Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Investor Presentation (April 2006)
36 slides from Duke Energy Corporation (holding Company)'s investor presentation, Apr 3, 2006
Slide 1: The "New" Duke Energy
The “New” Duke Energy Investor / Analyst Luncheon – NYC April 3, 2006
Slide 2: Agenda
Agenda • Welcome • Paul Anderson - Chairman of the Board Role going forward • Jim Rogers – President & CEO Vision for the “new” Duke Energy Earning the Right for continued growth • David Hauser – CFO Financial metrics and expectations Legal structure • Jim Rogers Commitment to shareholde
Slide 3: Safe Harbor Statement / Reg G Disclosure
Safe Harbor Statement This document includes statements concerning future company performance which are forward-looking statements within the meaning of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the add
Slide 4: Paul Anderson, Chairman of the Board
Paul Anderson Chairman of the Board
Slide 5: Strategic Imperatives
Strategic Imperatives 2003 – 2006 Imperatives 1. “Ox out of the ditch” - regained financial strength and credibility 2. Established a sustainable business model • Decision to exit DENA businesses in West and Northeast • Completion of Cinergy merger 3. Chose a successor Next Imperative • Decide wheth
Slide 6: Governance
Governance • Role as Chairman Strategic portfolio decisions High-level management succession • Ann Gray continues as lead director • Jim Rogers assumes day-to-day management as President and CEO 6
Slide 7: Jim Rogers, President and CEO
iW Right Action. Right Direction. Right Time. Jim Rogers President and CEO
Slide 8: The "New" Duke Energy
The “New” Duke Energy Total Assets* $ 70+ B Market Capitalization ~ $ 36 B Retail Customers 5.5 million Net Generation Capacity 40,000+ MW * as of 9/30/2005 8
Slide 9: North American Assets
id North American Assets 4 dé : fe Duke Energy. . cHarth PLAINFIELD Og <s Shoou ae CHARLO % oe eS f { Investor / Analyst Meeting - NYC Right Action. Right Direction. Right Time. Corporate Headquarters Major Office Location DEGT — Natural Gas Storage DEGT — Natural Gas Processing Plant DEGT — Wholesa
Slide 10: Latin American Assets
Latin American Assets Mexico City Guatemala City • 4,000+ MW • 8 countries: Brazil, Lima Argentina, Peru, Bolivia, Ecuador, El Salvador, Guatemala, and Mexico Sao Paulo Buenos Aires 10
Slide 11: US Franchised Electric & Gas
US Franchised Electric & Gas • 5 states: North Carolina, South Carolina, Indiana, Ohio and Kentucky • 47,000 square miles of service area • ~28,000 MW • 3.8 million retail electric customers • 500,000 retail gas customers 11
Slide 12: 5 Key Power Industry Challenges
5 Key Power Industry Challenges 1 Fuel flexibility 2 Power price shocks 3 Environmental issues 4 Resource adequacy 5 Growth 12
Slide 13: Fuel Flexibility
Meeting Challenge #1 Fuel Flexibility Comparison of Generation Fuel Mix 100% 4% 9% 8% 6% 90% 80% 21% 25% 70% Duke Energy’s diverse 60% 64% fuel mix mirrors the 50% overall industry mix 50% 47% 40% 30% 20% Other 26% Natural Gas 10% 20% 20% Coal 0% Nuclear US Generation Duke Energy Net Duke Energy MW
Slide 14: Power Price Shocks
Meeting Challenge #2 Power Price Shocks Striving to minimize price increases • Fuel diversity across fleet • Economies of scale in fuel purchasing and efficient fuel delivery systems • Retail rates below national average • Focus on energy efficiency and conservation 14
Slide 15: Environmental Issues
Meeting Challenge #3 Environmental Issues Expect to spend approximately $ 2.4B through 2008 • Install 25 scrubbers Allows for fuel flexibility with different types of coal Cleaner coal gives flexibility with emissions allowances • Aspire to have industry’s cleanest coal fleet by 2009 • Shape US
Slide 16: Resource Adequacy
Meeting Challenge #4 Resource Adequacy • Exploring new coal plant in the Carolinas • Pursuing IGCC plant in Indiana • Announced plans for a potential new nuclear plant in South Carolina, with Southern Company • Capital commitment will require pre-approval of projects and assurance of adequate cost r
Slide 17: Growth
Meeting Challenge #5 Growth Growth through… Organic growth: 1.5% Merger savings in near-term Investing in new base load generation and environmental compliance longer term with timely recovery of capital 17
Slide 18: Earning the Right
Earning the Right Closed merger ahead of schedule Obtained regulatory approvals in 5 states Increased Duke Energy’s dividend by 12.7% Achieve successful integration & merger savings 18
Slide 19: Measuring Success
Measuring Success e c a rd S c o r erg er sults Approximately Approximately M $650 $650 MM MM ia l Re . F i na nc r kfo r ce 1 otal w o e __ T a c h i ev Aggregate AggregateNetNetSavings Savings sts t o C o during duringinitial initial55years _ _ -fu e l O&M years n lts __ N o l R e s u er ati ona 2
