Duke CEO talks about gas plant construction, Piedmont merger

During the third quarter earnings call on Nov. 5, Duke Energy (NYSE:DUK) President and CEO Lynn Good discussed examples of the company’s increased emphasis on natural gas.

She noted that Duke has started construction on the 750-MW Lee combined-cycle gas plant in South Carolina. Pre-construction work has also begun at the Citrus County gas project in Florida.

The day before the earnings call, Duke announced it would not build a 650-MW gas plant and a major transmission line in the western counties of North Carolina. Instead, Duke will go with smaller natural gas generation units, and smaller-scale infrastructure tweaks to replace the Asheville coal plant.

The Western Carolina Modernization still represents a $1bn investment, Duke officials said.

Duke Energy is on pace for record natural gas usage in 2015.

“Additionally, we are taking significant steps to grow our low-risk regulated business mix as highlighted by last week’s announced acquisition of Piedmont Natural Gas, which provides us with additional capabilities and growth potential around natural gas infrastructure,” Good said in her prepared remarks.

Duke expects to close the Piedmont deal in late 2016 or early 2017.

“I think the portfolio is always under review,” Good said in response to a financial analyst question. The addition of Piedmont is an example of this, Good added.

Duke and Piedmont are already among the partners in the Atlantic Coast Pipeline project. Duke expects Federal Energy Regulatory Commission (FERC) approval of the Atlantic Coast Pipeline in 2016.

On another topic, Good said that she was pleased with the progress that the company is making on closure of old coal ash basins. That’s been a big point of emphasis for Duke and the states of Virginia and North Carolina since the Dan River coal ash spill.

Company officials also said they were pleased with the 97% capacity factor recorded lately at the Duke nuclear fleet.

Earnings for the third quarter of 2015 were higher than the prior year quarterly results, primarily due to warmer weather compared to the previous year. The company also experienced strong growth in the regulated utilities business, including the impact of the recently completed North Carolina Eastern Municipal Power Agency (NCEMPA) acquisition.

Officials also said that the Edwardsport coal gasification power plant in Indiana experienced a record month of net generation in July.

Duke expects to have more than 300 MW of commercial wind and solar energy coming online in the 4Q 2015. While some states are taking a fresh look at the implementation of their renewable standards, wind technology is advancing to make such generation more economic, according to Duke.

Duke Energy noted that electricity use per customer has remained flat over the past couple of quarters.

Duke Energy announced third quarter 2015 adjusted diluted EPS of $1.47, compared to $1.40 for 3Q 2014. Third quarter 2015 reported EPS was $1.35, compared to $1.80 for the same period last year.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.