Duke Energy's 2015 Capex to Grow by $2 Billion from 2014

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Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with Duke Energy (NYSE:DUK) (Charlotte, North Carolina) said Wednesday that the power provider's capital expenditures (capex) for 2015 will grow to as much as $7.8 billion, from $5.52 billion in 2014. President and Chief Executive Officer Lynn Good said during the company's earnings conference call that the planned expenditures are part of a multi-year growth investment strategy.

Industrial Info is tracking 137 active Duke-related projects worth $7.49 billion. This includes 28 projects valued at $3.5 billion that are in the planning stages, where a variety of factors could result in delays, reductions, cancellations or other changes. Another 14 projects, valued at $2.54 billion, are in the engineering stages; 95 projects, valued at $1.45 billion, are under construction.

The grassroot, 765-kilovolt Kokomo Pioneer Transmission Line project in Indiana has a total estimated value of $1.1 billion. A joint venture by Duke and American Electric Power (NYSE:AEP) (AEP) (Columbus, Ohio) is awaiting permitting for the overhead, extra-high voltage transmission line, which would run 290 miles to link Duke Energy's Greentown substation in Kokomo, Indiana, with AEP's Rockport station in Evansville, Indiana. Construction kickoff is slated for second-quarter 2016, with completion in fourth-quarter 2019.

Good said the company's growth plan calls for a $1.9 billion investment in transmission and distribution infrastructure during the next seven years in Indiana. Legislative hearings on the plan were held last month, she said, and a decision is expected by mid-2015.

Duke plans to invest $2 billion in the Carolinas, Good said, including the acquisition of North Carolina Eastern Municipal Power Agency's assets and investments in renewables. She said Duke is expected to own more than 100 megawatts (MW) of solar-power generation capacity in North Carolina by the end of the year.

Florida also will see investments of $2 billion. Duke is planning an 820-MW, combined-cycle power plant at its Citrus facility site in Crystal River, Florida.

The company is earmarking $1.9 billion for its Commercial businesses, including the Atlantic Coast Pipeline joint venture project. The planned, 550-mile natural gas pipeline would transport up to 1.5 billion cubic feet of gas per day from the Marcellus and Utica shale formations to North Carolina and Virginia. Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) owns 45% of the project, while Duke owns 40%, Piedmont Natural Gas Company (NYSE:PNY) (Charlotte, North Carolina) holds 10%, and AGL Resources owns 5%.

Duke reported $97 million in fourth-quarter 2014 net income, down from $688 million a year earlier. Fourth-quarter 2014 revenue totaled $6.37 billion, compared with $6.61 billion in fourth-quarter 2013.

The fourth-quarter results include a $100 million charge for a proposed legal agreement with the U.S. government that stems from a federal grand jury investigation of the February 2014 Dan River coal ash spill, and ash basin operations at other North Carolina plants. A proposed agreement could be reached and filed in the next several days for consideration by the court, the company said.

For related information, see March 24, 2014, article - Scope of Inspections into Duke Energy Expands After Dan River Coal Ash Spill in North Carolina.

Duke also incurred a $373 million tax charge in the fourth quarter as a result of its decision to repatriate up to $2.7 billion in historical foreign earnings.

Duke reported its Regulated Utilities segment earnings were hit by higher operations and maintenance costs, primarily related to nuclear-outage cost levelization in the Carolinas, as well as the timing of fossil-fuel plant outages. Duke's Non-regulated Business segment saw higher revenues from its Midwest generation fleet, and increased results from the renewables business, but these were offset by lower earnings from the International Energy segment, where the drought in Brazil resulted in lower generation of hydro-electricity and higher purchased power costs.

Net income for all of fiscal-year 2014 totaled $1.88 billion, down from $2.66 billion in 2013. Operating revenue for 2014 totaled $23.93 billion, up from $22.76 billion in 2013, the company reported.

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