Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Non-Deal Roadshow (September 2014)
44 slides from Duke Energy Corporation (holding Company)'s roadshow presentation, September 2014
Slide 1: Fall Roadshow Update
(= DUKE Ce ENERGY. Fall Roadshow Update
Slide 2: Safe Harbor
Safe Harbor 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 t
Slide 3: Duke Energy representatives
Duke Energy representatives Steve Young EVP – Chief Financial Officer Bill Currens Vice President – Investor Relations (704) 382-1603 bill.currens@duke-energy.com Additional Information For more information on Duke Energy, please visit www.duke-energy.com/investors 3 | Roadshow Update | September 20
Slide 4: Agenda
Agenda – Duke Energy Overview – Financial Update – Growth Investments – New Generation – Infrastructure – Other Information 4 | Roadshow Update | September 2014
Slide 5: Duke Energy Overview
Duke Energy Overview 5 | Roadshow Update | September 2014
Slide 6: Duke Energy value proposition
Duke Energy value proposition Superior Total Shareholder Return (TSR) Potential R Long-term EPS growth of 4-6% (1) Attractive annual dividend yield (~4.2%) (2) with growth flexibility ~8.2%-10.2% average annual TSR potential Strong balance sheet Operate in constructive regulated jurisdicti
Slide 7: Duke Energy: scale, diversity and flexibility
Duke Energy: scale, diversity and flexibility Highly-regulated business with earnings diversity (1) Regulated Utilities geographic diversity Pre-Merger Post-Merger Midwest 4% 9% 12% 24% Carolinas 67% 84% Region Electric Customers Carolinas 3.9 million Regulated International Commercial Power Florida
Slide 8: Commercial Businesses provide additional diversity
Commercial Businesses provide additional diversity International Energy Commercial Power 4,600 MW of generation in Latin America Renewables – long-term contracted projects with 25% investment in National Methanol creditworthy counterparties Highly contracted business Commercial Infrastruct
Slide 9: Established track record of long-term, attractive total shareholder returns
Established track record of long-term, attractive total shareholder returns 23.8% 22.5% 20.8% 19.6% 17.0% 16.2% 15.6% 15.4% 12.2% 12.4% 11.9% 10.2% 2014 YTD 1 Year 3 Year 5 Year Annualized Annualized DUK Philadelphia Utility Sector S&P 500 Total Shareholder Returns per Bloomberg as of September 5, 2
Slide 10: Established track record of adjusted EPS growth
Established track record of adjusted EPS growth 2009 – 2013 Results (1) $4.50-4.65 4.5% annual earnings growth from 2009 to 2013 $4.38 $4.35 $4.29 $4.32 Expect longer term growth in adjusted EPS between 4-6% through 2016 (2) $3.66 Future EPS growth supported by investment opportunities, custom
Slide 11: Established track record of dividend growth
Established track record of dividend growth DUK has an above-average dividend yield DUK annual dividend per share (1) compared to its peer group DUK is growing the dividend annually, but at a rate slower than the growth in EPS DUK will reach its targeted 65-70% payout ratio in 2014 Once the
Slide 12: Financial Update
Financial Update 12 | Roadshow Update | September 2014
Slide 13: DUK is well-positioned to continue meeting its financial objectives
DUK is well-positioned to continue meeting its financial objectives Achieve Grow increased 2014 EPS EPS 4 - 6% guidance range of through 2016 (1)(2) $4.50 - $4.65 (1) Grow Maintain strong dividend within 65 - 70% credit ratings and target payout (1) balance sheet (1) Based on adjusted diluted EPS /
Slide 14: Achieving long-term adjusted EPS growth of 4-6% through 2016
Achieving long-term adjusted EPS growth of 4-6% through 2016 (1) Retail Load Growth >0.5% 4% Adjusted EPS growth Optimize Commercial Businesses – As of June 30, rolling highly achievable Incremental Growth twelve month trend is with base plan Projects – Accretive deployment of ~1.5% MW Generation sa
Slide 15: Retail customer sales growth trends improving
Retail customer sales growth trends improving Annual Retail Sales Growth 2008 – 2013 (1) YTD Load Growth Drivers by Class as of June 30, 2014 2008 2009 2010 2011 2012 2013 Weather-normalized load growth of ~1.5% is above full-year expectations of ~0.5% 1.9% – Residential: usage per customer was unfa
Slide 16: Wholesale sales growth provides earnings support
Wholesale sales growth provides earnings support (1) 2014 total wholesale net margin is Wholesale Net Margin expected to be ~$1.1 billion New long-term contracts in the Carolinas – New 20-year contract with NCEMC at $1 B Duke Energy Progress began in 2013 – 18-year contract with Central EMC at D
