Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Investor Presentation (September 2020)
62 slides from Duke Energy Corporation (holding Company)'s investor presentation, Sep 9, 2020
Slide 1: Duke Energy Investor Update
Duke Energy Investor Update September 2020
Slide 2: Safe Harbor statement; Regulation G disclosure
Safe Harbor statement This presentation includes forward-looking statements within the meaning of the federal securities laws. Actual results could differ materially from such forward- looking statements. The factors that could cause actual results to differ are discussed herein and in Duke Energy’s
Slide 3: Safe harbor statement
Safe harbor statement This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions and can often be identified by
Slide 4: Key Takeaways
Key Takeaways Duke Energy is now a 95% regulated electric and gas utility, with a robust low-risk $56 billion capital plan Communities we serve are fast growing and vibrant, operating in above-average regulatory jurisdictions High level of confidence in 4%-6% EPS growth outlook and 6% rate bas
Slide 5: Our Long-Term Investor Value Proposition
Our Long-Term Investor Value Proposition Scale owner of premium utilities Strong regulated growth outlook Duke Energy is the largest regulated utility in North America by: $56Bn 5-year capital plan Rate base, electric customers and total assets De-risked, focused on smaller scale projects
Slide 6: Carolinas IRP Highlights
Carolinas IRP Highlights SEPTEMBER INVESTOR UPDATE 2020 // 6 // 6
Slide 7: Duke Energy's clean energy future vision for the Carolinas
Duke Energy’s clean energy future vision for the Carolinas Carolinas IRPs illustrate multiple pathways to a cleaner energy future Collaborated with over 200 Stakeholders to help shape path to achieve our climate goals KEY MESSAGES Carolinas Integrated Resource Plans (IRP) filed Sept. 1 include six
Slide 8: Carolinas IRPs: Summary Results
Carolinas IRPs: Summary Results Earliest 70% CO2 70% CO2 Reduction: Base without Base with Practicable No New Gas Reduction: High Small Modular Carbon Policy Carbon Policy Coal Generation High Wind Reactor (SMR) Retirements Pathway A B C D E F System CO2 Reduction 56% 53% 59% 62% 64% 64% 70% 73% 71%
Slide 9: Coal retirements by portfolio
Coal retirements by portfolio Carolinas fleet coal capacity (MW)(1) 12,000 10,000 8,000 Coal Capacity [MW] 6,000 4,000 2,000 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2049 2019 IRP 2020 IRP - Most Economic 2020 IRP - Earliest Practicable (Both B
Slide 10: IRP contemplates the largest coal closure in the industry over the next decade
IRP contemplates the largest coal closure in the industry over the next decade 2019 active coal nameplate capacity and planned retirements by 2030 (GW) DUK planned 20 retirements in addition Planned coal retirements by 2030 Coal remaining post 2030 to 6.5 GW retired between 2010-2019 15.2 15 Capacit
Slide 11: National Leader in Low Carbon Intensity Energy
National Leader in Low Carbon Intensity Energy Carbon Intensity Benchmarks and Duke Energy Projections 2,000 1,800 Carbon Intensity [lbs./MWh] 1,600 1,400 1,200 1,000 800 600 400 200 0 PPL WEC FirstEnergy Duke Ameren Xcel Duke 2021 Duke 2030 Duke 2035 CMS Energy DTE Southern NextEra Dominion 2018 Be
Slide 12: Serving the Carolinas Winter Peak
Serving the Carolinas Winter Peak Solar Generation Load Carolinas: winter peaking California: summer peaking Solar more closely aligned with summer peak – storage can be used to shift energy Winter Solar to evening hours Solar not output highly aligned with variable winter peak Source: CAISO SOLAR +
Slide 13: Environmental track record
Environmental track record Duke is less “coal-heavy” than other utilities and has done more to reduce its carbon footprint(1) 79% Coal capacity (%) (MW) Coal generation (%) (MWh) 71% 62% 65% 50% 49% 48% 51% 44% 36% 29% 27% 29% 27% 29% 22% 24% 23% 26% 23% 20% 18% 17% 12% 5% 2% PPL AEE DTE FE WEC LNT
