Duke Energy CEO talks strategy behind big sales, environmental deals and more

CHARLOTTE, N.C. — Duke Energy Corp. CEO Lynn Good says a raft of major actions announced in January result from months of work at a power giant determined to address increasing environmental demands. They also are intended to reduce risk for a company facing billions of dollars in transition costs to new energy and transmission models.

Settlements in Florida and North Carolina speed the closing of some coal plants and determine how Charlotte-based Duke (NYSE: DUK) will recover costs of cleaning up coal-ash operations in its home state.

A blockbuster deal to sell a 19.9% stake in its Indiana utility to Singapore sovereign wealth fund GIC raises $2.05 billion for capital spending at a better rate than plans Duke had for selling $1 billion in additional stock. It has allowed Duke to increase its five-year capital spending plan to $60 billion and boosted its anticipated compound annual growth rate 100 basis points to an average of 5% to 7%.

Still, major moves have consequences that can cut two ways.

The coal-ash announcement, in which Duke agreed to pay for $1 billion itself of about $8.5 billion to  upgrade environmental protection in coal-ash operations, was generally well received. But it did lead S&P Global Ratings to cut the company’s credit rating a notch to BBB+, citing concerns that it established Duke would not recover some of its coal-ash costs.

Duke Energy customers to save over $1B under new coal ash settlement, NC AG says

The GIC announcement gave Duke’s stock a boost and brought less mixed results. “(Duke Indiana) transacted at what we view as a very attractive multiple and is accretive to earnings and credit,” Guggenheim Securities analyst Shahriar Pourreza wrote last week. “The sale removes all equity from the five-year capital plan and proceeds will be used to redeploy into higher-growth opportunities.”

Good talked about all of this and more with the Charlotte Business Journal recently. Read the full interview here. 

Cox Media Group