8-KRegulation FD

Duke Energy CORP 8-K Report, Regulation FD Disclosure (Sep 18, 2015)

Filed September 18, 2015For Securities:DUKDUKBDUK-PA

Summary

Duke Energy Indiana, Inc., a subsidiary of Duke Energy Corporation, has reached a settlement with key stakeholders regarding operating costs at its Edwardsport clean coal gasification plant. This agreement addresses previously deferred operating and maintenance expenses, proposing an $85 million reduction and a $5 million shareholder contribution for attorney fees and trusts. The remaining deferred costs incurred before a 2016 cap will be recovered from customers over eight years, maintaining the June 7, 2013 commercial in-service date for accounting and ratemaking purposes. This settlement also introduces caps on ongoing capital expenditures and recoverable annual plant operating and maintenance costs through 2017. Future regulatory filings for cost and rate updates will be annual instead of semi-annual. Duke Energy expects to recognize a pre-tax charge of approximately $90 million in Q3 2015, which will be treated as a special item and excluded from adjusted diluted earnings per share. The settlement is contingent on approval by the Indiana Utility Regulatory Commission (IURC), with a decision anticipated in the first half of 2016.

Key Highlights

  • 1Duke Energy Indiana (DEI) settled with consumer advocates and industrial groups on Edwardsport clean coal plant operating costs.
  • 2The settlement proposes an $85 million reduction in previously deferred operating and maintenance (O&M) expenses.
  • 3Shareholders will fund $5 million for attorney fees, trusts, and programs.
  • 4Remaining deferred costs incurred before 2016 will be recovered from customers over eight years.
  • 5The commercial in-service date for the Edwardsport plant remains June 7, 2013, for accounting and ratemaking.
  • 6Caps are introduced on ongoing capital expenditures and annual O&M costs through 2017, with specific amounts detailed for 2016 and 2017.
  • 7DEI anticipates a pre-tax charge of approximately $90 million in Q3 2015, excluded from adjusted EPS.

Frequently Asked Questions

Duke Energy expects to take a pre-tax charge of approximately $90 million in the third quarter of 2015. This charge will be treated as a special item and excluded from the company's adjusted diluted earnings per share, meaning it will not affect the reported adjusted EPS.

The remaining deferred costs incurred prior to the 2016 cap will be recovered from customers over an eight-year period. This aims to spread the cost recovery beyond the immediate reporting period.

The settlement proposes caps on recoverable annual plant operating and maintenance costs and ongoing capital expenditures through 2017. Customers will recover these costs over time, and future regulatory filings to update operating costs and customer rates will occur annually instead of twice a year, providing a more streamlined process.

The settlement is subject to approval by the Indiana Utility Regulatory Commission (IURC). A decision from the IURC is expected in the first half of 2016. If approved, it would resolve all currently pending Edwardsport-related proceedings at the IURC.