Slide 14: Premium Utility Franchises With Attractive Fundamentals
Premium Utility Franchises With Attractive Fundamentals SEPTEMBER INVESTOR UPDATE 2020 // 14 // 14
Slide 15: Duke Completed Its Portfolio Transition Ahead of Peers
Duke Completed Its Portfolio Transition Ahead of Peers CURRENT INDUSTRY THEMES Divestiture of merchant Announced exit from Midwest generation in 2014 businesses Regulated business M&A Announced acquisition of Piedmont in 2015 Divestiture of international Announced exit from Duke Energy International
Slide 16: Duke Energy Is The Largest Regulated Utility In North America
Duke Energy Is The Largest Regulated Utility In North America $56 B NORTH AMERICAN RATE BASE 5-YEAR CAPITAL AS OF 12/31/2019 ($B)(1) PLAN $77 $56 $48 $47 $42 ELECTRIC 86% DUK A B C D GAS 10% COMMERCIAL RENEWABLES TOTAL ASSETS ($B)(2) 4% $160 $126 $122 $120 $109 53 GWS TOTAL GENERATING DUK E F A G CA
Slide 17: Earnings growth predicated on $56 billion 5-year capital plan
Earnings growth predicated on $56 billion 5-year capital plan $56 BILLION, 5-YEAR CAPITAL PLAN 2020-2024 CAPEX REMAINS INTACT Potential upside BREAKDOWN from clean energy momentum in all Incremental jurisdictions Grid 4% $56 B Incremental Investments $56 B Additional LDC 10% Florida Investments Sola
Slide 18: Strong customer growth in vibrant economies
Strong customer growth in vibrant economies YTD Q2 2020 GROWTH IN NUMBER OF SERVING THREE OF THE MOST RESIDENTIAL CUSTOMERS VIBRANT STATES IN THE COUNTRY 1.8% 1.7% 1.7% 1.8% U.S. Rankings: #1 #2 #3 #4 #5 1.4% 1.5% 150 2019 Net Migration (in 100 134 126 0.9% thousands)(1) 91 50 67 53 Midwest Carolina
Slide 19: And supportive regulatory relationships
And supportive regulatory relationships Growth Profile Utility Regulatory Earnings Earnings Ranking3 Base1 Base Growth2 NC Duke Energy $25B 6.0% Average / 1 Carolinas Top 20% SC Average / 2 Duke Energy $18B Top 40% Progress 3.8% FL Above Average / 2 7.5% Top 10% Duke Energy $14B Florida IN Average /
Slide 20: Piedmont Acquisition Has Been a Tremendous Success
Piedmont Acquisition Has Been a Tremendous Success INDUSTRY LEADING LDC BUSINESS EARNINGS BASE GROWTH ($B) NET INCOME GROWTH ($MM) 16% 15% ~2x ~2x outperformance outperformance 8% 8% (1) Piedmont LDC peers Piedmont LDC peers (1) 2016A-2020E Rate Base CAGR ($mm) 2015A-2020E Net Income CAGR ($mm) Near
Slide 21: Piedmont's Customers Have Benefitted Under Duke Ownership
Piedmont’s Customers Have Benefitted Under Duke Ownership LOW CUSTOMER BILLS HIGH CUSTOMER ($/therm) SATISFACTION STRONG SAFETY RECORD 1.23 772 3.90 ~2% ~45 pt ~2x reduction increase reduction 1.68 1.16 727 2016 2019 2016 2020 2015A 2020E Average Customer Bill Customer Satisfaction Metric TICR Safet
Slide 22: Track Record of Operational Performance
Track Record of Operational Performance SEPTEMBER INVESTOR UPDATE 2020 // 22 // 22
Slide 23: Strong Track Record of Performance
Strong Track Record of Performance Met annual guidance in 7 of the last 8 years while exiting businesses with volatile earnings Kept O&M flat, including absorbing ~$300 million of O&M from the Piedmont acquisition in 2016, in addition to offsetting wage / salary increases and general inflation
Slide 24: Strong Track Record of Meeting EPS Guidance
Strong Track Record of Meeting EPS Guidance ADJUSTED EARNINGS PER SHARE VS. GUIDANCE Guidance Range Actual EPS(1) within guidance Actual EPS(1) outside guidance $5.20 $4.85 $4.75 $4.70 $4.70 $4.80 $4.60 $4.45 $4.55 $4.55 $4.50 $4.50 $4.45 Exited merchant Acquired Piedmont Midwest Natural Gas/ $4.20
Slide 25: We Have Succeeded On Major Project Development / Management
We Have Succeeded On Major Project Development / Management OUTSTANDING PROJECT MANAGEMENT …AND PRUDENT DECISIONS TO NO LONGER ON KEY PROJECTS… PURSUE PROJECTS WHEN POTENTIAL RISKS Citrus County Combined Cycle (CC) – 1,640 MW EXCEED REWARDS $1.5 billion investment recovered through GBRA Levy a
