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Duke Energy CORP 8-K Report, Corporate Update (Nov 24, 2017)

Filed November 24, 2017For Securities:DUKDUKBDUK-PA

Summary

Duke Energy Corp (DUK) has filed an 8-K report detailing a significant partial settlement in the rate case of its subsidiary, Duke Energy Progress, LLC (DEP), with the North Carolina Utilities Commission (NCUC). The settlement, agreed upon with the Public Staff of the NCUC, addresses key components of the rate case, including a proposed return on equity (ROE) of 9.9% with a capital structure of 52% equity and 48% debt. This agreement is expected to result in an estimated pre-tax impairment charge of approximately $25 million in the fourth quarter of 2017 related to specific projects, which will be treated as a special item and excluded from adjusted diluted earnings per share, mitigating its impact on core earnings. While the Stipulation resolves several issues, it's important for investors to note that certain critical matters remain unresolved. These include the recovery and amortization period for coal ash basin deferred costs and ongoing coal ash costs, as well as the recovery and amortization period for deferred storm costs. The NCUC's review and approval are still pending, with an evidentiary hearing scheduled for late November 2017. DEP has requested that new rates become effective in February 2018, highlighting potential future adjustments to the subsidiary's revenue stream.

Key Highlights

  • 1Duke Energy Progress, LLC (DEP) has reached a partial settlement in its North Carolina rate case.
  • 2The settlement includes a proposed return on equity (ROE) of 9.9% based on a 52% equity / 48% debt capital structure.
  • 3DEP expects to incur an estimated pre-tax impairment charge of approximately $25 million in Q4 2017 related to specific projects.
  • 4This impairment charge will be treated as a special item and excluded from adjusted diluted earnings per share.
  • 5Key issues remain unresolved, including coal ash basin costs and deferred storm costs.
  • 6The settlement is subject to review and approval by the North Carolina Utilities Commission (NCUC).
  • 7DEP has requested new rates to become effective on February 1, 2018.

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