Journal, sort being confidence the sitting also plant short in got this Toyota the longer-term our in is macro

would what you So I add? that's would share. Brian, what And

significant I year, would Steve, Carolina the a to residential contributed North this over add, weakness half. has amount

going year space. in decoupling mitigate forward. is in And seen going strongest risk also and our migration, hot really It's the of something Florida. need strong So population growth Florida, emphasize, to we jurisdiction but a to volatility has it's been residential going the to state strong Florida we've had in

positive see to out, do kind late next customers we talk load as we year. in So coming this we and Carolinas see the shoots to industrial turning mid of

question. helpful. One separate That's Great. other

you're kind plan and your are Just financings forward of -- on just what rates for for curve interest and doing your standpoint or of generally is whatever the refinancings growth from using the when you rate of like? rates, the

And dynamic We a -- absolutely, area. yes, that's know, are as generally you absolutely.

in of offset XXXX. And objective as do on a the So in again about all we 'XX. interest in structure, impact rates outcomes. talked a to look We cost at it the that we of of range is we're doing 'XX, range, we'll did our work

next is from Barclays. Campanella the The line question of Nick with

if significant terms Carolinas the changes could in growth rate hit for frame to that us, just wanted And X% decoupling these specifically? confidence stands how just range structure 'XX, pretty I informs there's out lower that help some 'XX you but for just been a your EPS the X% in little and fiscal EPS ask, you're 'XX just frame volatility to to the 'XX? NYRP could with of the know residential you just versus to I implied in

of multiyear is This of first the the it forward, the go of Carolinas a does will utility history confidence have price modernized delivering value very It's that as that, confidence what X% the transparent, to but the construct would underpin we I consequential. the integrated X% that our underpinning So plans, in X% in the to this I confirm growth. it's we outline going every to closely Nick, with course, return. our capital the to growing rate kind would step expenditure to to plans, more matching that add capital ability resource set way, growth, to in state. in of of customers also necessary serve be X% And

Carolinas moment and as in are the Florida. So rate very in plan, and and Brian example. Ohio, in solar see our along growth generation our we well strong continues grid for be the positioned grid mentioned for investment And extraordinary And well in both the updating future. have to multiyear Florida continue a ago, capital Midwest will and

feel in investors, I we're customers constructive benefits underpin our So find and confidence to the future. to between the got balance elements all growth we've right and and like in confident jurisdictions the the the of jurisdictions are that

prior slides know you kind Okay. sustainable Great. And what just back O&M. I after I about But just kind think about to XX% XX%. 'XX. looking on in talked we've where of about calls, talked of

So but view? And that could and you just do different you mischaracterizing think just about it, maybe just how help reconcile I'm buckets then that's 'XX?

million that have Nick, the of been X Yes. because think that we different I I some look you confusing question And at $XXX all. I commentary to as really appreciate has

you. for it through step me let So

that be $XXX the we that 'XX primarily that And in driving thought cost, time initiative of recall sustainable. million cost center. corporate million identified we a may said we to would $XXX at of XX% entered with you You out at

ideas, going it on further, we'll talking we weak other XX% look able levers, We as we XXXX. executed then that our have confident that structure. continue Slide part throughout for the of including we tax sustain XXXX million cost are to also which is that only all in continuous XXXX. And on O&M, to improvement XXXX, $XXX we of on will schedule the that developed drivers but what well. XX. those based ideas, not have That's plans those including And volume XXX% have on be think is and XX% and of total to mitigation we're sustainable into been highlighted savings into about And weather

efficiency believe to various place and will we think 'XX to that's part just lower. continue in to O&M have and So in we lower to continue our operations. drive We drive be conviction than of elements 'XX our productivity

next of Chopra the with is Durgesh from Evercore. line The question

questions answered. I had All answered. all my have my just a the have been questions -- been

Just clarification, a quick Lynn.

response were I that equity first incremental any believe XX% the you you the I clarify if understanding you think just mentioned Could question, content CapEx. in -- to to my referring of is if there? to XX%. correct

That's correct, mean. It does response balanced to was what Durgesh. in

opportunities And we about that's and this financing we'll that incremental the that our a as the so bring about. plan consider of And tools I cash we for equity incremental think business, range to concrete in all capital that think But course, plan February levers of for and clearly. will is lay out have more capital and across growth. range flow the of with would all matched

Next line Davenport of Carly Sachs. question Goldman with is the from

to with just on as if well. natural curious of any, and a if the plan, start areas You've Maybe chunk pushback? gas any get to just Carly. some there's the resource also solar, North Obviously, a in where healthy Carolina share but wind got Miller expect, there John for with of you renewables

curious the you're with any focus ESG if natural reliability outweigh expecting to So gas? concerns the with that on

put from plans And stakeholder the to very appreciate are balanced forward strategy which believe the imagine gas And are robust provides state. commitment and we've we con. resource clean, batteries a you reliability, some view between together, to start increasingly spectrum our natural integrated right what all by balance nuclear to informed that a renewables I above by stakeholders question. that the pulling across process. as John, to of different saying is pro, these there But some affordability the very I'd is points of

in So believe And we a way. very with we'll front the of through in posted the in elements the closely forward moved as consistent keep process and those plans, this of will think part reviewed we we'll of of way evaluated previous way, and the commission. all step constructive you the we've be work every

O&M maybe as now know Got at XQ, That's follow-up in year the helpful. November. to the just I business it. we discussion. in will X And then agility come are the that savings of but

if target indications towards that of have sustainable. you where curious XX% Just trending you're of any being

sustainable. XX% make to going We're

That's right. Yes. We're there, John.

line culmination to well ability a as and tied and of lot to QX XXXX couple a those season that. and confirmed we've to the on of of as of we've have a evaluated for implement, the months it fall efforts sight beyond, just We takes to the keep work because was going outage that

Thank you questions There time. waiting for no at are this question. your additional

So I'll closing Lynn back Good any remarks. pass to for the call

Well, your at of seeing engagement Appreciate investment thank today you forward looking to at and we're all EEI. you Duke, all.

And always available. So we'll of IR Brian then. course, continue are conversation the I and and

so So thanks much.

concludes conference call. the your you Thank That participation. for

You may your now lines. disconnect