Slide 26: 2020 Additional O&M Cost Savings Well Underway
With 2020 Additional O&M Cost Savings Well Underway Highly confident in achieving a $350-$450 million $ in millions reduction in O&M and other expenses to mitigate 2020 headwinds $450 ‒ Unparalleled capability to mitigate headwinds given $400 our size, scale and agility Clear line-of-sight of sa
Slide 27: Strong O&M Cost Management
Strong O&M Cost Management O&M COST MANAGEMENT ($ IN BILLIONS) Highly confident in TOP TIER COST MANAGEMENT achieving a $350-$450 CONTINUES $4.9 $4.9 $5.0 $4.9 million reduction in O&M and other expenses in Outstanding track record of cost management Flat to declining O&M 2020 to mitigate COVID-
Slide 28: Focus on Balance Sheet Management
Focus on Balance Sheet Management SEPTEMBER INVESTOR UPDATE 2020 // 28 // 28
Slide 29: Our utilities have strong credit metrics that support our corporate rating
Our utilities have strong credit metrics that support our corporate rating Rated Issuers FFO/Debt (1) Moody's S&P DUKE ENERGY CORPORATION Stable Stable Senior Unsecured Debt Baa1 BBB+ Commercial Paper P-2 A-2 26% 25% PROGRESS ENERGY, INC. Stable Stable 23% 23% 22% Senior Unsecured Debt Baa1 BBB+ 18%
Slide 30: Strong focus on balance sheet and consistent dividend growth
Strong focus on balance sheet and consistent dividend growth PRUDENT BALANCE SHEET INCREASED QUARTERLY DIVIDEND MANAGEMENT PAYMENT FOR THE 14TH CONSECUTIVE YEAR Strong available liquidity position of $8.7 billion as of Jun. 30 Stable outlooks at Moody’s and S&P Expect to receive remaining refu
Slide 31: Appendix
Appendix SEPTEMBER INVESTOR UPDATE 2020 // 31 // 31
Slide 32: ESG is an essential component of Duke Energy's strategy
ESG is an essential component of Duke Energy’s strategy Industry-leading climate goal of net-zero carbon emissions by 2050 Announced over 1,500 MW of new wind and solar projects in 2019 ENVIRONMENTAL Further reduced CO2 emissions by an additional 8% in 2019 from 2005 levels, bringing total dec
Slide 33: Carolinas IRPs: Academic studies support assumptions and methodology
Carolinas IRPs: Academic studies support assumptions and methodology Studies supporting resource methodology Natural gas enables the acceleration of coal retirements by providing replacement winter peak resources as the integration of renewable resources and battery technology continues to advan
Slide 34: Carolinas IRPs: Commission rules and review process
Carolinas IRPs: Commission rules and review process The 2020 IRP includes a most economic or “least-cost” portfolio, as required by North Carolina Utilities Commission (NCUC) Rule R8-60 and subsequent orders, and the Public Service Commission of South Carolina (PSCSC) and The Energy Freedom Act (A
Slide 35: Carolinas IRPs: Carbon Reduction by Scenario
Carolinas IRPs: Carbon Reduction by Scenario SEPTEMBER INVESTOR UPDATE 2020 //// 35 35
Slide 36: Carolinas IRPs: Generation Mix by Portfolio
Carolinas IRPs: Generation Mix by Portfolio 2025 2030 2035 8% 2% 1% Base Case with 2035 Carbon Intensity: Carbon Policy 32% 38% 38% 350 lbs./MWH 60% 60% 61% PVRR: $82.5 B 8% 2035 Carbon Intensity: 70% CO2 Rdctn: 33% 29% 32% 240 lbs./MWH High Wind 60% 67% 71% PVRR: $100.5 B 8% 2% 1% 2035 Carbon Inten
Slide 37: We operate utilities across a diverse set of regions across the country
We operate utilities across a diverse set of regions across the country COMPETITIVE CUSTOMER RATES(1) REGULATED ELECTRIC UTILITIES IN HIGH- 2019 EARNINGS BASE RESIDENTIAL QUALITY REGIONS OF U.S. AVG. 14.16 DEO - Electric DEK - Electric THE U.S. DEP (SC) 13.01 4% 1% DEF 12.86 DEP (NC) 12.41 DEI CAROL
Slide 38: Peer utility benchmarking
