Duke Energy Pushes Five-Year Capital Spending to $37 Billion, with Major NGCC Additions

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Researched by Industrial Info Resources (Sugar Land, Texas)--Despite a dip in profits and the ongoing fallout from a massive coal ash spill in 2015, Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) is bolstering its long-term capital spending plan with heavier investments in infrastructure and modernization. The sale of international business took a bite out of earnings, but executives believe it will help the company focus on its strongest growth areas. Industrial Info is tracking $7.42 billion in active projects involving Duke.

During 2016, the company benefited from favorable weather, cost reductions and an early close to its acquisition of Piedmont Natural Gas, all of which helped to offset significant storm costs and higher interest expenses. Duke also benefited from higher earnings from its midstream pipeline investments, notably the Atlantic Coast Pipeline. For more information on Duke's acquisition of Piedmont, see October 4, 2016, article - Duke Energy Acquires Piedmont in $4.9 Billion Deal, Growing its Foothold in U.S. Pipelines.

Duke is expanding its capital expenditure plan for the next five years to $37 billion, an increase of roughly 25% from the previous five-year growth plan. Capital spending totaled $13.22 billion in 2016, compared with $8.36 billion in the previous year.

"Our five-year plan includes investment of $3.3 billion in highly-efficient, natural gas-fired, combined-cycle (NGCC) plans," said Steven K. Young, the executive vice president and chief financial officer of Duke, in a quarterly earnings conference call. "This will include completing our Lee combined-cycle facility in South Carolina, our Western Carolinas Modernization Project in North Carolina, and our Citrus County plant in Florida, and beginning work on plants within service states beyond 2021."

Industrial Info is tracking all three projects singled out by Young: the $750 million addition to the William S. Lee Power Station in Belton, South Carolina; the $650 million addition to the Asheville Power Station in Arden, North Carolina; and the $1.5 billion Citrus County Power Station in Crystal River, Florida.

The 750-MW South Carolina project will include two 250-MW Siemens combustion turbine generators, with duct-fired heat-recovery steam generators (HRSG), and a 250-MW condensing reheat steam turbine generator; the 560-MW North Carolina project will include two 280-MW General Electric (NYSE:GE) dual-fueled natural gas- and fuel oil-fired combustion turbine generators, with HRSG, and a GE (or equal) steam turbine generator; and the 1,640-MW Florida project will include four 270-MW Mitsubishi combustion turbine generator sets, with inlet air chilling and supplemental-fired HRSGs, and two 280-MW steam turbine generator sets. For more information, see Industrial Info's project reports on the South Carolina, North Carolina and Florida NGCC projects.

Duke also plans to pay for $5 billion in coal ash cleanup by passing the costs on to its 3.3 million customers in North Carolina. In 2014, state legislators ordered Duke to close all 32 of its North Carolina ash basins following an ash spill into Dan River, according to the Charlotte Observer. The basins hold 111 million tons of ash, which can toxify water when in high concentrations.

Industrial Info is tracking more than $900 million in coal ash projects involving Duke, including the $31 million Sutton Power Plant Coal Ash Landfill in Wilmington, North Carolina. The company plans to relocate ash to the Brickhaven Clay Mine, formally owned by Charah Incorporated, to an ash landfill, followed by reclamation and backfill at the existing sites. For more information, see Industrial Info's project report.

As a less expensive alternative to excavation, Duke has submitted plans to state regulators to keep two-thirds of its North Carolina coal ash in the ground, according to the Charlotte Observer. The state is reviewing the proposal and is hearing public comment until April 5. Duke has spent $770 million on cleanups to date.

Early in the fourth quarter of 2016, Duke completed the exit of its less profitable international businesses to focus on its U.S. operations. The exit deals were valued at $2.4 billion.

Full-year net income was reported to be $2.15 billion, a 23.58% decrease from 2015, although 2016's operating revenues stood at $22.74 billion, a 1.66% increase.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.