Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — EEI International Utility Conference 2010
47 slides from Duke Energy Corporation (holding Company)'s conference presentation, Mar 15, 2010
Slide 1: EEI International Utility Conference
EEI INTERNATIONAL UTILITY CONFERENCE March 15, 2010 Lynn Good Jim Turner Group Executive and Group Executive; Chief Financial Officer President and Chief Operating Officer; U.S. Franchised Electric & Gas
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additiona
Slide 3: Agenda
Agenda > 2009 financial highlights and accomplishments > U.S. Franchised Electric & Gas overview > Value proposition > Fleet modernization strategy > Projected rate base growth, assumed returns by regulated jurisdiction and anticipated rate case activity > Commercial Businesses overview > Value prop
Slide 4: 2009 Financial Highlights and Accomplishments
2009 FINANCIAL HIGHLIGHTS AND ACCOMPLISHMENTS Lynn Good Group Executive and Chief Financial Officer
Slide 5: 2009 Financial Highlights
2009 FINANCIAL HIGHLIGHTS (Amounts in US$) 4Q09 4Q08 2009 2008 Reported Diluted EPS $ 0.26 $ 0.26 $0.83 $ 1.07 Adjustments 0.02 0.06 0.40 0.20 Discontinued Operations - - (0.01) (0.01) Extraordinary Items - (0.05) - (0.05) Adjusted Diluted EPS $ 0.28 $ 0.27 $1.22 $1.21 Measure Target Result Adjusted
Slide 6: U.S. Franchised Electric and Gas
U.S. FRANCHISED ELECTRIC AND GAS Jim Turner Group Executive; President and Chief Operating Officer, U.S. Franchised Electric and Gas Belews Creek – “Most Efficient Coal Plant in America” (2008)
Slide 7: Franchised Electric and Gas Value Proposition
FRANCHISED ELECTRIC AND GAS VALUE PROPOSITION Fleet and grid • Successful deployment of capital to modernize the generation fleet and power delivery system modernization Constructive • Timely and constructive rate recovery of capital regulatory outcomes investments and operating expenses Operational
Slide 8: Fleet Modernization
FLEET MODERNIZATION Carolinas Modernization Indiana Modernization Capacity (through 2020) Capacity (through 2020) (MW) (MW) 2,500 1,200 Renewables 1,000 Remaining 2,000 Unscrubbed Units to be Buck and 800 Evaluated for Other Planned 1,500 Dan River Renewables Retirement/ Retirements Gas Plants Contr
Slide 9: Projected Rate Base Growth
PROJECTED RATE BASE GROWTH Projected End of Year Rate Base (Franchised Electric and Gas) (US$ in billions) $28.9 $26.7 2.8 $23.3 2.6 $20.9 2.3 7.1 Projected Rate Base = 2.1 7.0 Prior Period Rate Base 6.5 5.6 Add: Capital Expenditures Less: Depreciation & Amortization 16.3 18.2 12.5 13.8 Less: Deferr
Slide 10: Focus on Regulatory Returns
FOCUS ON REGULATORY RETURNS Projected Earned vs. Allowed Return on Equity ROE% (2010) 12% 10.7%(1) 10.5% 10.63%(2) Current 10.375%(3) Allowed ROE 9% 9.5 – 10.0% 9.0 – 9.5% 8.5 – 9.0% 6% 6.5 – 7.0% Projected Earned ROE 3% Range 0% Carolinas Indiana Ohio T&D Kentucky Key Levers to Address Regulatory L
Slide 11: Frequent Rate Case Activity to Recover Costs
FREQUENT RATE CASE ACTIVITY TO RECOVER COSTS 2010 2011 2012 2013-2014 North Carolina South Carolina Indiana or Under Consideration Ohio Generation, T&D, Gas T&D Kentucky Gas Electric Electric Indicates rate case has concluded and new rates have been implemented Indicates year of projected re
Slide 12: Commercial Businesses
COMMERCIAL BUSINESSES Lynn Good Group Executive and Chief Financial Officer
Slide 13: Commercial Businesses Value Proposition
COMMERCIAL BUSINESSES VALUE PROPOSITION Diversified Sources of Earnings Growth and Cash Midwest Generation Ohio generation (~4,000 MW) Midwest gas-fired generation (~3,600 MW) ►A tale of three businesses > Midwest Generation - mature Wind – 735 MW Renewables business with strong historical cash Wind