Peer utility benchmarking Ranked by net electric utility plant value ($mm) Key Metrics Peer A Peer B Peer C Peer D Peer E Peer F Peer G Peer H Peer I Total electric sales (GWh) 206,584 147,734 134,866 196,403 122,489 117,172 89,441 49,988 51,286 36,077 Electric customers 7,800 4,270 5,500 9,100 5,47
Slide 39: Advancing our strategic vision
Advancing our strategic vision TRANSFORM THE CUSTOMER EXPERIENCE MODERNIZE THE GENERATE EXPAND NATURAL GAS ENERGY GRID CLEANER ENERGY INFRASTRUCTURE STAKEHOLDER ENGAGEMENT EMPLOYEE ENGAGEMENT AND OPERATIONAL EXCELLENCE ARE FOUNDATIONAL TO OUR SUCCESS SEPTEMBER INVESTOR UPDATE 2020 //// 39 39
Slide 40: Our investor value proposition
Our investor value proposition A STRONG LONG-TERM RETURN PROPOSITION 4.6% ~8-10% 4 -6% LONG-TERM EPS DIVIDEND YIELD(1) zzz ATTRACTIVE GROWTH WITH LONG-TERM RISK-ADJUSTED DIVIDEND GROWTH TOTAL SHAREHOLDER ANCHORED BY LOW- COMMITMENT(2) RETURN(3) RISK REGULATED INVESTMENTS(4) CONSTRUCTIVE JURISDICTION
Slide 41: Upcoming events & other
Upcoming events & other SEPTEMBER INVESTOR UPDATE 2020 // 41 // 41
Slide 42: Upcoming events
Upcoming events Event Date 2020 ESG Investor day October 9, 2020 3Q 2020 earnings call Early November 2020 SEPTEMBER INVESTOR UPDATE 2020 //// 42 42
Slide 43: Investor relations contact information
Investor relations contact information BRYAN BUCKLER, VICE PRESIDENT INVESTOR RELATIONS Bryan.Buckler@duke-energy.com (704) 382-2640 CINDY LEE, DIRECTOR INVESTOR RELATIONS Cynthia.Lee@duke-energy.com (980) 373-4077 ABBY MOTSINGER, MANAGER INVESTOR RELATIONS Abby.Motsinger@duke-energy.com
Slide 44: For additional information on Duke Energy, please visit duke-energy.com/investors
For additional information on Duke Energy, please visit: duke-energy.com/investors
Slide 45: Duke Energy Corporation Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations Duke Energy Investor Update September 2020 Adjusted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Investor Update in September 2020, include a discussion of adjusted EPS for the year-to-date periods ended December
Slide 46: Non-Rider Recoverable O&M
Non-Rider Recoverable O&M The materials for Duke Energy’s Investor Update in September 2020, include a discussion of Duke Energy’s non-rider recoverable operating, maintenance and other expenses (O&M) for the year-to-date periods ended December 31, 2019, 2018, 2017 and 2016. Non-rider recoverable O&
Slide 47: :FBS&OEFE%FDFNCFS %PMMBSTJONJMMJPOT FYDFQUQFSTIBSFBNPVOUT 4QFDJBM*UFNT
%6,&&/&3(:$03103"5*0/ 3&1035&%50"%+645&%&"3/*/(43&$0/$*-*"5*0/ :FBS&OEFE%FDFNCFS %PMMBSTJONJMMJPOT FYDFQUQFSTIBSFBNPVOUT 4QFDJBM*UFNT 3FQPSUFE *NQBJSNFOU %JTDPOUJOVFE 5PUBM "EKVTUFE &BSOJOHT $IBSHFT 0QFSBUJPOT "EKVTUNFOUT &BSOJOHT 4&(.&/5*/$0.& &MFDUSJD6UJMJUJFTBOE*OGSBTUSVDUVSF " f (BT6UJMJUJFTBOE*
Slide 48: Reported to Adjusted Earnings Reconciliation, 2018
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2018 (Dollars in millions, except per-share amounts) Special Items Costs to Regulatory Achieve and Sale of Impacts Reported Piedmont Legislative Retired Impairment of the Discontinued Total Adjusted
Slide 49: Reported to Adjusted Earnings Reconciliation, 2017
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2017 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve Commercial Reported Piedmont Regulatory Renewables Impacts of Discontinued Total Adjusted Earnings Merger Settleme
Slide 50: Reported to Adjusted Earnings Reconciliation, 2016
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2016 (Dollars in millions, except per-share amounts) Special Items Costs to Cost Commercial International Reported Achieve Savings Renewables Energy Discontinued Total Adjusted Earnings Mergers Init
Slide 51: Reported to Adjusted Earnings Reconciliation, 2015
DUKE ENERGY CORPORATION REPORTED TO ADJUSTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2015 (Dollars in millions, except per-share amounts) Special Items Ash Basin Costs to Midwest Settlement Cost International Reported Achieve Edwardsport Generation and Savings Energy Discontinued To
