Summary
Duke Energy Corporation (DUK) filed an 8-K on August 29, 2017, detailing a significant settlement agreement by its subsidiary, Duke Energy Florida (DEF), with the Florida Public Service Commission (FPSC). This 2017 Settlement Agreement replaces a prior agreement from 2013 and includes provisions for base rate increases for DEF in 2019, 2020, and 2021, totaling $67 million annually, as well as for solar generation. Importantly, the agreement also signifies the termination of the proposed Levy Nuclear Project. As a consequence of terminating the Levy Nuclear Project, DEF will incur a write-off of costs associated with obtaining the combined operating license and any unrecovered project costs. This is expected to result in a pre-tax impairment charge of approximately $135 million for Duke Energy Corporation in the third quarter of 2017. This charge will be treated as a special item and excluded from the calculation of adjusted diluted earnings per share, meaning it will not directly impact the company's core operational earnings per share metric.
Key Highlights
- 1Duke Energy Florida (DEF), a subsidiary of Duke Energy Corp, entered into a Second Revised and Restated Settlement Agreement (2017 Settlement) with the Florida Public Service Commission (FPSC).
- 2The 2017 Settlement replaces a previous agreement from 2013 and extends the base rate case stay-out provision through the end of 2021.
- 3DEF is permitted a multi-year increase to its base rates of $67 million per year for 2019, 2020, and 2021, with additional increases for solar generation.
- 4The agreement includes provisions for future investments in solar and renewable energy technology.
- 5The proposed Levy Nuclear Project is terminated as part of the 2017 Settlement.
- 6DEF will write off costs associated with the Levy Nuclear Project, including license acquisition and unrecovered project costs.
- 7Duke Energy Corporation anticipates a pre-tax impairment charge of approximately $135 million in Q3 2017 related to the Levy Nuclear Project termination, which will be treated as a special item excluded from adjusted diluted EPS.