Duke Energy losing money on coal power plants

Sponsored by

NEW YORK (AP) — Duke Energy lost $97 million in the first quarter after reducing the value of a fleet of coal-fired power plants in the Midwest that it is trying to sell.

Duke announced in February that it would try to unload the power plants in the Midwest that sell power into wholesale markets, instead of directly to customers. Wholesale prices have been extremely volatile, but generally low in recent years, due to extremely low natural gas prices.

The company's regulated utility operations, however, performed better than expected due to stronger demand as the economy recovers. It's also able to charge higher rates.

Duke lost 14 cents per share on revenue of $6.62 billion in the first three months of the year. Last year, the company earned $634 million, or 89 cents per share, on revenue of $5.9 billion.

Adjusted to remove the $1.4 billion write-down of the coal plants, Duke earned $1.17 per share in the latest quarter. That's up from last year's adjusted $1.02 per share and higher than the $1.12 expected by analysts surveyed by FactSet.

"We're seeing this economic recovery deepen and broaden a bit," said Duke CFO Steve Young in an interview Wednesday. "It's started to get into median income households and small businesses."

Electricity sales rose 7.1 percent in the quarter, and 2.6 percent when the effect of weather was removed.

Christopher Muir, an analyst at S&P Capital IQ, said the growth was promising. "It's not enough of a trend yet," he said. But it's definitely encouraging."

Duke also benefited from higher rates that regulators have allowed the company to charge customers.

Duke Energy Corp., based in Charlotte, is the nation's largest electric utility by market value and number of customers. It serves 7.2 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky.

Duke CEO Lynn Good said in an interview Wednesday that Duke was working to deliver steady and strong results for shareholders, and the volatility and low returns of the Midwestern fleet was hindering that effort.

Because wholesale power prices apear likely to remain weak, Duke is unlikely to get the asking price it had originally imagined for its power plants, so it wrote down their value.

In February, a pipe at the bottom of a pond that held waste from a Duke coal plant in North Carolina burst and spilled toxic ash into the Dan River. Good said cleanup efforts cost the company $15 million in the quarter. She said while there will be more costs to come, she does not expect them to be large enough to materially affect overall results.

Duke shares rose 10 cents to $73.11 per share Tuesday in morning trading. Shares are up 6 percent so far this year and hit a new high for 2014 last week.

Sponsored by

Get All the Electric Light & Power and POWERGRID International to Your Inbox

Subscribe to Electric Light & Power or POWERGRID International and the email newsletter today at no cost and receive the latest news and information.

Related Articles

EIA: Gas-fired combined cycle overtakes coal in U.S. generating capacity


As of January, generating capacity at gas-fired CC (NGCC) power plants totaled 264 GW, compared with 243 GW at coal-fired ...

Presque Isle retired, 2 new Michigan power plants now operating

By 2050, the company aims to slash carbon releases by 80% from its 2005 levels

State orders Duke Energy to remove coal ash from all power plants


Duke Energy Corp. must remove the residue left after decades of burning coal to produce electricity, North Carolina's envi...

Wyoming carbon capture lab gets new funding


Carbontech Labs, a research accelerator created by Oakland, California-based nonprofit Carbon180, will provide $1 million