Slide 52: Adjusted to Reported Earnings Reconciliation, 2014
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2014 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Economic Reported Progress Asset Litigation International Hedges (Mark- Discontinued Total Adjusted Earnings Merg
Slide 53: Adjusted to Reported Earnings Reconciliation, 2013
DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION Twelve Months Ended December 31, 2013 (Dollars in millions, except per-share amounts) Special Items Costs to Achieve, Nuclear Crystal River Reported Progress Development Litigation Unit 3 Discontinued Total Adjusted Earnings Merger
Slide 54: Available Liquidity Reconciliation
Duke Energy Corporation Available Liquidity Reconciliation As of June 30, 2020 (In millions) Cash and Cash Equivalents $ 341 Less: Certain Amounts Held in Foreign Jurisdictions (10) Less: Unavailable Domestic Cash (87) 244 Plus: Remaining Availability under Master Credit Facilities and other facilit
Slide 55: Operations, Maintenance and Other Expense
Duke Energy Corporation Operations, Maintenance and Other Expense (In millions) Actual Actual Actual Actual December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 Operation, maintenance and other (a) $6,223 $5,944 $6,463 $6,066 Adjustments: Costs to Achieve, Mergers (b) (238) (94) (
Slide 56: FFO to Debt Calculation: Duke Energy Corporation
FFO to Debt Calculation Duke Energy Corporation (in millions) Year Ended December 31, 2019 Actual Cash From Operations $ 8,209 Adjust for Working Capital 250 Coal ash ARO spend 746 Include Capitalized Interest as cost (159) Hybrid interest adjustment 10 Preferred stock adjustment (21) CR3 securitiza
Slide 57: FFO to Debt Calculation: Duke Energy Carolinas
FFO to Debt Calculation Duke Energy Carolinas (in millions) Year Ended December 31, 2019 Actual Cash From Operations $ 2,709 Adjust for Working Capital 144 ARO spend 278 Include Capitalized Interest as cost (30) Lease‐imputed FFO adjustment (D&A) 43 Funds From Operations $ 3,144 Current maturities o
Slide 58: FFO to Debt Calculation: Duke Energy Progress
FFO to Debt Calculation Duke Energy Progress (in millions) Year Ended December 31, 2019 Actual Cash From Operations $ 1,823 Adjust for Working Capital (92) Coal ash ARO spend 390 Include Capitalized Interest as cost (28) Lease‐imputed FFO adjustment (D&A) 56 Funds From Operations $ 2,149 Notes payab
Slide 59: FFO to Debt Calculation: Duke Energy Florida
FFO to Debt Calculation Duke Energy Florida (in millions) Year Ended December 31, 2019 Actual Cash From Operations $ 1,478 Adjust for Working Capital (178) Coal ash ARO spend 22 Include Capitalized Interest as cost (3) Adjust for CR3 (54) Lease‐imputed FFO adjustment (D&A) 79 Funds From Operations $
Slide 60: FFO to Debt Calculation: Duke Energy Indiana
FFO to Debt Calculation Duke Energy Indiana (in millions) Year Ended December 31, 2019 Actual Cash From Operations $ 997 Adjust for Working Capital 2 Coal ash ARO spend 48 Include Capitalized Interest as cost (26) Lease‐imputed FFO adjustment (D&A) 18 Funds From Operations $ 1,039 Notes payable to a
Slide 61: FFO to Debt Calculation: Duke Energy Ohio
FFO to Debt Calculation Duke Energy Ohio (in millions) Year Ended December 31, 2019 Actual Cash From Operations $ 526 Adjust for Working Capital (19) Coal Ash ARO spend 8 Include capitalized Interest as cost (22) Lease‐imputed FFO adjustment (D&A) 10 Funds From Operations $ 503 Notes payable to affi
Slide 62: FFO to Debt Calculation: Piedmont Natural Gas
FFO to Debt Calculation Piedmont Natural Gas (in millions) Year Ended December 31, 2019 Actual Cash From Operations $ 409 Adjust for Working Capital 88 Include Capitalized Interest as cost (26) Lease‐imputed FFO adjustment (D&A) 4 Funds From Operations $ 475 Notes payable to affiliated companies $ 4