Slide 14: Navigating Ohio's Competitive Environment
NAVIGATING OHIO’S COMPETITIVE ENVIRONMENT CIN Hub Cal 10 ATC Power Prices ► A competitive market in Ohio since deregulation $65 in 2000 $60 ESP development period >Dramatic drop in demand and power prices $55 Over 30% occurred in early 2009 $50 reduction $/MWhr >Current market price is below ESP pri
Slide 15: Midwest Generation – Our Competitive Response
MIDWEST GENERATION – Our Competitive Response ►DERS Strategy > Attract customers within the DE Ohio service territory (“defensive”) > Attract customers outside the DE Ohio service territory (“offensive”) ►DERS has acquired approximately 60 percent 2009 Monthly Ohio Retail Load Switching Trend of DE
Slide 16: Renewables
RENEWABLES Growth Opportunities ►Public policy drives growth prospects ►Natural extension of our business > Energy infrastructure provider > Proven construction management North Allegheny > Operational excellence ►Attractive financial performance Top of the World Campbell Hill > ITC and MACRS return
Slide 17: Duke Energy International
DUKE ENERGY INTERNATIONAL Focused on Clean and Contracted Energy Brazil – Contractible Capacity Under Firm Contract ►Clean, self-funding electric generation 98% 94% 95% business principally focused on Brazil and 83% 78% Peru > Principally hydro generation > Annual free cash flow ~ US$200 – 300 milli
Slide 18: Financial Overview
FINANCIAL OVERVIEW Lynn Good Group Executive and Chief Financial Officer
Slide 19: Key Assumptions for 2010
KEY ASSUMPTIONS FOR 2010 ►Reflects impact of 2009 rate cases in NC, SC, OH and KY ►Weather-normalized 2010 load forecast relatively flat to 2009 • Residential and Commercial load flat to 2009 • Continued textile decline in Carolinas • Slight improvement in non-textile industrial sales in both Caroli
Slide 20: 2010 EPS Range and Segment EBIT Expectations
2010 EPS Range and Segment EBIT Expectations (Amounts in US$) 2010 Adjusted Diluted EPS: US$1.25 - $1.30 $1.35 2010 Adjusted Segment EBIT Expectations $1.25 – $1.30 (US$ millions) 2009 2010E * $1.30 U.S. Franchised Electric & Gas $2,321 $2,630 $1.25 Commercial Power 500 315 $1.22 International 409 4
Slide 21: 2010 Summary Cash Flows
2010 SUMMARY CASH FLOWS (US$ in Millions) 2010E Primary Sources: 2010E Segment CapEx Adjusted Net Income (1) $ 1,700 Depreciation & Amortization 1,800 Deferred and Accrued Taxes 600 Total Sources 4,100 Primary Uses: Capital Expenditures (5,200) Dividends (1,300) Total Uses (6,500) Other Sources/(Use
Slide 22: Continued Dividend Growth
CONTINUED DIVIDEND GROWTH > Dividend expected to grow at a slower rate than growth in adjusted-diluted EPS > Dividend payout ratio to trend downward (based on adjusted-diluted EPS) > 2% increase assumed for 2010 > US$1.3 billion of expected dividend payments in 2010 Indicative Annual Dividend Rate a
Slide 23: Summary – Duke's Financial Objectives
Summary – Duke’s Financial Objectives Allocate Capital Efficiently Grow Earnings and Maintain a Strong and Earn Competitive Dividends Balance Sheet Returns > Adjusted diluted EPS CAGR > Deploy capital consistent with > Management is committed to of 4-6% off a 2009 base is our business mix (maintain
Slide 24: Appendix
Po Eneray. APPENDIX
Slide 25: Overview of Corporate Structure
OVERVIEW OF CORPORATE STRUCTURE Duke Energy U.S. FRANCHISED ELECTRIC AND GAS COMMERCIAL POWER INTERNATIONAL North and South Wind Business DE Carolinas Carolina Duke Energy Retail DE Indiana Indiana Sales (DERS) DUKE ENERGY BUSINESS MIX (2) DE Ohio Midwest Coal Ohio T&D Generation (1) (including DE K
Slide 26: U.S. Franchised Electric and Gas
