Powered in part by stronger residential demand growth than in 2021, Duke Energy Corp. should see one more year of above-trend retail volume, the company’s executives said Feb. 10.
Charlotte-based Duke posted total retail volume growth of 2.0% last year, led by roughly 3% growth from commercial and industrial clients. That helped the company post a fourth-quarter profit of nearly $3.6 billion – more than triple the number from late 2020 and in line with 2019’s Q4 – on revenues of $22.3 billion. The ongoing recovery from 2020’s COVID-19 shock played a key role but Duke also is benefiting from demographic headwinds: Its footprint includes three of the top five states for population migration in 2021. The company grew its residential customer base in Florida and the Carolinas 1.8% last year versus 0.8% in its Midwest territory.
For 2022, Chair, President and CEO Lynn Good and her team are forecasting 1.5% of aggregate retail electric volume. C&I demand growth is expected to slow to between 1% and 2% but residential growth should be slightly higher at around 1%. Beyond that, they added, annual volume growth is forecast to be between zero and 0.5%.
“What we’ve put forward through 2022 is a very strong growth story,” Good told analysts and investors on a conference call. “It's built on Florida, the Carolinas, Midwest gas rate cases, load growth, O&M cost management.”
On the cost side of the ledger, Good and CFO Steve Young said they are targeting for operations and maintenance spending to be level with 2021, an outlook that reflects the inflationary pressures of the day. The Duke team has trimmed about $400 million in O&M spending from its budget since 2016 – and shed about 2,000 workers from its payroll in 2021 – and said there are future opportunities to grow that number as the company sheds more coal assets. Young also pointed to savings the company has generated from having “completely redone” its real estate footprint.
A negative in Duke’s fourth-quarter results was a drop from 2020 in the delivery of commercial renewable energy projects: The company reported earnings of $49 million from that division in Q4 and $201 for the full year, down from $79 million and $286 million, respectively, in 2020. At issue were – and will continue to be this year – shortages or delivery delays with solar panels. Some suppliers, Good said, have said they can’t deliver within the timeframes Duke wants and alternative options are proving too expensive to commit to.
“So we have made a decision to push some of our projects into ‘23,” she said. “We're very confident in our projects that we have identified for ’23 […] We have appropriate supply and are ready to go.”
Good noted that Duke has met all its regulated renewables benchmarks and that the company’s previous guidance for annual income of $200 million to $250 million from commercial renewables is still appropriate.
Shares of Duke (Ticker: DUK) were down more than 4% to about $100 in afternoon trading Feb. 10. They have lost about 7% of their value over the past six months.
