8-KFinancial EventsExhibits & Filings

Duke Energy CORP 8-K Report, Material Impairment (Apr 30, 2012)

Filed April 30, 2012For Securities:DUKDUKBDUK-PA

Summary

This 8-K filing by Duke Energy Corporation (DUK) on April 30, 2012, primarily concerns a settlement agreement reached by its subsidiary, Duke Energy Indiana, Inc., regarding the Edwardsport clean coal gasification plant project. The agreement, subject to Indiana Utility Regulatory Commission approval, caps the costs to be reflected in customer rates at $2.595 billion, including estimated financing costs through June 30, 2012. This settlement addresses cost increases associated with the project. As a direct consequence of this settlement, Duke Energy and its subsidiary will record an approximate $420 million pre-tax charge to earnings in the first quarter of 2012. This charge is designated as a special item and will be excluded from the calculation of Duke Energy's adjusted diluted earnings per share, providing investors with a clearer view of ongoing operational performance.

Key Highlights

  • 1Duke Energy Indiana, Inc. reached a settlement agreement on the cost increases for the Edwardsport clean coal gasification plant.
  • 2The settlement caps costs recoverable in customer rates at $2.595 billion, including estimated financing costs up to June 30, 2012.
  • 3Duke Energy Indiana agrees not to request a retail electric base rate increase before March 2013, with new rates potentially effective April 1, 2014.
  • 4The agreement is contingent upon approval from the Indiana Utility Regulatory Commission.
  • 5Duke Energy Corporation and Duke Energy Indiana will recognize an approximate $420 million pre-tax charge in Q1 2012 due to the settlement.
  • 6This pre-tax charge will be treated as a special item and excluded from adjusted diluted earnings per share.

Frequently Asked Questions

The main purpose of this 8-K filing is to announce a settlement agreement reached by Duke Energy Indiana, Inc. regarding cost increases for its Edwardsport clean coal gasification plant project. This settlement affects future customer rates and leads to a significant pre-tax charge for Duke Energy.

Duke Energy Corporation and Duke Energy Indiana will recognize an approximate $420 million pre-tax charge to earnings in the first quarter of 2012. This charge is considered a special item and will be excluded from the company's adjusted diluted earnings per share.

The settlement agreement stipulates that Duke Energy Indiana will not request a retail electric base rate increase prior to March 2013. If approved, new rates would likely be in effect no earlier than April 1, 2014.

Under the settlement agreement, the cap on costs to be reflected in customer rates is $2.595 billion. This amount includes estimated financing costs through June 30, 2012. If the commission order comes after June 30, 2012, the company can recover additional financing costs until customer rates are revised.