U.S. FRANCHISED ELECTRIC AND GAS > 5 states: North Carolina, South Carolina, Indiana, Ohio and Kentucky IN > Comprises approximately 77% of adjusted segment EBIT for 2010(1) OH > 50,000 square miles of service area > Approximately 27,000 MW of regulated generating capacity > 5,200 MW nuclear KY NC >
Slide 27: Fleet Operational Excellence – Reliability
FLEET OPERATIONAL EXCELLENCE – RELIABILITY Nuclear Generation Capacity Factor Fossil Generation Commercial Availability 100% 100% 95% 90% 90% 80% 85% 70% 2006A 2007A 2008A 2009A 2010E* 2006A 2007A 2008A 2009A 2010E* Duke Energy Industry Averages Duke Energy > 2009 capacity factor second best in flee
Slide 28: Fleet Operational Excellence – Operating Costs
FLEET OPERATIONAL EXCELLENCE – OPERATING COSTS Nuclear Total Operating Cost – US$/MWh Total Fossil Production Costs – US$/MWh $30 $50 $25 $40 $20 $30 $15 $20 $10 $10 (1) 2006A 2007A 2008A 2009A 2010E* 2006A 2007A 2008A 2009A 2010E* Duke Energy Industry Averages Duke Energy Industry Averages > Low op
Slide 29: Well-Positioned for Pending Environmental Regulations
WELL-POSITIONED FOR PENDING ENVIRONMENTAL REGULATIONS Pending Regulations Coal Regulation > Coal Combustion Byproducts (CCB) Coal Ash – designation forthcoming by EPA, final regulation expected Q1 2011 Air Pollutant Regulation by EPA > Clean Air Transport Rule (CATR) – final rule expected in mid-201
Slide 30: Maintaining New Nuclear Options
MAINTAINING NEW NUCLEAR OPTIONS Cherokee County, SC – Lee Nuclear > Two Westinghouse AP 1000 reactors Piketon, OH > 2,234 megawatts – two 1,117 megawatt units > Filed COL with NRC in 2007 – under review > Estimated commercial operation date of 2021 Piketon, OH > Formed development alliance > Evaluat
Slide 31: Non-Regulated Midwest Generation
NON-REGULATED MIDWEST GENERATION Midwest Primarily Coal Midwest Gas Fired Beckjord (MISO) 1,074 MW Hanging Rock (PJM) 1,240 MW Type: 6 Coal Units, 4 CT Units Type: 2 Combined Cycle Units Fuel: Coal, Oil Fuel: Natural Gas Ownership: Unit 6 37.5%; 100% Ownership: 100% Location: New Richmond, OH Locati
Slide 32: Non-Regulated Renewables Portfolio
NON-REGULATED RENEWABLES PORTFOLIO Wind In Service Wind In Service (Cont.) Sweetwater 1-5 283 MW Silver Sage 42 MW Type: 175 GE 1.5 MW, 135 Mitsubishi 1 MW, & Type: 20 Suzlon 2.1 MW turbines North Allegheny 81 Siemens 2.3 MW Ownership: 100% Ownership: 1-3 50%; 4-5 47% PPA: 20 yr Platte River Auth,Ch
Slide 33: Duke Energy International
DUKE ENERGY INTERNATIONAL Houston MEXICO BELIZE GUATEMALA 2009 Net Capacity HONDURAS Guatemala NICARAGUA San Salvador COSTA RICA PANAMA 6% VENEZUELA Guatemala 283 MW GUYANA FRENCH SURINAME COLOMBIA GUYANA 22% El Salvador 296 MW ECUADOR PERU Ecuador 160 MW 72% BRAZIL Peru – Egenor 501 MW Lima BOLIVIA
Slide 34: Capital Expenditure Profile
CAPITAL EXPENDITURE PROFILE (US$ in millions) 2010E 2011E 2012E Cumulative Committed Capital Edwardsport IGCC $ 910 $ 280 $ 80 $ 1,270 CC / CT Additions – Carolinas 420 380 170 970 Nuclear Fuel 240 390 310 940 Cliffside 440 240 80 760 Smart Grid (1) 130 310 290 730 Renewables 430 - - 430 Environment
Slide 35: CapEx – System Growth and Maintenance (by Utility)
CAPEX – SYSTEM GROWTH AND MAINTENANCE (BY UTILITY) (US$ in millions) 2010E 2011E 2012E Cumulative System Growth Carolinas $ 1,120 $ 940 $ 630 $ 2,690 Indiana 960 450 280 1,690 Ohio 150 220 200 570 Kentucky 20 20 10 50 Total System Growth $ 2,250 $ 1,630 $ 1,120 $ 5,000 Maintenance and Other Carolina
Slide 36: Expected 2010 Debt Issuances
EXPECTED 2010 DEBT ISSUANCES (US$ in millions) DE DE DE DE Duke Carolinas Ohio Indiana Kentucky DEGS DEI Energy Total Estimated Debt $600 $ - $510 $ - $315 $315 $535 $2,275 Issuances (1) (2) Scheduled Debt (505) (5) (5) (5) (30) (225) - (775) Maturities Potential Debt - - (125) - - (225) (275) (625)