Slide 17: Non-fuel O&M cost targets through 2016
Non-fuel Operations & Maintenance (O&M) cost targets through 2016(1) 9% merger savings to keep O&M flat through 2014 Our Objective Cost Reductions, Figures rounded and chart not to scale by category Flat O&M expense from 2014 Emerging Benefits through 2016 Costs & Other IT Systems Leverage our sca
Slide 18: Announced agreement to sell Midwest Generation to Dynegy
Announced agreement to sell Midwest Generation to Dynegy – Transaction overview Zimmer Generating Station – Announced sale of Midwest generation business to Dynegy for $2.8 billion in cash – Expect transaction and resulting use of proceeds to be accretive to adjusted diluted EPS beginning in 2015 or
Slide 19: International strategic review
International strategic review Strategic review of International is underway International owns and operates – Wide range of options being considered 4,600 MW of net generation – Includes optimizing offshore cash and development of growth plan; $1.7 billion offshore as of June 30 – Expect to complet
Slide 20: Growth Investments
Growth Investments 20 | Roadshow Update | September 2014
Slide 21: Growth investments of $16-20B from 2014-2018
Growth investments of $16-20B from 2014-2018 New Generation ($6-8 Billion) Infrastructure ($7-9 Billion) Compliance & Other ($3 Billion) Florida CC / CT SB560 in Indiana EPA regulations, Investments Grid modernization and including existing and W.S. Lee CCGT in SC T&D in OH, FL, NC, SC pot
Slide 22: New generation projects update
New generation projects update 2016/17 Gas Capacity – Florida ($350 Million Investment)(1) Major Generation Projects • Two new CT gas plants at the Suwannee Plant (320 MW), ($ millions) expected online in 2016, or pursue acquisition of Osprey CCGT • Air chilling units for Hines Energy Complex, addin
Slide 23: Agreement in place to purchase NCEMPA's joint ownership
Agreement in place to purchase NCEMPA’s joint ownership – Agreement to purchase the North Carolina Eastern Municipal Power Agency (NCEMPA) joint ownership in several Duke Energy Progress plants (1) – Purchase price of approximately $1.2 billion (2) – Transaction requires approval from FERC, US Depar
Slide 24: Growing renewables portfolio
Growing renewables portfolio (~$2 billion of investments through 2018) Commercial Renewables Regulated Solar Rooftop solar installation in NC Happy Jack Wind Farm Wind North Carolina Solar RFP – Construction of Los Vientos III and IV wind projects – On Sept. 15th, company announced (1) PPAs with 5 n
Slide 25: Duke Energy Indiana files $1.9 billion T&D infrastructure plan
Duke Energy Indiana files $1.9 billion T&D infrastructure plan – On August 29th, filed a seven-year T&D infrastructure improvement plan with the Indiana Utility Regulatory Commission (IURC) under the provisions of Senate Enrolled Act 560 – Total investments of ~$1.9 billion over 7-year term – Transm
Slide 26: Atlantic Coast Pipeline to benefit customers and regional economies
Atlantic Coast Pipeline to benefit customers and regional economies – On Sept. 2nd, Duke and Piedmont Natural Gas Harrison Co., WV ACP Trunk Line announced the selection of Dominion to construct ACP Lateral and operate the Atlantic Coast Pipeline Transco – Project Overview: DUK CCGT – 550+ mile pipe
Slide 27: Pipeline provides DUK with investment opportunity of ~$2 billion
Pipeline provides DUK with investment opportunity of ~$2 billion (1) Joint Venture Ownership Structure Next Steps and Necessary Approvals (2) Parent Company Ownership Percentage Event Timing 45% File affiliate agreement with NCUC Fall 2014 Pre-filing with FERC Fall 2014 40% File FERC application Sum
Slide 28: Duke Energy key takeaways
Duke Energy key takeaways Substantial, diversified Largest regulated earnings and cash U.S. utility flows Attractive dividend yield Strong balance sheet with growth commitment and credit profile A solid, low risk long-term holding 28 | Roadshow Update | September 2014
Slide 29: Other Information
Other Information 29 | Roadshow Update | September 2014
Slide 30: 2014 quarterly earnings expectations
2014 quarterly earnings expectations(1) Key 2014 Drivers vs. 2013 (Actual) 1Q 2014 2Q 2014 Key 2H 2014 year-over-year drivers Weather + + $4.32 ▲Revised customer rates at Duke $2.17 Impact of 2013 rate cases + + Impact of nuclear levelization + + Energy Carolinas (3Q only) Reduced $2.16Florida COR a
Slide 31: Edwardsport IGCC plant operations on track
