NYSE:DUK) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.
CEO Selection Process
Greg Gordon – ISI Group : Can you give us an update on where you stand in terms of your CEO search and whether you can give us any view on whether we get visibility on that sort of at the front end of the period that stipulated in the settlement or towards the end of the year?
James E. Rogers – Chairman, President and CEO : Greg, I’ll address that. The CEO selection process is being led by a Special Committee of the Board. The committee is working with an outside advisor to support this process in applying a great deal of rigor and due diligence. Of all the decisions, the Board can make, the most important decision is the selection of the CEO. They are looking at both internal candidates, as well as external candidates. The process is ongoing. They are being very thoughtful to liberty and are working their way through this and it’s difficult at this time to predict whether the decision will actually be made. But in every event it will be made before the end of this year.
Greg Gordon – ISI Group : One other question on a different subject. It’s been fairly often the case that you’ve been able to settle cases in North Carolina. I can’t remember a situation where the ROE has been challenged in Court and remanded in this fashion. Is there any precedent for this type of scenario and can we look at that precedent if there was any into and how the Commission might respond?
James E. Rogers – Chairman, President and CEO : As a general rule, the Supreme Court differs to the judgment of the State Commission. I think what’s important to appreciate about the remand to the State Commission is this they didn’t strike down the 10.5% ROE. What they simply did was asked the commission to explain in detail the basis of their approval of the merger and specific I mean the settlement and specifically the underlying basis for the 10.5%. There is ample evidence in the record and what is expected from the commission, and at least what we expect from the commission is that they will review the evidence that was presented and they will write an order that underpins the 10.5.
North Carolina Situation
Daniel Eggers – Credit Suisse : Just following up on Greg’s question on the North Carolina situation, does that potentially have any bearing on, how is the Progress settlement is put together when I guess presented ultimately to the commission or does it prospectively slowed down the Duke case in the sense of maybe you need to build a bigger or more broad docket in order to avoid a debate in the future?
James E. Rogers – Chairman, President and CEO : Good question, Dan. I would address it this way, when we file for rate case we file with the lot of testimony that really supports the ROE request that we’re making. As a consequence of that when we enter into a settlement as we have in the Progress Energy case, basically that 10.2 is underpinned with testimony and we will file additional testimony when there is a hearing on the settlement. So, I think the most important point here is if one doesn’t change the historic practice in the Carolinas of reaching settlements and presenting settlements to the Commission. What the Court has really done is ask the Commission to explain in much greater detail why they approved the settlement and specifically why they approved the ROE. So, I think it’s really a message to the Commission to address based on record evidence why they made their decision in more detail.
Daniel Eggers – Credit Suisse : Can I ask one more? I am sorry. On the Ohio capacity case situation, obviously, the other parties have pretty (strongly) maintained their position and you guys have maintained yours. Is there an opportunity for you guys to look at a settlement or find a common ground on this issue or is this one that’s going to have to go to a Commission decision and prospectively a litigation to get to a fair outcome from your perspective?
James E. Rogers – Chairman, President and CEO : Dan, my judgment is, I mean, we’ve always reached settlements in Ohio, but this one is difficult if not impossible to reach a settlement. I don’t rule out the possibility of settlement later in the process, but I think where everybody is kind of strapped on their position and going full speed before the Commission to make the argument. Our argument is a strong argument and if I put my – I didn’t practice law in a long time – but if I put my hat on as a lawyer, this case is a very strong case for us, because this capacity charge has been approved for AEP and the consequence of it that Commission can’t discriminate against one company versus another company and the application of their rulings. So, we’re clearly going to win in the Supreme Court. I believe we can win and there seems to be evidence or an indication that we could win as at the Commission.
Daniel Eggers – Credit Suisse : Then Lynn I guess just one question on Commercial Power; after the first quarter, kind of fairly far off the full year rate and capacity is going to work since you’ve been in the second half. What should we be thinking about is going to help fill in against guidance, where you guys have it today?
Lynn J. Good – EVP and CFO : Dan we do have an assumption of some success in Ohio in our guidance. I think as we shared with you in February, you should look at the broad guidance range of $4.20 to $4.45. We’ve assumed a range of outcomes. So as we move through this process and get some more clarity on Ohio, I think we’ll be able to give you more sense of how Commercial will contribute, as well as how the other parts of the business will contribute.
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- James E. Rogers
- North Carolina