By By JONATHAN FAHEY, AP Energy Writer – 29 minutes ago
NEW YORK (AP) — Duke Energy Corp.'s fourth-quarter earnings topped Wall Street expectations as electric rates rose and more extreme weather increased demand for power. But results were reduced by merger costs and cost overruns at an Indiana power plant.
Duke acquired Progress Energy in June, making it the nation's largest utility.
Duke reported net income of $435 million, or 62 cents per share, for the fourth quarter. Adjusted to remove the effect of the merger costs and other one-time charges, Duke earned 70 cents per share. Analysts had expected the company to earn 65 cents per share on an adjusted basis.
The company's results for the quarter are not directly comparable to last year because the company had not combined with Progress. As a stand-alone company, Duke posted net income of $288 million last year, or 65 cents per share.
In pre-market trading, Duke shares fell 4 cents to $68.70.
Performance at Duke's regulated utilities improved as a result of the addition of Progress Energy's territories in the Carolinas and Florida. Higher power prices and an income tax benefit also helped, and electricity demand was boosted by more extreme weather.
Adjusted for the effect of weather, electricity demand grew 1 percent over last year, according to Duke Chief Financial Officer Lynn Good. She said Wednesday that she expects demand growth to continue to be weak because the economy is not growing quickly and efficiency programs are making homes and businesses less energy hungry.
Duke, based in Charlotte, serves 7 million customers in six states. It is the largest utility in the U.S. by market value and number of customers.
Duke CEO Jim Rogers said in an interview Wednesday that lower power demand is likely to affect the entire industry. In response Duke — and the industry — will likely focus intensely on lowering costs in the months ahead.
"The growth in demand is not going to be the same as we've experienced in the past," he said. "Our industry is going to have to change its cost structure."
Good said that in Duke's service territory, auto manufacturers and metals companies have been increasing activity but textile manufacturers and chemical companies have been cutting back.
Andy Smith, an analyst at Edward Jones, said Duke posted a solid quarter and, more importantly, has resolved three major issues investors were concerned about: An investigation into boardroom maneuvering by North Carolina regulators, how much the company would have to pay for a new coal plant in Indiana that has gone far over budget, and whether the company would try to fix a broken nuclear plant in Florida.
In December the company reached a settlement with North Carolina regulators over surprise executive changes in the hours after Duke's merger with Progress was completed. Rogers will retire by the end of this year as part of the settlement. Duke took a charge of $164 million in the quarter, accounting for 13 cents per share, to pay merger-related expenses. Seven hundred employees have accepted buyouts to leave the company, and Duke expects another 400 to leave in 2013.
Also in December, Indiana regulators approved a settlement over payment terms for the over-budget coal plant. Customers will pay $2.6 billion and Duke will absorb $900 million. The plant was originally supposed to have cost $1.9 billion. The overruns cost Duke $28 million in the quarter, or 2 cents per share. For the year, cost overruns have cost the company $628 million.
Earlier this month Duke announced it would close the crippled Crystal River nuclear station in Florida rather than spend as much as $3.4 billion to try to repair it. The plant has been shut since 2009 when part of its structure cracked during maintenance.
"We've had a lot of issues to deal with," Roger said. "But now we're positioned to harvest savings, to change our cost structure, and get prepared for the future."
Calpine's profit up on asset gain, loss widensStories You Might Like
Feb. 13, 2013, 6:33 a.m. EST
By Saabira Chaudhuri
Calpine Corp. CPN -2.22% swung to a fourth-quarter profit as the wholesale power company recorded a large gain from the sale of assets; however, its core loss widened as revenue declined.
The company raised its share buyback program by $400 million bringing the total authorization to $1 billion.
Calpine--which sells power to utilities and other power marketers on the wholesale market rather than at regulated rates-- has been cutting costs, refinancing debt, shedding non-core assets and expanding in more attractive markets in an effort to improve its bottom line of late.
In November, it said it had agreed to sell its South Carolina contracted peaking plant, Broad River Energy Center for $427 million, a sale that it billed as complementary to its October agreement to buy a Texas power plant from Bosque Power Co. for $432 million plus adjustments in a bid to boost capacity in the state. And last month, Calpine closed the sale of its Riverside Energy Center LLC to Alliant Energy Corp. (LNT) for roughly $400 million.
"2012 was a breakout year for Calpine, as we capitalized on the secular shift toward greater utilization of combined-cycle gas turbines in the power generation industry," Chief Executive Officer Jack Fusco said Wednesday. "Overall, our business continues to be resilient across a wide range of natural gas prices."
Calpine--one of the largest U.S. independent wholesale power-plant operators--reported a profit of $100 million, or 22 cents a share, versus a year-earlier loss of $13 million, or three cents a share.
The latest period included a $222 million net gain on the sale of assets The year-earlier period included an unrealized gain of $72 million related to derivatives. Excluding one-time items such as these, the company recorded a loss of $86 million versus a loss of $43 million a year earlier.
Revenue was down 6.3% to $1.37 billion.
Analysts polled by Thomson Reuters had most recently forecast an adjusted loss of five cents a share on $2.81 billion in revenue.
Operating margin widened to 21.6% from 13.4%.
In December, Calpine said Mr. Fusco had extended the terms of his contract through December 2015. He will continue in his CEO role through the company's May 2014 annual meeting, then immediately afterward become executive chairman.
Shares closed at $19.78 Tuesday and were inactive in recent premarket trading. The stock has risen 22% in the past 12 months.