Edwardsport IGCC plant operations on track Operational Status IGCC Rider Proceeding Status Tracker Costs Thru Filed Status – Plant began commercial operations in June 2013 IGCC-10 Sept 2012 Nov. 2012 Approved – Performance testing is complete; reviewing test data received from GE IGCC-11 Mar. 2013 M
Slide 32: Fuel and Joint Dispatch savings update
Fuel and Joint Dispatch savings update(1) Fuel and Joint Dispatch (JDA) Savings Quarterly Savings Results ($ in millions) Guaranteed $687 million in fuel and joint $50 $350 dispatch savings to Carolinas customers over $300 $40 5 years (2) $250 – During 2Q 2014 achieved ~$40 million in $30 $200 total
Slide 33: Dan River coal ash cleanup
Dan River coal ash cleanup Dan River cleanup progress Cleanup of ash in Dan River – Clean-up activities identified by the EPA in the Dan River are complete; ongoing monitoring will continue – EPA recently stated that the water quality of the river is back to normal – Reached constructive agreements
Slide 34: Coal Ash Management Act of 2014 (North Carolina)
Coal Ash Management Act of 2014 (North Carolina) Key Provisions Next Steps – Requires North Carolina ash basin closure within 15 – Governor to sign into law years, depending upon risk classification determined by NC DENR – Work begins to prioritize sites and finalize closure – High & Intermediate ri
Slide 35: Immediate actions following Dan River coal ash accident
Immediate actions following Dan River coal ash accident 1. Formed dedicated internal task Site Baseline coal ash basin plan in NC (1) Timing Cost (est.) force to address near and long-term Dan River Dewater, close and excavate to lined structural fill 20-24 mo. (2) coal ash management system-wide so
Slide 36: North Carolina coal ash plan cost estimate comparisons
North Carolina coal ash plan cost estimate comparisons (1)(2) The comprehensive, long-term closure strategy to be developed for remaining sites by the end of 2014 will be a site-specific, fact-based approach. $B Movement to full excavation and all dry handling significantly increases expected costs
Slide 37: Terms and Background
Terms and Background Fly ash – A fine material similar to the consistency of talcum powder. Fly ash accounts for about 78 percent of the coal ash generated annually in the United States. When many early coal plants were built, fly ash was emitted through smokestacks; later, emissions equipment captu
Slide 38: Environmental compliance costs through 2023
~$5-6 billion of environmental compliance costs through 2023 – Anticipate ~$5-6 billion(3) in Carolinas (1) 2014 – 2016 2017 – 2023 compliance costs for approved Mercury Controls/Sorbent Injection or pending air, water and waste Response to Emissions Standards regulations over next 10 years Wastewat
Slide 39: Pending environmental regulations
Pending environmental regulations Rule overview Potential impacts to Duke Energy Regulates Hazardous Air Pollutants (e.g., mercury & non-mercury HAPs) Additional air emissions control Mercury and Air Compliance deadline April 16, 2015 with possible one-year extension equipment Toxics Standards
Slide 40: Pending environmental regulations, cont.
Pending environmental regulations, cont. Rule overview Potential impacts to Duke Energy Regulates coal combustion residuals (e.g., coal ash) Close or upgrade wet ash ponds Coal Combustion Rule proposed in June 2010 Convert wet ash handling to dry Residuals Rule (CCR) EPA expected to finali
Slide 41: Brazil's reservoir levels – SE region
Brazil’s reservoir levels – SE region 90 80 Reservoir Level (% Maximum Volume) 70 62.90 63.75 62.45 60 60.83 48.71 50 43.18 45.48 54.13 55.06 45.05 43.18 40.30 41.62 38.80 37.40 40 34.60 36.30 36.30 28.86 37.46 30 20 10 2000 2001 2012 2013 2014 0 Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec –
Slide 42: Senior Management Committee
Senior Management Committee Lynn Good Steve Young Dhiaa Jamil Lloyd Yates Keith Trent President and EVP and Chief EVP and EVP Market Solutions and EVP Grid Solutions and Chief Executive Officer Financial Officer President, Regulated President, Carolinas President, Midwest & Generation Region Florida
Slide 43: Investor Relations App
Investor Relations App – Free mobile app for Investor Relations materials now available for iPhone, iPad, and Android mobile devices – The Duke Energy app provides mobile access to commonly used IR materials, including: – SEC Filings – Earnings Materials – Company Presentations – Press Releases – Se
Slide 44: For additional information on Duke Energy
For additional information on Duke Energy, please visit: www.duke-energy.com/investors