Slide 20: Committed to the 2006 Charter
Committed to the 2006 Charter Deliver on Deliver on our our 2006 2006 financial financial objectives and objectives and position position the the company company for growth for growth in in 2007 2007 and and beyond. beyond. Complete the Complete the Duke Duke Energy Energy North North America exit A
Slide 21: Reporting Segments
Reporting Segments Segment Leaders Businesses Jim Turner Franchised electric & gas utilities in Southeast & US Franchised Tom O’Connor Midwest (Duke Energy Carolinas, Duke Energy Electric & Gas Indiana, Duke Energy Ohio and Kentucky) Ruth Shaw Natural Gas Fred Fowler Natural gas transmission & stora
Slide 22: David Hauser, Group Executive and CFO
David Hauser Group Executive and CFO
Slide 23: 2006 Ongoing EBIT Expectations
“Old” Duke Energy 2006 Ongoing EBIT Expectations Reporting Segment: ($ MM) US Franchised Electric & Gas $ 1,500 Natural Gas Transmission 1,390 Field Services 500 Crescent Resources 250 International 275 North American Nonregulated n/a Generation & Marketing Other (330) 23
Slide 24: Merger-related EBIT Impacts
Merger-related EBIT Impacts 2006 Ongoing EBIT Expectations Merger-related EBIT Impacts: ($ MM) Cinergy Contribution (9 months) $ 800 Merger-related Savings (9 months) 140 Returned to Customers (7 months) (140) Purchase Accounting 60 Note: Ongoing EBIT excludes Cost to Achieve 24
Slide 25: 2006 Ongoing EBIT Expectations
“Old” Duke Energy 2006 Ongoing EBIT Expectations Reporting Segment: ($ MM) US Franchised Electric & Gas $ 1,500 Natural Gas Transmission 1,390 Field Services 500 Crescent Resources 250 International 275 North American Nonregulated n/a Generation & Marketing Other (330) 25
Slide 26: 2006 Ongoing EBIT Expectations
April 1 2006 Ongoing EBIT Expectations Reporting Segment: ($ MM) US Franchised Electric & Gas $ 1,950 Natural Gas Transmission 1,390 Field Services 500 Crescent Resources 250 International 275 North American Nonregulated 325 Generation & Marketing Other (250) 26
Slide 27: US Franchised Electric & Gas
US Franchised Electric & Gas Ongoing EBIT Expectations* ($ MM) Duke Energy Carolinas $ 1,500 Cinergy Regulated Businesses 530 Merger-related Savings 50 Returned to Customers (130) Current Expectation $ 1,950 27
Slide 28: North American Nonregulated Generation & Marketing
North American Nonregulated Generation & Marketing Ongoing EBIT Expectations* ($ MM) Generation Assets $ 250 Merger-related Savings 20 Purchase Accounting 60 Returned to Customers (5) Current Expectation $ 325 28
Slide 29: Other
Other Ongoing EBIT Expectations* ($ MM) Previous Expectation $ (330) DENA Continuing Ops moves to Nonreg 90 Merger-related Savings 70 Cinergy Governance Charges (80) Current Expectation $ (250) 29
Slide 30: Financing Organizational Structure
Financing Organizational Structure Duke Energy Corporation 4.7x FFO Duke Capital Duke Power Cinergy BBB, Baa3 BBB, Baa1 BBB-, Baa2 4.2x FFO 5.9x FFO 4.6x FFO Texas Westcoast Union Gas PSI CG&E Eastern BBB, Baa2 BBB, A (low) (a) BBB, A (a) BBB, Baa1 BBB, Baa1 All amounts relate to 2006 projections No
Slide 31: Stock Buyback Program
Stock Buyback Program Duke Energy resumed $2.5 B stock buyback program on March 13 Board approved up to $1B in 2006 2006 program is not accelerated As of March 31, repurchased 3 million shares at an average price of $ 29.1275 31
Slide 32: Jim Rogers, President and CEO
iW Right Action. Right Direction. Right Time. Jim Rogers President and CEO
Slide 33: Commitment to Investors
Commitment to Investors Focused on what matters most to you: Growing earnings and dividends over time Achieving the full value of our portfolio Reinvesting in the business Developing a strong leadership team with a deep bench Delivering clear and transparent communications 33
Slide 34: Predictable, Stable Earnings Stream
Predictable, Stable Earnings Stream Largest, most diversified regulated platform in North America Low-risk gas platform: FERC, NEB, OEB Integrated electric platform in 5 states today 2006 Ongoing EBIT* ~$3.34 B Regulated 71.2% Nonregulated 28.8% *Excludes “Other” 34
Slide 35: Unlocking the Value of Our Portfolio
Unlocking the Value of Our Portfolio • Strong balance sheet and solid cash generation from operations • Continuous refinement and assessment of our portfolio • Finding the right combination of assets to increase shareholder value Sum-of-the-parts analysis of our portfolio indicates our share price s
Slide 36: Questions?
We are relentlessly focused on what matters most to you. Questions?