Slide 37: Credit Ratings Summary
CREDIT RATINGS SUMMARY Moody's S&P Duke Energy Stable Positive Issuer Rating / Corporate Credit Rating Baa2 A- Senior Unsecured Baa2 BBB+ Commercial Paper P-2 A-2 DE Carolinas Stable Positive Senior Secured A1 A Senior Unsecured A3 A- DE Ohio Positive Positive Senior Secured A2 A Senior Unsecured Ba
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Slide 39: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations EEI International Utility Conference March 15, 2010 Adjusted Diluted Earnings per Share (“EPS”) The materials for Duke Energy Corporation’s (“Duke Energy”) EEI International Utility Conference presentation on March 15, 2010 include a discussion of adj
Slide 40: financial measure for future periods, information to reconcile it to the most directly comparable
financial measure for future periods, information to reconcile it to the most directly comparable GAAP financial measure is not available at this time, as management is unable to project special items or mark-to- market adjustments for future periods. Adjusted Segment EBIT and Other Net Expenses for
Slide 41: Latin American Portfolio Cash Flows
Latin American Portfolio Cash Flows The materials for Duke Energy’s EEI International Utility Conference presentation on March 15, 2010 include a discussion of management’s expectation that the Latin American portfolio of assets will have significant annual free cash flow of approximately $200 milli
Slide 42: Cash-on-Cash Returns for Certain Renewables Projects
Cash-on-Cash Returns for Certain Renewables Projects The materials for Duke Energy’s EEI International Utility Conference presentation on March 15, 2010 include a discussion of Duke Energy’s estimate that Renewables projects recently constructed or in the process of construction will earn on average
Slide 43: Adjusted to Reported Earnings Reconciliation – Dec 2009 QTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION December 2009 Quarter-to-Date (US Dollars in millions, except per-share amounts) Special Items (Note 1) Costs to Economic Achieve, Hedges Adjusted Cinergy (Mark-to- Discontinued Total Reported Earnings Merger Impairments Market) *
Slide 44: Adjusted to Reported Earnings Reconciliation – Dec 2009 YTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION December 2009 Year-to-Date (US Dollars in millions, except per-share amounts) Special Items (Note 1) Costs to Crescent Economic Achieve, Related International Goodwill and Hedges Adjusted Cinergy Guarantees and Transmission Other (
Slide 45: Adjusted to Reported Earnings Reconciliation – Dec 2008 QTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION December 2008 Quarter-to-Date (US Dollars in millions, except per-share amounts) Special Items (Note 1) Costs to Economic Discontinued Achieve, Hedges Operations/ Adjusted Cinergy (Mark-to- Extraordinary Total Reported Earnings Mer
Slide 46: Adjusted to Reported Earnings Reconciliation – Dec 2008 YTD
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION December 2008 Year-to-Date (US Dollars in millions, except per-share amounts) Special Items (Note 1) Costs to Economic Discontinued Achieve, Crescent Emission Hedges Operations/ Adjusted Cinergy Project Allowances (Mark-to- Extraor
Slide 47: Cash Flow Reconciliation Required by SEC Regulation G
Duke Energy Corporation March 15, 2010 EEI International Utility Conference Cash Flow Reconciliation Required by SEC Regulation G (US$ in Millions) Forecast 2010 Primary Sources: Adjusted Net Income (1) a $ 1,700 Depreciation & Amortization a 1,800 Deferred and Accrued Taxes a 600 Total Sources 4,10
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